Money Rehab with Nicole Lapin - Why 2024 Could Finally Be Your Year To Buy a Home with Netflix's Jon Grauman

Episode Date: March 12, 2024

Nicole chats with Jon Grauman (real estate agent and star of Buying Beverly Hills on Netflix) about everything you want to know about what the housing market will hold in 2024. They talk about how an interest rate drop could affect housing prices, tips for finding your dream home, and— in case you’re curious— the truth about squatter’s rights. Catch Jon in Season 2 of Buying Beverly Hills, premiering on March 22, 2024, on Netflix.

One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that

I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details.

I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your

reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Right around this time last year, I spoke to John Grauman, real estate agent slash star of Buying Beverly Hills on Netflix. We talked about the state of the housing market and opportunities

for both buyers and sellers. Fast forward to the present and it's time to check in and see how these opportunities have changed. So John is back to give us his outlook for 2024. John is my favorite of all the TV real estate agents because he's an expert on screen and off. But you should also totally watch him on season two of Buying Beverly Hills, which comes out on March 22nd on Netflix. Today we talk about how the interest rate drop could affect home prices, tips for finding your dream home, and for the cherry on top, the truth about squatters rates. John Grauman. Hi. Welcome to Money Rehab again. Yeah. Thanks for having me back. You were here almost a year ago. Crazy town USA. Yeah. What is time? When you were here last, inventory was in the pooper. Interest rates were climbing.

Uh-huh. Mortgages were high. Yep. But also prices were high. Uh-huh. So let's cut to present day. Fill us in. What has happened since the last time you were here?

It might as well still just be a year ago. I don't know that much has really changed, frankly. We're still in a high interest rate environment. We're still in a low supply environment. And as a result, we have a stagnant market is the simple reality. We've been in this for the better part of the last 12 to 18 months. Obviously, the cost of debt is much higher. Thus, people's purchasing power got dramatically impacted. And you know, usually when that happens, historically, there's meant to be sort of a teeter totter effect, as interest interest rates go up and people's purchasing power goes down,

thus too so should home prices to reflect that. But that didn't happen this time. The seesaw is broken. Yeah, it really did. It broke, right? Because most sellers, most homeowners rather, still feel handcuffed to these historically low interest rates that they're probably never going to see again, right? So they don't want to give those up. And as a result, there's less supply on the market, less for the buyers to choose from. And I think that has inadvertently helped to stabilize home prices. Because if you think of real estate as a commodity like anything else, what happens when there's less of any commodity? Its value goes up. In this case, it just held. It just stabilized.

I thought it was so interesting that you compared 2023 to 2008 and you said more homes were sold in 2008 than in 2023, which was wild. So striking to me. I didn't even think of it that way. So what would you expect for 2024, I guess, compared to 2008? So first, just touching on that point, because that stat is incredible. But you think about it in 2008, at least there were a number of sort of forced sales. There was foreclosures. There was things happening that at least continued to keep the market active. In 2023, it was just a stalemate, right? Sellers didn't want to sell. Buyers didn't want to buy. It was just a stalemate. And those that did, frankly, had oftentimes wildly unrealistic expectations. Buyers thought it was 2008. Sellers thought

it was still 2021. It was just hard to get them to connect on what reality. Meaning sellers wanted super high prices, buyers wanted rock bottom. Super great deals. Yeah, exactly. So for 2024, if I can just whip out my crystal ball here and see what it says, I think the market is going to get incrementally better. It started off so promising. We came out of this sort of holiday hibernation with this renewed sense of confidence and optimism because rates had started steadily coming down over Q4. And then the Fed came out with this surprising announcement right before the holidays saying that they're anticipating multiple rate cuts this year. And I think that's all the market was looking for. Everyone's just been waiting for a sign. It's like looking at that third base coach just like, when are you waving me home?

J-PAL, give us something. Give me something. So everybody, I think we came out of the holidays. And again, people seem to have a different outlook. The sentiment was changing. The conversation was changing. And as you know, as the conversation goes, so does the market. So we were feeling really optimistic like six to eight weeks ago.

And then it just kind of pulled back. And I think that's what the recovery is going to look like. It's going to be a little bit up and a little bit down, a little bit up and a little bit down. But overall, the trajectory is going to go upward. We need at least one rate cut. One rate cut will signal that the worst is behind us and we're on the ascent. But until we see that, there's still a lot of uncertainty in the market. So two steps forward, one step back, but the overall scatterplot chart is moving up, meaning what? I think that we will have a pretty active spring selling season. I think that'll start to taper

off a little bit in the summer. And once we're on the back half of summer and within two months proximity of the election, watch out because I think the market's going to turn toxic. Why? So election years always muck up everything with financial markets. Housing market is not immune from that either. Nope, not at all. So why so dicey, especially this year? One word, uncertainty. All markets hate uncertainty. Capital markets, housing markets.

