KGCI: Real Estate on Air - The Government Wants You To Rent

Episode Date: July 18, 2024

So when I was young, the American dream meant buying your own home. Maybe a bedroom for each child, a white picket fence classically, a yard in front to hang out and visit with your neighbors, a yard in the back to play with your kids, maybe let a dog run, has some toys back there, a swing set. Increasingly, that's getting harder and harder for Americans to afford. And the thing is, it's not an accident. This is a deliberate policy by our government. Our government wants you to rent your home and own nothing and love it. How could that be?

I'm going to go through step by step and show you the pieces of the puzzle are going on now so we can either accept that if that's the policy you want or you have the chance to fight against that. So before we get into that, let's make sure we understand the numbers and where we really are. In an economy, as I always say, there's two pieces. There's demand and supply. Demand in real estate is mostly measured by interest rates will drive the demand, and supply will be on the inventory. On the interest rate side, we dropped again today slightly below the 7% ratio to 6.91%.

And as you can see from the graph, they've been in the between 6% and 7% most of the last year. That's what's driving traffic. We're kind of still in that same range. Psychologically, Blow 7 is nice, not determinative. But overall, the rates are such that there's more than enough buyer activity to keep housing prices going up slightly. And also I would say because of inflation, that's going to have to happen. We're going to have to have rates, stay high, at least for the near future to inflate out the debt. That's the policy that our government seems to be working on.

On the supply side, that would be how many houses are for sale or inventory. And that number similarly is at all-time lows. If you look at the numbers today, slightly higher than last year. Last year, we were at $456,000. They have 4774. nominally different, but this still remains to be the all-time low for non-pandemic years, other than slightly higher than last year. So what does it tell us?

As long as there's little inventory, you cannot have housing prices crash. Now, you certainly can have them crash in individual markets where there's certain factors going on. But nationwide, housing prices are set to continue to rise at normal levels based on the amount of inventory. Now, real estate is hyperlocal. most of my business is in Los Angeles, in the California area, what's the market like there?

Well, Altaut's research, I think there's a really good job. They have a report they do every week on the market. They rank the market based on certain factors. And here they have a still in Los Angeles at a 40, which to them is a seller's market. It's just a slight seller's market, not tremendously so, but enough to keep prices going up and buyers having to compete. And that's my experience.

So all those things they have, have offers on them, in some cases, multiple offers. But the market still is increasingly, I'm sorry, continues to be competitive overall and looks to be that it will continue in the near future. Okay, so let's get into the news and what's new. Lots of good fun stuff. One of the things, a great graph I saw, you're going to see a lot of news, and rightly so. It is disturbing that insurance prices are going so much, and particularly California, not only prices going up, but insurance companies scared, the state will force them to insured huge losses are leaving the state.

State Farm being one of the biggest, not writing even now renewals from any customers. But there's an interesting graph that I saw this week that showed the increase in cost of a home based on insurance in blue at the bottom versus green. And what this tells us is this is the percentage of income it takes to buy a home. And you can see on average, and you can see that that number's gone up because the mortgage rates from 17%, 60% back in 2018-19 to 22%. This is why it's harder for more people to afford houses. And insurance has gone from 1.49 to 1.64. So while the insurance has gone up a couple hundred dollars a month in some cases, $500 a month, compared to the difference in mortgage rates, it's insignificant. So I would say let's make sure we keep our eye on the ball, the ball being overall,

inflation and government spending, gee, just this week the government spent another whatever was trillion dollars and of money that we have to borrow, this would cause rates to go up. Okay, also in the news, let's see for California's. Good news is California is not the only state so screwed up with people stealing houses. Now, I want to advocate changing the phrase from squatters to house thieves. You know, if you watch old cowboy movies, they would. talk about a guy who was a horse thief with such negativity.

Oh, he's a horse thief. And I was wondering, why is the name horse thief such a big deal versus thief? And the answer is it was particularly galling to those people because horses were so important to their way of life, certainly in the movies, but I imagine in real life as well. And I believe when we use the word squatter, it's kind of like how illegal alien became immigrant, became, according to the administration now, newcomers. You know, if you make it seem not as bad, it's easier to allow to continue. versus if you identify people who walk in your home, your half million dollar or million dollar value home,

that you work hard for your whole life to buy or to rent out to get income for your retirement, and they steal the house and the cost to get the amounts, tens of thousands of dollars, you lose monthly income of rent, thousands of dollars. They're not just somebody who picks up a pocketbook at North Jones. They are grand theft housing, and I believe one of the essential problems is, we treat these people like their parking tickets rather than significant crimes. We're going to talk about more of that later. But the good news is, is not just in California that we've basically turned over our state to criminals.

