KGCI: Real Estate on Air - Don't believe your lying eyes, our government is telling us

Episode Date: March 20, 2025

As I prepared this week's podcast, I was shocked about how almost every news story, on one hand, we're being told one thing. And on the other hand, it's obvious that's not the case. We're being told that homeless is being, the war in homelessness is being beaten. And in reality, I see more homelessness all the time here in Los Angeles. We're told that crime is going down. But in reality, we know there's more crime or robberies than I've experienced living in Los Angeles for 25 years. and so on and so forth. And so I noticed this pattern.

I want to share that with you guys today. But before we get into details, let's make sure we review where the economy is, and that's always with statistics. So rather me just pontificating, we're going to go where the numbers are to understand. Now, in any economy, there's supply and demand. And supply is the amount of inventory.

Demand is probably measured or most affected by interest rates in the mortgage industry. And this week, we had a volatile ride. We actually had mortgage rates jump up above 7.5% briefly and then jump back down and close the week at 7.22. So we ended the week down below almost a quarter percent, which will always stimulate more demand. And I have to tell you, I've never had so many homes that were pending escrow, meaning getting ready to close, where I got offers and increase that I have in the last six months or so. So I know the demand

is still out there for houses. As long as rates stay in the range of where they've been over the last year or two, I'd imagine it will continue. I don't know if. it will continue. It feels very tight, very volatile rate of break up or down. I don't know which way. It certainly seems very stressed. On the supply side, you'll notice that now this year is starting to create a pattern where the inventory is about 10% higher than last year. Last year was the lowest record ever for non-pandemic year. You'll notice the only years below it were pandemic era. Like a lot of businesses, we're starting to adjust back to normal. But, even still we have about another 50,000 homes nation.

Why not 10% more homes for sale? Not a lot, not enough to change the economics, but certainly it's more. And it's certainly a little less pressure on the selling site. Now, real estate inherently is a very local economy. And so we want to make sure we look at each area being different. And in Los Angeles, our market overall, using outlets research, which is a great source. We're still about a 42,

which means we're a slight sellers market. Still, we've remained that consistently for the last few years. More of a slight sellers market the last year or so, been in this range. And so at 42. And overall, prices seem to be about steady, inventory, steady. Things are going to be hanging in about where they are.

So overall, we know that we have a fairly consistent market with what we've been experiencing over the last year and a half or so, no major changes on the horizon. Okay, under news, under the, is it me or you, we're told that crime's not that bad. The truth is, we know, that many police departments are not reporting their data to the FBI is required. And this is a designed method to kind of understate the fact of real crime. But in the news last week was our mayor in Los Angeles, Mayor Bass, who's telling us the crime is getting better and she's beating crime. her house was broken into. Now, it's not her fault that the house is broken into. But it certainly does,

it is ironic that while she's campaigning around the city saying crime's not that bad and we're making great progress that literally her own home is broken into. I just find that to be incredibly ironic. And the more that the, I think the emperor tells us that everything's better, we see that the emperor is wearing no clothes. One of the interesting news items last week was Los Angeles Dodgers applying for a permit for innovations at Dodgers Stadium. You know, we all, I guess, lived by some of the same rules at least. One of the most prominent residents in Los Angeles is the Dodgers,

and one of the most iconic buildings is Dodgers Stadium. And they posted online their permit request to, I think, read you mostly below the field, expanding clubhouses and facilities, underground. And it's just, I found it interesting. I linked it to my email version of this, a podcast if you're interested, but I just found a fascinating that even something goes on, I don't really thought about it, but even a major stadium has to put out a permit process and send it to see Los Angeles. I imagine some clerk who gets the mail and opens it up or email or however that gets done. And so that goes on even for a iconic team like the Los Angeles Dodgers.

