KGCI: Real Estate on Air - Is the Government Hindering Homeownership

Episode Date: May 1, 2025

President Ronald Reagan famously said the most dangerous words in the English language are I'm from the federal government and I'm here to help. One area that's obviously true is in the air of housing policy where the federal government has consistently increased its role and power in the market over the last 90 years, particularly in the 38 years I've been in the industry. And results have gotten worse over time. And it's continuing based on what I see going forward. Now, before we're getting those details, let's say look at, take it. a look at where the market is from a statistical point of view, and then we'll talk about what the federal government is doing. So I say that in a market, there's, the basic economists will say that there's two aspects. There's supply in demand. Supply would be

sellers inventory. In demand be buyers as measured or one of the factors being interest rates. Let's take a look at those two. Interest rates last week, interested up about an eighth percent. Closed week at 7.16%. Now, while that's higher than it was a couple weeks ago, you can see it's in about the same range as been for the last year, about 7%. So while it is higher a little bit, it's not enough to sell the market down in the long run. We should keep an eye on that and see if that's a trend and continues. But as of right now, it's not so significant that will cause this major problems. Now, the next factor would be on the seller's side.

What is the inventory? How many homes are available for sale? Because the challenge has been for a while that we just haven't had enough homes for buyers to choose from to increase the sales activity overall. And one of the great sources of Teradata, and we look at their inventory numbers, we see that this year's inventory is about 15% higher than last year, maybe 12 or 13%.

The inventory is starting to slow down a little bit this year. It had been an upward trend and seems to be headed down, while last year it was on a slight upward trend going forward. So it looks like we're in about the same range. You'll notice that the only years below this year in recorded history were the pandemic period years. This would be the lowest ever for a non-pandemic year. 18 was higher, 19 was higher, 20 was lower when the pandemic started,

21 was lower, 22 was lower, 23 was lower. So this is about a little higher than last year. So it might be the second lowest ever on record other than during pandemic years. That seems to be about where we're at. So overall, the inventory is relatively tight, and even if buyers decided to pull out of the market, there's not enough inventory to cause prices to go down. Now, we'll see this amount localized. In the L.A. market, Altaut's research has a great job looking at the market,

and they determine a seller ranking or a market ranking and has been at 42 for a few months now. It's been the 40, 41, 42 range most consistently over time. And it has last month, they did beep up. 43%. Now, this is still on the seller's side of the market until we get down below 30. And you can see all the metrics are still pointing for the most part, either in a positive direction for sellers or a stable market. So overall, in LA, the market's certainly not crashing right now. Certainly doesn't appear to be crashing anytime soon. Of course, things can always change pretty quickly. We'll keep our eyes on it. Now, one of the things I do in

this podcast is always talk about the real estate industry news and how poorly they prepare buyers and sellers. One example that is always showing bad news. Here's an example Newsweek saying that the housing market gets more bad news. Now one of the things you need about industry is that bad for a buyer would be good for seller, bad for seller, bad for seller would be good for a buyer. And so there's a trade-off here. So to say the market has bad news is kind of doesn't make any sense. Let's take a look at what they're talking about. You look at their stats and what they'll say is that the number of sales has dropped again by 1.9% in terms of the number of sales from a year ago.

But while those number of sales went down 1.9%, the average price went up 5.7%. Where's that number down here? 5.7%. So the overall gross sales dollar amount went up about net 3.3.5%. Now, what's bad might be for buyers that housing prices wouldn't. up 5.7%. But in an inflationary time like now, maybe they got a raise of 10%. Maybe they change jobs got a promotion of 10%. In inflation market, even though prices go up, it may or may not be bad. It's how do you outrace the inflation is the key point. And obviously for homeowners, it's like

free money. If you owned a house about it a year ago for a million dollars, you made $57,000 because the value went up without doing anything. The typical homeowner owes about 50% equity in the house. So to use that same million dollar property, even if you had only $500,000 of equity in the home, the fact it went up $57,000 is over a 10% return on your investment. If you had put down 25% and buy a year ago, that 5.7% rise is like a 25% rise in your investment.

So you can see the prices going up, can be very good for homeowners and can be very good for people looking to sell their property. Buyers that might not be good news, but again, buyers might be experiencing higher income, so it's not the same problem that otherwise might be. So overall, I would say that article is very misleading. Now, one of the positives, one of the great resources in our industry of real estate has been rich dad, poor dad, and the author Robert Kiyosaki. and while he's always referred to as some sort of a guru as though that means a bad thing,

money-wise did an interview with him this week, and they showed that he owns over 15,000 homes. And what he says is he hasn't used any cash because he just takes the money, the profits from the past homes to buy new properties, using debt to leverage his investment, and the depreciation on the homes he has offsets his profits on the older homes and his other investments. He owns, I think a half billion or a billion dollars of other assets, gold mines and stocks and bonds, all kinds of stuff.