Here's a case in New York where a woman was so frustrated and so upset about the loss of her one, I think it was a million dollar home in Queens, New York. Now, she overreacted, I guess. She changed the locks and I think turned off utilities, which is illegal because the states protect the quote squatting house thieves rather than the homeowner. As a result, she gets arrested, but they don't. She gets arrested, and then here's the picture in the video of the woman, the video of her going in, and then the police come and take her away.

Here's a woman who owns a house being taken away in handcuffs, trying to protect her own home. Now, she didn't shoot them. She didn't shoot the thieves stealing her house. She merely tried to change the locks and get them out, but that is illegal in California. And good news I guess for us Californians is it's also true in New York City. So welcome to the party in New Yorkers.

It's not a fun party to be in and hope that it doesn't happen to you. But again, we have to stop calling people squatter to people like still sneakers at the Nike store. House thieves, Grand Theft House might be a great new crime to invent. Now we actually have a whole new category of criminals. We call them burglary tourism. And these are people who come to our country and identify easy places to steal and then come here to take advantage of the opportunity.

So here's an article, oops, where am I at here in the Queens? There we are. Here we are. This is from K-TILA-5, burglary tourism. Apparently groups of thieves and people we've led over the border here recently

what our administration calls newcomers, the people that your federal government is taking your tax dollars to fly here and give them money and give them all kinds of services. Apparently, none of them had the idea that there are certain cities that they are more likely to get away with stealing things as they organized.

And Irvine is an example. Irvine used to be one of the safest cities in America. They had 34 home burglaries in 35 days, according to Irvine Police Department. Why? because the criminals who are coming here have identified Irvine, California. You know how when you see the top 10 places to visit, like maybe you're going to Italy, where top 10 tourists are sites to see in Italy?

Oh, the Coliseum and this street and that store and this coastline to criminals, the top 10 cities to steal. And I guess apparently Irvine, California is one that's particularly attractive to steal. So that's part of what's going on by rent now is, or by living in real estate, think about what city or end reputation of your police department. Obviously, I'm in Los Angeles. We must be highly targeted. To that point, LA, we kind of lead the world in celebrity crime.

And here's a case where former NBA player and really local boy does good, Paul Pierce grew up in Inglewood, Inglewood High, and he went on to play in the NBA for the hated Celtics. His home's burglarized. So we now in California and in L.A. have like celebrity crime reports. That's how L.A. now, you know, some cities are known for cribs. You know, you see on TV, Orlando, Shaquille O'Kale's house,

or this guy's house, that guy's house. Here we have an L.A. a celebrity, a crime going on. And then you can come in here and see which of your favorite celebrities had their home burglarized and see where the burglary happened and so on. Now, going back to the house thieves, a.k.a. according to our government, mere squatters. These are new arrivals, according to our administration. Here we have a guy, and you may have seen this else on social media. He's here from Venezuela, and he's training other illegal aliens, people come here illegally, or newcomers to buy administration.

He's training them on how easy it is to steal a house. And he gives them kind of a step-by-step instructions on what to do. And that way more of them, as they come here, theoretically, without job prospect, business prospects. At least one prospect is you can get a house. You can live there for free, as he says, and you can rent rooms out to other criminals who'll pay you. Maybe you get five or ten. Imagine being next door to these kind of people squatting in your house or your neighbor's house, thieving there, doing drugs. I've had houses where we had to take out 10, 12 people doing drugs in the house because they don't live there. They don't care. They don't mind burning things. So here we now have a new business. We're going to call him the house thief.

trainer to teach people the most efficient way to steal houses. Isn't that lovely that we have this new career opportunity for people? Okay, continuing with news, interesting news cycle. One of the things I always talk about is how bad the news is and how misaligned the news is with their customers. CNN, for example, is way more worried about advertisers. That's why these big news companies never report negative about pharmaceuticals. It's always positive because, so, much of the revenue comes from pharmaceutical companies. In real estate, you'll find they always praise Zillow and Redfin and other companies to advertise because that's what they get the money from.

Here's an example. CNN has a report. They're worried about their customer Zillow. Why Zillow is worried about America's housing market shakeup. So you have an article about why Zillow is worried about the shakeup. There's no article about why Americans should worry about it. Why Americans shouldn't worry that their neighbor real estate agents going out of business or their neighborhood real estate brokerage might be going out of business.