And I don't want to derail this conversation by taking it too political, but Lord knows that this upcoming election is going to turn this country into a three-ring circus and that it's going to breed so much uncertainty into the markets. The natural human response is to say, I'm just going to pump the brakes. Things feel really shaky and unstable right now. I'm just going to wait for the dust to settle, see who's in office, and then I'll make a decision. And that's, you're going to start to see more and more of that as we get closer to November. Yeah. You never regret a pause or a workout. Was that on the bottom of a Snapple cap? I've never actually heard that one. Okay.

All right. It's true. When in doubt, sweat it out or wait it out, I think. Okay. And that's probably what's going to happen when it comes to the election because regardless, some people might want to move to another country or whatever. And so that's not the time to make the biggest purchase of your life. Probably not.

But on the backside of that, once we get past the election, once the dust does settle, assuming we get a little love with interest rates, I think that the market's going to pick up pretty quickly. And I think that's going to be the start of the next boom. I think there are so many people sitting on the sidelines. Like if you think about it, the demand for housing has not diminished. It hasn't waned. It's just getting pent up. The longer we're in this correction, the more it gets pent up. And the moment that there's a signal for people to start coming off the sidelines and getting back in, I think you're going to see a lot of competition, which inherently will drive

prices back up. And that's going to be the start of the next bull run. So hopefully a rate cut is going to happen. Do you think that the prices are going to meet somewhere in the middle? Or you think that sellers are just going to continue to want astronomical figures? Like if it heats up, there has to be some compromise, no? Or is it just going to be a seller's market? It's more or less going to be a seller's market is the reality. I think what you're getting at is this has been so unfair to buyers, right? Buyers got beat up and pushed around when the market was really frothy, right?

When it was going at this sort of fast and furious pace, getting outbid on deal after deal and competing with cash offers and so forth. Then rates go up and it's like, okay, well, at least prices should come down. And they didn't, right? If you think about it from a buyer's perspective, interest rates went up essentially two and a half times what they were just a couple years ago. And prices have held steady. There's been no adjustment pricing.

It's totally unfair to buyers. But all those buyers that have been sitting on the sidelines just waiting for prices to come down, they're not going to. It's not going to happen. It's a supply and demand issue. So, yeah, the reality is, like, if you were thinking about buying, now is, relatively speaking, a good time to be doing that because you can always refinance the interest rate, right? There's a stupid cheesy saying in the real estate world, which is marry the house, date the rate. But if you think about it, it makes sense. Like you can always refinance your interest rate. So if you can afford it today and you can with, you know.

If they go down. They will go down. If your expectation is, I'll refinance when they go back down to two and a half or 3%, that's wildly unrealistic. But they will go down. We'll see interest rates in the fives. There's no question about that. And that's normal. And that should hopefully give way to a more normal market. Well, it's actually low, historically speaking. Historically, yes. But I'm also of the mind that the days of doubled interest rates will never be seen again because it's just a different world today. Yeah. People have not that long-term of a memory when it comes to interest rates and are expecting the go-go days of after the financial

crisis that are never coming back. No. It's the reality. And someone who wants to buy a house too. Yeah. It's a tough reality. I get it. It's a really tough reality for people that, again, have been sitting and watching saying, it's going to happen. Prices are going to come down. Okay, maybe.

I just don't see it. Barring any massive geopolitical event or heaven forbid, a catastrophic earthquake, something like that. I hate to keep saying these words. I'm not trying to put this out there. I'm not. This is not me trying to manifest that. But that's, you know, it would take something like that. I hate to keep saying these words. I'm not trying to put this out there. This is not me trying to manifest that, but it would take something like that.