But what's amazing is he laid out his plan in a book, Rich Deadported and in a game, the cash flow game. It's a fantastic game. But this man is a master real estate investor. My entire life, I've watched him. Now, I haven't as well as he has, but I invest money in real estate, and I take some profits and put that into another real estate transaction. So I think Robert Kiyosaki is not to be put down as a guru.

The opposite, he has been highly respected as a master real estate investor that anybody looking to increase their income and wealth could benefit from. On industry news point of view, how is the market headed? Central Lockers, a vendor that sells and rents lockboxes to realtors. They report traffic has increased, meaning people going into homes, increased by 3% year over year. Now remember before we said sales were down, but we have more buyers going in to look at property,

and it's 3% is more than the 1% drop in sales prices. So what you have is buyers are clearly still looking to buy property in increasing numbers, and it's only our policies are frustrating them, the most important one being not enough homes. We've talked about that over and over again on this podcast. Now, how about all the taxes are, our city is collected to pay for more homeless people.

Is that can help solve the problem and help all of us enjoy a better way of life, make our city more valuable, more safe, more livable, maybe so less people move out of the area or maybe we can build more property? Not likely. City of LA, here's an example. Say a program where they bought 1,200 homes for homeless people. So not for taxpayers like me or you, but for homeless people, who knows where they're from, they come from all around the world, because we give them the same.

priority as residents. They spent $800 million, which means that the average unit, oh, by the way, this is a hat tip to Shiva, who's an attorney in the South Bay, a great real estate investor as well and a good friend of the program. He gave me this particular link. I thought I talked about it before, but the city bought 1,200 homes, average price about $667,000. How would you like a free $667,000 condo? I'd like one. I mean, if it was livable, I could live in it and sell my house or find some of the way to live if it was free. I'm a taxpayer. I don't get that.

But the pathetic part is they're vacant. 1,200 are vacant after two years. So the city housing program is just a complete disaster. And I think one of the things we're coming to realize is our city government is just completely unable to even provide the most basic functions. For example, even dog shelters are crippled with overcrowding. They have double the size of what they're built for. Now, I'm not a dog lover. My wife rescued a dog.

We have a dog in the house. It's not my dog. It's her dog. But it's a rescue. And it was sad to see how they're kept. My daughter also has a rescue dog. But in LA County, we have twice as many dogs. We can't build housing for people.

We stand to reason that we can't build enough housing for dogs. And that's why we need more charities, I think, to do that. Now, there's a little bit of good news in terms of local industry news. Ellick County has its first new park in 35 years. When you look at statistics, it is a metro area. We have way underserved parks. The reason is our politicians allow private golf courses to be factored in as parks when they consider zoning. And so you have all the politicians playing at their political friends golf courses.

They call it parkland. But we actually did build a landfill. I grew up near this, actually. and I've passed by this many times, put up in the smell for years off of the pointy hills landfill off the 60 freeway. Well, that's now topped off and being turned into a large county park. So good news for L.A. County, we are going to get, finally, after 35 years, a new park. It's going to be east of L.A. by about 30 miles, which can be anywhere from a 30-minute

to an hour drive. But as far as a county program, that's good news. Now, if you follow me, one of the topics I talk about all the time are, the evil big corporations. One of the evil corporations I talk about is Zillow. Zill is a company who's worth billions of dollars. They're basically an unregulated monopoly in the real estate market dominating,

putting companies out of business. And at the same time, paying no federal taxes because the way that they use the tax code, they basically avoid, they show on paper losing money, but they have investors to buy their stock. The whole thing is just a pretty scam as far as I'm concerned. So what does Zill do?

Now, if you were losing money or not making enough money to pay taxes, what might you do? worry about your core business. Their core business used to be advertising, leads, giving information to home owners, home sellers, home buyers. Now they're navigating fair housing guardrails

in large language models, which means AI. So you have Zillow, one of these big evil corporations, now teaming up using AI to basically turn against their competitors to say, hey, these guys are violating federal laws, these guys are violating state laws. As if the government needs, more people, more resources, and more help. Obviously, we all want to avoid discrimination. And I believe overall in real estate is one of the best industries I'm serving people regardless

of race, creak color, sex. We're the laws protect people. We're training it all the time. I think real estate is really the big equalizer of opportunities for all people. You can disagree with me. But there's no reason that Zillow needs to help our federal government, I don't think. That does make sense to me. Why would they do that? If they're not making a profit enough to pay taxes, Why are they involved in this? You can assure they're using it to destroy their, continue the structure of the competition and their dominance in the market.