Also the news under, I guess you would say bad news, but I guess it's better to at least admit the bad news than be surprised. There's a study that showed that the quality of life, the satisfaction of residence has declined again and is at a nine-year loan in Los Angeles. And what's interesting is the major issue Los Angeles have is economic. It's not crime. It's not what could be a lot of other things. It really is just that everything costs so much. And that's what's driving people to move somewhere else. So, and again, I'm not a big fan of UCLA, if you know me.

I think we should make the whole thing into condos or affordable housing. But there you are the nine-year low and declining. And I think that explains one reason why so many Los Angeles are moving to other states. One of the factors that makes it harder for people to buy houses overall, as talked about a lot, is student loans. And it's interesting, Chase is a company that you would think as a bank, their responsibility would be to help taxpayers. You know, they take taxpayer money to exist and use it and use the benefits of it. And you would think similar on the line, they'd be required to do something that helps American citizens.

They don't. But it was interesting that Jamie Diamond, their chairman, and really one of the real forces of evil, I'm actually writing an entire podcast on my real estate rip-offs podcast about him. but he said the quiet part out loud that nobody really wants to say, which is it doesn't really matter what you study when you're in college. Now, obviously there's exceptions, medicine, and sciences and things. But he's talking about in general for business practices. And what that is is a condemnation of the education in our college system, right?

People spend four years and $100,000 or more to get an education. He's saying, doesn't matter what you study. it also I guess would mean it doesn't matter where you study. And the question that I like to ask him, doesn't matter that you study at all in college or might be better off. My assessment for most people in non-technical skills, not doctors, not engineers,

but most people in general business, they'd be way better off spending four years in a real business, learning the business. At the end of four years, they have experienced knowledge of an industry in depth. And they learn more, I believe, actually doing the work they do in college working on spreadsheets and such. So it's just interesting of all people that Jamie Diamond would say that part out loud,

since he's such a part of the political class that has, I think, encouraged people to take on mass of debt. I also found interesting when I looked into the details how college debt has been declining so much. It peaked in 2010-11 at $152 billion and is now down to the United has now down to. to $98 billion. So it's come down to about 30, 40%, the total amount in length. Most every other business has gone up nonstop in that time period or stayed flat. And so it does tell you that there were abuses of the system and they've been reeled in. And it does, I think, indicate some point to students who feel they've been taking advantage of where loans are given out frivolously. I mean, here you have the chairman of JP Morgan saying,

it doesn't matter where you study. Then, you know, obviously somebody who spent a lot of money to get an Ivy League education in some sort of unimpactful department would have grounds for being frustrated or upset. I don't know that I would justify for giving the money. If you agree to take it, you should be responsible for it. I don't think that sends the right message at all. But it is fascinating that our political class is really backing away from the importance of college and saying that out loud, I think,

is a very interesting study. On another front, one of the things I love as a California, is when other states act as stupid as we do. And the latest to the party now is Colorado. Colorado is passing a law that basically steals property from homeowners, from landlords, people want to rent property out, and give it to tenants who otherwise wouldn't be entitled. The way they do this is owners of property who might have saved the whole life to buy an investment

or use a real property for their retirement or their way of life. Now can't just terminate a tenant contract, even though the tenant agreed to only live there for a certain period of time on a lease or month to month, but now it has to show cause. And of course, once you have to show cause, you have to go to a judge. And this is where progressive states have judges that will make it harder and harder and harder to show real realistic cause. And now you have the state saying, well, that is just cause, but that's not. And so this is just another land grab. And Colorado adds to the states and cities that are destroying personal property, which are the foundations of our American success story, the American dream.

And it doesn't work out for those areas. You look at the areas that have taken property and given it to tenants. And inevitably, you have less homes built. You have less renovation. You have less housing overall, lower quality housing, lower income. and lower investments. And so Colorado, welcome to the party, but I assure you it doesn't end well. The end of the story is not a good one for them. Next, to lead the way in Edis C, as Los Angeles has to always, our city added a new department because we don't have enough government employees

taking tax dollars. So we have now, the only city council creates a new department called the Department of Homelessness. Now, one of the things you should know, is that anytime a government entity creates a new department, two things happen. One, that problem never gets solved. It just grows. And two, the department never goes away. And so, you know, we've had our governor, Governor Newsom over 10 years ago, promised to eliminate homelessness.