For prices to come down a little bit. For prices to come down, in my opinion. It's not going to be based on the current economic system that we're in right now. That's not going to sway it. But are you mostly talking about big cities, LA, New York, where there's finite space? Yeah, I think there's a supply and demand issue everywhere. In fact, I know there is. The reality is we're just not building enough houses to keep a pace with the growing population. And the millennials are putting a greater strain on the housing market than we've ever seen before. And they're all coming into their own now. They're getting married, they're having kids, they have

jobs, they're getting established, and they need housing. So in a city like LA where I live and work, I think that's even more prevalent because we've just run out of real estate. We can't go any further west. There's a big ocean right there. We're not going any further east. We crossed downtown already. So a city like LA that's historically always been very horizontal is now starting to go vertical because we've run out of space. But speaking to your point earlier in terms of- Well, some of the houses over there too on the PCH are like falling into the ocean anyway. It's a whole nother threat, which is just, yeah, a climate threat, which is really,

as it pertains to real estate, an insurance problem. And that is a big systemic problem that we're going to be facing in years to come that I'm not sure, frankly, how we're going to navigate. In parts of a country like LA, fire insurance has become so exorbitant, it makes it virtually impossible. I'm talking about premiums that are hundreds of thousands of dollars a year. Try buying a oceanfront property in Florida right now and getting wind insurance. It's virtually impossible. Insurance is required by banks to provide loans. Well, if you can't get the insurance, then you can't get the loan. Well, then the system breaks. So there's going to be some big challenges coming for this industry.

Isn't there the case where you can get insurance from the state up to a certain amount? Yes. Call a California fair plan up to $3 million. And then you can layer that with additional policies. But that's a whole other thing. And I'm not an insurance broker. But basically, it's causing a lot of homebuyers to get spooked or really priced out of the market.

And it's something most homebuyers don't know until, I don't want to say until it's too late, but until they're already under contract. Yeah, in the process. We're in escrow and thinking I'm going to be moving into my new home in 30 days. And then you get an insurance premium that you think is going to be 20 grand, but it's 120 grand. I think it's a really important thing to think about as you're going into the process and not when it's too late. I've talked to people who are trying to buy in Mandeville or whatever around

here. It's like impossible to get the insurance at all. Even if you do have the money for a big, fancy, nice house. Yeah. At a certain point, it's just, it doesn't matter how much money you have. It's just whether or not you're willing to pay it. And explain to me why cash offers always win. Like at the end of the day, the seller will get their money from the cash buyer or from the bank. So they're getting the same amount of money. But why is everybody so excited about the cash offers specifically

if they ultimately get the same amount? It's a smart question. So first of all, they don't always win. I've been in situations where I beat out cash offers just by having other terms that were better or more favorable. But if you think about what's the difference between a cash offer versus an offer that has financing,

it really comes down to three things. There's no loan contingency, because you're paying cash. There's no appraisal contingency, because you're not getting a loan. And you have the ability, the flexibility, I should say, to be more nimble and close faster. That's it. You take away two contingencies and you can close quicker. Otherwise, to your point, whether it's 100% paid in cash or 20% paid in cash and 80% in a loan, it all adds up to 100. That's all it is, is it just gives sellers a greater sense and feeling of certainty that

this person will cross the finish line. It's speed. That's speed. Yeah, that's it. And again, those contingencies are pretty significant because in California, the contracts are very much designed in favor of the buyer. So the buyer puts the property under contract and essentially just places a force field around the property for whatever that contingency period is, which is typically around two, two and a half weeks. So within that timeframe, they have an opportunity to look under the hood, kick the tires, do their due diligence. And it's all, you know, they have a free look to do so. If at any point they decide, I don't want to buy this house, they can pull the ripcord, they get their deposit back. And it's a real harm to the seller because they have to then try to recreate that initial momentum

when they came to market and find a new buyer. But the buyer just gets their money back and move on to something else. Yeah. And then you have questions as a buyer too. I'll go on any real estate porn website of my choosing of the day and I'll see like, oh wait, this was off the market. Now it's back on the market. What happened? It's tough. I have some questions about it. Look, it's the age old, you only get one chance to make a first impression. There is no substitute for that initial rollout. When something is new to market, to your point, the real estate porn that everyone's looking at 18 times a day, when something new comes on, and it's new, and it's fresh, and the market hasn't seen it before, that is every seller's

greatest opportunity to get the highest price. The longer it sits, the more, I would say negative the narrative is that people start coming up with in their minds. True or not, it doesn't matter. What's wrong with it? Why isn't it sold? Why won't anyone pay that price? Totally. Right. People start. Something must be weird. Exactly. And this is an internal conversation. Somebody died there. I don't have the opportunity to then counter that. These are just things people are thinking in their minds and it all then directly affects what they ultimately are willing to write in an offer. Yeah, because it's all sentiment. It's all feelings anyway. It's a very emotional process, the home buying and selling process. But let's double click on those times where you

beat out couch offers. How did you do that? The one that comes to mind just off the top of my head was it was a David and Goliath kind of situation. My client was David competing against one of the wealthiest families in the world, had a cash offer, and I had them write a letter to the seller. And I knew the seller. I knew what would speak to them and what would essentially sort of pluck at their heartstrings to know that this is someone that you would want your home to pass on to. And they ended up leaving, the seller did about $300,000 on the table and going with the lower offer because they felt a connection to that person. And you know, for them, that wasn't enough money to move the needle. Wow. Yeah. I kind of just got chills a little bit. Is that weird? No. I have all sorts of feelings about financial markets.