And they've become a monopoly that for some reason don't seem to be regulated fairly like any other industry. I don't know why. Now, one of the reasons why Zillow can help destroy the American housing market and get away with it is their biggest investor is an American. The biggest investor is Australian. The hedge fund Caledonia, they're struggling

because their Zill investments drop 25%. They have lost, millions of dollars investing in this organization called Zillow. And which is interesting to note that they are the largest shareholder in Zillow. So it tells you that the people who believe most in Zillow are not Americans, they are Australians. Nothing wrong with our Australian friends, but I would say that as an American is certainly not where I want to see the investments in our real estate industry and key industries like real estate. So one of the constants I see in our market in the real estate news is the kind of the notoriety,

the pushing the marketing of CEO Robert Refkin of Compass. Compass is one of those Silicon Valley hedge fund companies that got billions of dollars to enter the market, bought up competitors, put competitors out of business, hasn't made a profit yet to pay its share of federal, I think, or even state taxes. And yet he's a hero. This is the kind of person is a hero to our real estate industry news. People who destroy industries but basically pay no taxes. I don't know how that wins in the long run.

So recently he was interviewed by CNBC and they just fought over this guy all the time. And he might be a good businessman. I've watched him a few times. He seems smart enough, but I don't think he's the hero that CNBC makes him out to be. So I quote him, and I just found this fascinating, and saying that we now see more sellers,

than buyers. We see more sellers and buyers. Now remember, I showed you the graphic before that foot traffic was up 3%, meaning there's more buyers shopping, there's more potential buyers shopping for houses. I also showed the statistic that inventory has been basically flat, slightly declining, which means there's less inventory would mean there's less homes for sale or less potential sellers. The thing that I really dislike about this language is,

that I think real estate people sometimes make the market sound somehow magical or ethereal rather than practical, which means there's one buyer and one seller in every transaction, the one that buys the house and the one that sells it. There's always this equal number. Now, if the market gets worse in terms of numbers, maybe interest rates go up, the economy goes down, there'll be both less buyers and less sellers. What there will be will be more frustrated buyers or shoppers or frustrated sellers, we would call expired listings. But there's never more buyers and sellers because a buyer, if they're frustrated, we just pay more and be the buyer. Or a seller who didn't sell would just cut their price and sell their house.

So there's never more buyers and sellers. It can't be. The law of economics is there's one buyer for one seller for every transaction. And anybody else is either a prospective buyer or shopper or prospective seller or prospective sales. And so the terminology I think is so important. It just shows an insight is to make the business not about business, but some sort of magical emotion or something. And then there's another quote,

Fortune magazine behind their paywall. Additionally, I've never met the guy. He's probably perfectly nice. And he obviously built a big company, but I just don't think he's the industry spokesperson. He's being promoted to be as such. I just don't think his insights are so revolutionary.

The hear of the quote him saying that because of the, he says he wants to sell about high asking prices, that sharks are to come out and hurt you even more. Well, I don't know about that. I mean, so is he saying that more aggressive buyers are sharks? Is his company not training people properly? Is he saying, hey, use us to protect you? Okay.

but I don't know that necessarily that buyers are gaining the upper hand. We showed how there's more buyers and a little less inventory. So if anything, the opposite is going on right now, that's not true, number one. And number two, if it was true, do buyers having the upper hand mean to shark's string control? In my experience, sellers are more aggressive and more knowledgeable on average than particularly first-time buyers. So I don't know where this quote comes from. And again, I don't have anything against him. I just think the industry falsely puts them forward as some sort of industry spokesperson rather

as a guy who's running a business. And frankly, again, one of those companies that sucked a lot of money from Silicon Valley and investors and still hasn't turned enough of a profit to pay its share of federal taxes. Okay, speaking of people over their skis, I talked about the federal government harming us. And I want to talk about specifically as it relates to this commission lawsuit. You may have seen the news about this one court case with one seller, a very specific kid, husband and wife, team, business people retired, who after signing their listing agreement decided they were cheated.

Nobody told them their paying commissions the buyers, even though they signed their contract. And they got their class action attorney that I would call, class action attorneys are basically another word for blood-sucking leeches. And they filed a lawsuit in St. Louis, Missouri, with one judge, one jury, And they're going to decide the real estate policy, they're going to upset the entire policy of real estate across the entire country because of one lawsuit. It just makes no sense.