We've had a city mayor elected who promised to eliminate homelessness. We have, you know, millions, if not billions of dollars now added to try to solve. this homeless problem. And now we're going to hire new people whose sole purpose in life is to make sure they have a job. And the way they do that is by feeding the homeless industry. Last week, I talked about the whole industry that's popped up around this business of homelessness by governments. So that's not going to end well either. That's just going to be a nonstop boondoggle here in the city of Los Angeles. Next, you know, there's a lot of the news a few months ago about President Trump's

valuation of properties and how he overstated his value of property or he didn't overstated. Just to show how volatile values of properties are, I thought I would share. This is a fascinating story. Blackstone, one of the largest entities in America, they have a property they bought in 2014 for $605 million, this massive building, trophy building. They sold it last week for $185 million. They lost over $400 million. on that property. And it just shows you how hard is the value, how property values are volatile. It shows you how office space even in places like Manhattan is plummeting.

And it's going to affect banks across the country. So it is a warning sign for our economy. But I think more importantly, also shows how valuations are so subjective between a buyer, a seller, a appraiser, a tax assessor, insurance company, a lender. There's many different opinions. but at the end of the day, the one that matters was when a buyer and a seller agree and there's a transaction, as long as it's a at arm's length

transaction, that's the best indicator of value. And to try to come up with the interim values is at best an art, not a science. And it's very difficult. And I think the people who lambasted former President Trump over the valuation clearly didn't know what they're talking about. Next,

Speaking of banks acting poorly in taxpayers on the hook. Here's another new story on that subject, which is J.P. Morgan Chase, Bank America and Citibank, have $7.4 trillion. If you look at the numbers, I had to look at those zeros a few times to verify. In off-balance sheet and potentially dangerous cocktail of unknown assets. Now, this is what led to 2008 downfall, which was the banks who are basically, if you think of the banks as Las Vegas gamblers

who are betting money from the taxpayers. And if they win, they put the winnings in their pocket. And then when they're busted out, they turn to us and ask for more. That's what they did in 2008. So J.P. Morgan Chase Bank, American City Bank, are basically playing with taxpayer money and have $7.4 trillion in assets that they're not really disclosing to regulators and updating the values regularly and are considered dangerous assets,

but they're still allowed to grow and because of their domination of the market, replace local commercial banks that Americans need for businesses. I say this as a local businessman. We really need more local banks. I have a business I'm working with right now where we have a hard time finding a local bank to work with us. You found one to do some of the work, but not the others.

And they're just not that aggressive because they don't have to be because they have more business than they need as more and more banks are going out of business. Speaking of bad bankers and the person in charge, one of them being Janet Yellen, if you want to know why our economy is so out of control, it's because our leadership is probably so stupid. Here's case in point, Janet Yellen,

who says that she despairs a health market's one-two punch for first-time homebuyer. She refers to that as inflation in higher rates. Well, she's the person who's supposed to be in the business. backstop. She was the government official who, when the government was supposing, spent trillions of dollars, said, oh, no, inflation will be transitory. Now, when she said that, she sounded like a grandmother who didn't even know what the word meant, but she repeated it into the TV screen over and over again. And here we are years later, we realized that what she said was wrong. Either she's incompetent or dishonest. You can take your pick. But we know that the money we spent

trillions of dollars are still affecting our inflation rate. And that's the one to punch. inflation rate, cost of living, hard to save money. And inflation, it causes rates to go up, harder for buyers to qualify for mortgages. So here this lady acts like she doesn't know what's going on. If you take her to word, she's just incompetent and stupid. If you want to take the worst side of it, she probably is worse than that and probably knows what she's doing. And what's interesting is she lives on a very modest government salary of about $250,000 a year. But she gets paid about $7 million a year by banks and big companies that she's supposed to

you're regulating. So that's the par for the course in Washington is that people are supposed to be protecting taxpayer dollars are too busy laying their pockets with special interest money. And then they're, wow, how inflation happened, Janet Yellen? She doesn't know. She really does what she says. These people are just beyond the pill. Speaking of which, our federal governments broadcast medium source NPR, National Public Radio, which also has TV and websites, says housing experts just aren't enough homes in the U.S. Like, that's a new story to our federal government.