I don't think they really are. I think it's exaggerated. But that's not the story. Why homeowners should be concerned about companies, maybe they might go out of business halfway through a transaction. I can imagine stories that should be written, the worries about having a broker-owned escrow, because if you're buying a house, your money is an escrow,

and it's owned by the broker, and the broker because of this, the lawsuit goes out of business, your money might be entangled or last. No, CNN's worried, about Zillow. Basically, they should pull a sense here saying, Zillel, please send us more ads. We can care less about buyers and sellers of property. We care about you.

And so every time you see an article in these newspapers about these companies, just know they are paying the back of their advertisers and trying to fluff them up to get more. Speaking of which, here's another one. I've done previously in my podcast Real Estate Rip-offs, I did a piece on Redfin. And this is a company that does nothing about bad the industry, bad mouth everybody but them. They've never made a profit. So they've paid no federal estate taxes in their entirety. So they're disrupting businesses around the country while basically destroying our finances overall. A lot of talk about how they don't need real estate agents. And yet the reality is their number one strategy for growth because they're desperately

trying to stay alive and suck more stupid Wall Street investors in the business is to hire more agents than a regular commission plan. You can make this up. This company is. because of nothing but bad mouth real estate agents in my entire life. And now they're out hiring more and more real estate agents on traditional commissions place. Originally it was real estate agents on commission or misaligned. We're going to pay them a salary because we're smarter than you are. And here afterward it was 10, 12 years in business. And also, by the way, never making a profit. Redfin is now growing. How are they growing? They're growing by hiring traditional real estate agents like the ones in your neighborhood. And the whole thing is just, I just think, too funny.

again, I just think overall RedFids a contemptible company. Okay, speaking of contemptible, I'm going to do a whole piece on this one. Fannie Mae, your federal government. You know, sometimes these people will lie about what their real goal is and they'll lie about the policy when the challenge. Sometimes though they'll just say the truth out loud. Here's an example, Fannie Mae's CEO, a genius, what's her name, named Priscilla Almodovar, a real rocket scientist,

says the housing market hasn't killed America Dreamy yet. Yeah, they're working on it. And buying a home might just take a little longer. Oh, don't worry. Don't worry. She gets paid probably, I think, her salaries about $800,000 with perks. It's a million dollar a year to live like a king to run her housing industry. The housing issue in my lifetime, Fannie Mae has done nothing but reduced housing affordability,

make it less affordable for America's own homes. Right. So this is the head of this organization that's destroying the housing market. And of course, she's a double checkmark on the DEI scale. That's why she has the job. And you read her buy her, you'll see her. She's never bought her soul the house, never built the house. There's no way to buy the American dream.

But she does know that you should, don't have to give on it yet. maybe you should give up on it for your kids or your grandkids. It's just going to take a little longer for you to buy a house. I'm sure she has a fancy house in Georgetown or fancy house in some big suburb in Washington, D.C. Because her husband's also a political hack. But you should give up your dream. That's what our government's telling us. You should just give up on your dream.

I say no. I have this podcast and I'm in this business. I say no. I want to do a whole piece on Priscilla Amavadar, but when you look her up and see, well, who is this genius? that is really kind of making her housing policy that a federal government has decided is the genius. You go even to Wikipedia, which if anything, is liberal. She is the first female chief executive officer, Fannie Mae.

Wow, isn't that great? Is she competent? Nobody knows. Under leadership, nothing's happened positive in homeownership. That we know. How did she get here? She's an attorney. She worked for some big, connected law firm.

She worked for disgraced Elliott Spitzer, who was caught embezzling state funds in New York, to pay for prostitutes. That was her mentor or whatever mentors. And she goes on to various laws jobs and ends up running her housing market. You might say, well, how does it help us buy or sell houses? It doesn't because that's not the job. The family of may, the last thing they're worried about is you owning a house. What they're worried about is getting federal tax dollars into their pockets. The whole thing is just in my book, just a big financial scam. Speaking of financial scams, one of the biggest is Gavin Newsom. And we read.

recently passed a big bill on homelessness. We're now going to spend, here we are with the bankrupt state of California, and we're now going to spend $6.4 billion more to end homelessness and mental health problems. Isn't that great? And what's funny is you read this arc by Politico, which is the far left. This is the Democratic Party talking to itself out loud saying California says a message in homelessness to Newsome. Now, what they want to say is it barely passed, But we know that's not true. What we know is it just took them two weeks to print enough ballots to steal the election. This proposition was losing on the election day and afterwards.