Worse than that. Now you might say, well, Bill, I mean, we have a federal government. We have laws between states and such. Our federal government is at the center of this. Obviously, the class action attorney worked in conjunction with Department of Justice, which has been investigating the National Association of realtors and these policies. policies for years because the government wants more control of real estate. How bad is it? Well, here's an example. The lawsuit alleges that it's bad to have listing agents, I'm a primary listing agent, contract with buyers' agents to use the buyer's agents to market

the property. One of the things I do as a listing agent, I talk to myself and say, look, there's 100,000 realtors in Southern California. The main way of marketing is I attract them to bring their buyer, and rather me find the buyer, they're more likely to find the buyer who'll pay the highest price. And that's what most sellers won. And so the cooperative system has worked really well for most people. Now, do people abuse it? Sure.

Most commonly is abused by listing agents who double-end the deal. They take the buyer and the seller their own. This new policy is going to force more of that. What do I say that? Well, take a look at the Department of Justice. They're saying that offers of agent compensates should not be made anywhere. that I should not put in the MLS to buyers' agents. Hey, sell my house will pay you 2.5%.

Not allowed to do that by this lawsuit. Maybe I could put it on my own website. DOJ, Department of Justice, is saying not to do that. Maybe put it in Zillow. They're saying not to do that. Well, how did the Department of Justice come up with it? Did they have hearings and take input from the entire industry, what the best practice was?

Did they go to universities and research the real estate industry? I think you know the answer. No. In fact, there's one attorney. Her name is, I'm going to get her name right, because Jessica Lill, one attorney, who her whole life she's just been an attorney. Nothing wrong with attorneys. Again, she might be perfectly nice.

She might be one of the great trial attorneys of all time. I don't know. But all she's done her whole life is go to law school and then work as an attorney. Has she for bought or sold the house? I don't know. She never worked in the industry. She never researched the industry. And her comments about this don't see.

to indicate any kind of research from a real estate industry perspective. She has decided it's unfair to publicize the commission anywhere, which basically is going to upend the entire industry. Now I don't know if it's going to turn out that way or not. I'm sure there'll be appeals, and who knows, it's very complicated. As of today, we're still offering commissions, but there's a deadline coming up pretty quick. So the whole industry is a bit of a turmoil.

To show you how stupid it is, at the same time, another department of the real state of the federal government the veterans administration who they want to offer more homeless now all government officials all care about is more power and so the VA wants to do more loans to veterans

they really don't care about veterans one thing you'll know about the VA the last people they care about are veterans they care about their jobs and their pocketbooks so they want more power they want to do more VA loans and they know that VA loans have unique feature of being able

to offer to our veterans who served to buy property with no money down and no closing costs, no non-recurring closing costs, meaning you'll pay your per-rated interest and taxes and such, but none of the transaction fees and no down payment. And it's been a great feature for veterans as long as they've been in the business. Well, the VA is looking at the DOJ's ruling saying, well, hold on for a second.

Most veterans don't have two and a half percent to pay a buyer's agent. If they can't get buyers' agents and other buyers do their disadvantage, So we're going to alter our policy to allow the Veterans Affairs loans, VA loans, to finance the commission for the buyer's agents. Well, it makes sense to anybody in real estate that makes sense, to anybody who ever did a VA loan that makes sense. Anybody did any loan, it makes sense. Who doesn't that make sense to?

Jessica Leal, who's the attorney at the Department of Justice, as a general rule, those are people who are very educated, very focused on their careers, and not at all in touch with what's best for American real estate policy. I'm going to do a whole podcast episode on the federal government destroying our real estate industry one day at a time. But this is an example of on this one issue, you have two major departments in the government

taking the exact opposite position, one saying buyer commissions are bad, one saying they're so good, we want to finance that to make it easier for our customers to buy their houses. So at the end of the day, what do you do? I don't know I have any answer. I think that overall, the constant theme of my research, the constant experience I have,

is our cities, our county, our state, our federal government are all focused on their jobs and their power, not helping consumers and home sellers get the most other real estate. And so that's why I've supported the recall, the second recall, of Governor Gavin Newsom, and you can get information at the Restory California org website or text or email me. I've been more glad to send you to email. to the actual petition. The last petition did not qualify, but I do think it makes a statement

that we're dissatisfied with the policies in our state, and this is a man who has big impact on policies across the country. What's your solution? Or my out of line? Is the federal government helping us overall? I think not.

So call me, text me, email me, like this video if you like it, thumbs down if you don't, subscribe me if you want more. I'm not built gross probate. And as always, make today your best day ever. Thank you so much.