There are enough homes. Now, we know that there's not enough inventory if you're in real estate. We know there's homeless people, which means people with no homes. We know there's hardly any homes available for rent. There's hardly any of the homes for sale. I mean, you don't be a math wizard to figure out. We don't have enough homes. And here's your federal government.

How is the next person that just our enough homes in the U.S.? I've been saying this by podcast for years. And so now what's happening is they're saying it out loud as though they didn't notice it all along. I even know what to make of this one. I just, I don't know. The whole thing, our government is just, I think playing this for stupid or they're just really that stupid.

Speaking of design, as MarketWatch, never wanted to miss a chance to mislead. their readers. I had an article this week. Rents have finally stopped skyrocketing, which is true. Rents went up a lot during COVID, immediately post-COVID.

But the next part is they're now stuck at a price most Americans can afford. Now, there's virtually no vacancies in America. Maybe in some markets is 5%, 10%, but virtually by historical standards, there's hardly any vacancies in rental property.

There's hardly any homes for sale. But market watch what you believe most Americans can't afford the rental costs? Of course they can. They're living in houses. I mean, sometimes I read these things and wonder, what's the point of an article like that? Is it just to confuse people? Is that really their job? You would think if they're in the news, the goal would be to educate or provide viable information.

But they've obviously stopped doing that. Here's a question. And again, this is the government. telling you something which is obviously not true. You know, homelessness. It's hard to get homes in low-income homes. What if I was, if you found something who needed a home and you're just going to write them a check and say, look, you're homeless, boom, here's a house you can afford to live in. How much do you think that would be? You know, most people would say $300,000. You could live in a modest condo, $400,000. You can live in some, you know, cheaper condos in the city of Los Angeles.

You can start move into suburban areas and get a decent condo in a nice place. I've sold such condos recently. You can buy a house in south of LA for $500,550. Fix it up. Their homes for sale in those prices. The city of Santa Monica is giving to homeless people condos that cost, I'm surprised. Are you surprised, $1 million each? they're going to build

the 122 studio one and two bedroom and three bedroom apartments there'll be you know some retail but at the end of the day for $123 million dollars it'll only be $122 units so it's about a million dollars a unit that sounds like a lot

which is to give people a unit worth a million dollars I don't know what do you think I even know what to say. I just don't even know what to say. We're going to give people who are homeless. I imagine

that means people come here all around the world, right, because we don't distinguish between people who are here illegally and people who are legally. We're going to give them a million-dard condo in Santa Monica to 122 people. And then when that's done, we're going to build another 122, another couple thousand. I know Beverly Hills, they're supposed

to build another 2400 low-income homes here in Beverly Hills. So that we're doing, I don't know. It seems like a lot to me. I love your feedback. Put in the comments down below. Is it a million enough? Maybe we should buy my two million. Maybe we should make sure they have an ocean view. Maybe we should, I don't have concierge services or what do you? I don't know. What do you think? Tell me. Personally, I think the whole thing is out of control and we have to hold the political leadership accountable. It's not enough just to complain about it. That's why I personally, I think it's some risk to my business.

I'm going online and endorsing the recall, the second recall of Governor Newsom. You can download and fill out yourself and at least be heard that you disapprove. I don't know if you're successful or not, but I do think a sense allowed statement that we're holding him responsible. He's the person who I think turns San Francisco in what it is in our state, both when he was a lieutenant governor and governor. And he's really pushed a lot of these policies that have made housing less affordable and made our economy less at and that is all we have people moving out not moving in who are here legally.