But like every other election now in America, if we just count ballots long enough, Democrats will find ballots and win whatever they want. In this case, $6.4 billion for Gavin Newsom to spread like peanut butter amongst his political patronage and his hopes. And as he rents for president and as he continues his hold in California, he now is $6.4 billion of bonds now to do that. And they won by 40,000 votes out of millions of California. And it just took us two weeks to count all the ballots.

How stupid do they think we are that really they were counting ballots for two weeks? I don't think anybody really believes that. Under bad California policy in real estate, Here's another one that I think is worthy. We talked about this a couple weeks ago. Why California is forcing home sellers to give up part of their profit. And so what happens is housing gets less and less affordable, meaning less people can afford it.

Why? Because of bad government policies and too high taxes. What's the government do? It emulates a new bad policy with more tax dollars. You see what's happening here? They double down and create a program that will lend you back your tax dollars, but you have to give the state back 15 to 20% of the profit on your home. So all this is is a way to force taxpayers' degree to turn over their homes to the state.

Now, I don't know when I grew up, we didn't have anything where the state owned homes that people lived in. That wasn't the goal. But that's what's happening here. And again, let me just walk you through this. In California, you can't own homes. None of people can own homes. They're too expensive because of bad policies and high taxes. And the response of our policymakers in California is a new bad policy to raise taxes and spend it and then take back the property on the homes. This is just absolutely maddening that people allow us to happen. And I just don't know how long it goes on. I just really don't understand that. Also under bad policies, one of the common solutions that politicians love.

Politicians absolutely love the idea of high-density properties overseeing metro stations. The goal of every political leader in L.A., L.A. County and the state, is everybody should live in a high rise right over the metro center, and we all get around on these subways like they have in New York. That's the goal. Keep that in mind. So one of the solutions, they stop as being able to build new houses,

And they throw us some crumbs. Hey, you can add on to your house. We'll call them ADUs. You could build a new unit in your backyard. Now, for most people, you buy your house to live in. Now, I'm an example. Somebody got older and maybe I might want to put a unit in the back and write it out to get additional income.

I could see some cases for that. But generally, there's better housing solutions than that. It's only because of the taxes I would face that make that viable. Because if I could sell it without paying a fortune taxes and paying higher property taxes. As a result, nobody would build the ADU. They only build ADU because they're stuck in place because of the bad interest rates, the bad policies, and the bad taxes. But here's another reason they hate ADUs. Basically, what you're doing is you're building a house that's kind of looking over your backyard or your neighbor's backyard. It sounds great. Investor buys a house and they build

ADUs two-story and they look over their neighbors. The investor doesn't care. But homeowners care. You buy a house and you have a sense of privacy, only you discover that now your neighbor has a second unit to a renter that you'll know who they are, overlooking your backyard, where your kids play, where you might have your young vulnerable children play, who knows who have an invasion of privacy. And so we really haven't given thought to this, but what we do is we have politicians who have made homeowners so desperate to be able to afford property that now this ADU has become one of the most popular concepts, more conceptually than actually in practice. Now, I know it's been a lot of bad news today, so I really wanted to end on some good news today.

I got some great good news. I want to share with you guys. My new favorite website, hat tip to the red-headed libertarian on X. She pointed out to me this amazing website called the Squatter Squad. Now, again, I want to call them House Thieves. I don't want to call them Squatters. But this website chronicles them going in and basically throwing house thieves out of their home. There's one example in San Fernando Valley that they knocked on the door.

And they basically tell them that they have the right to be there. And there's a lot behind that. So I'm not recommending you just walk in and throw people out. They did their homework. They did properly. And you can see what they're doing is actually taking off the doors, the windows, and they're going to board the place up after they get the people out to keep them out. But squatter squad.com is the website.

They're on social media. They have YouTube videos. But I think more importantly, to me, what I see that's really exciting is that finally, I think there are people who have had enough. They've had enough people who've had their fortunes taken. I saw a probate case this week where probate estate is basically surrendering $250,000 of an estate for a person who is in the hospital in a conservatorship. They're so desperate to get rid of these people who, in my estimation, stole the property for them. I'm going to do a deep dive on that video as well. But thank God there.

People are fighting back, and my challenge to all of us is to do that. I'm going to publicize these people as much as I can. I'm going to encourage you to do the same. Go on to X, go on YouTube, go on Instagram, find them. And if you like their stories like them. And if you don't, let me know. Thank you so much. As always, make today your best day ever.

Thanks so much.