No. I have all sorts of feelings about financial markets. That makes me a super nerd. Millennials you touched on infamously feel shut out of the real estate market and they stress, they go on TikTok, they kvetch, they bitch, they bone that they don't have- Kvetch? Kvetch. Kvetch. Yiddish? I get it. Kvetch. I like it. Okay. That they don't have the same opportunities as the boomers. Yeah. Right? Is this narrative true? And if it is, what kind of resources do they have available to them as first-time homebuyers? I would say it's definitely true. It's an unfair world. I hate to be so just direct, and I don't mean to sound insensitive, but it's not a fair world that we live in. And

the world has changed dramatically. And as I said, there is just not enough supply for the growing demand. And as a result, yeah, a lot of people feel like, hey, I got shunned. I got shut out. That being said, there's also, I think, the biggest transfer of wealth happening right now from the baby boomers to the millennials. And they will likely be coming into more money that will help them in that regard. But sure, people are also living longer. And right now, that's a challenging time for them, especially with where interest rates are. But are there any things that they can use to lower the price if they're a home first time homebuyer? I wish that there was a magic pill

here. There really isn't one. Again, the best thing you can do is to try to buy down the interest rate, but you're not buying it down from 7% to 4%. You're talking about just with points. Yeah, more or less. Can you explain how that works? Again, as I said, usually what will happen is you can structure this in the DLS to receive a credit from the seller to do that. So you're not coming out of pocket for it, but work with your bank and they'll explain to you what the trade-off is that, hey, you pay one point and we can lower your interest rate,

usually let's say a quarter of a point. So we'll go from 7% to 6.75. Which adds up over time. For sure it does. And especially if you're going to keep that loan for the next 30 years, which by the way, you're not because lower interest rates are coming and people will have an opportunity to refinance,

I think sooner rather than later. But sure, in the short term, it's one way to at least kind I think, sooner rather than later. But sure, in the short term, it's one way to at least kind of shoehorn in a little bit easier. Okay, fine. What about up and coming neighborhoods? There are usually opportunities. Sure. Yeah. If you can get ahead of that trend. What do you keep in mind? What are your telltale signs that it's an up and coming neighborhood and not just like a faux up and coming neighborhood. That's really going to take a while to. Yeah, that's a good, interesting question. I would say

proximity and relevancy are the first two things that come to mind, right? If it's a little town in Timbuktu, well, it's really not within proximity to anything, which really doesn't make it relevant. Like, is it just outside of a major city? Okay. That's interesting. Is there something about it whether it has whether it's a vacation area for like you know fishing and hiking and what boating or what have you i think covid exposed a lot of areas that had been previously overlooked right covid did a lot of things and one of the things we did it was it kind of brought the borders down and the world sort of became flat again in terms of real estate and people started

moving to boise and started moving to Miami. And if there was any, you know, if there was one great winter coming out of COVID, it was certainly Miami. But other markets like just here in Southern California, Lake Arrowhead took off. The desert areas took off. Santa Barbara, Orange County,

anywhere that was sort of a fringe area to a major city, again, proximity, took off because people realized I can work from home now. I don't have to be within 30 minutes or 15 minutes of my office. I can be an hour and a half away or I can be an hour and a half flight away. So those are the kind of things. And I just, like anything else, follow the money. Yeah. I mean, the reason they're going to Miami or to Nashville or to Dallas or to wherever they don't have income tax, follow that money trail. Well, that and like, again, I mentioned Lake Arrowhead. So my wife and I bought a second

home in Arrowhead during the pandemic. And you know, a lot of clients that started moving out there, a lot of money had started moving out there. And as I said, you got to follow the money. And I had heard rumor that the owner of Soho House, Ron Burkle, had actually bought the Lake Arrowhead Resort, the big hotel there. And a friend of mine happens to represent him. So I called him. I said, hey, I'm thinking about making this offer. Can you call him and find out if this is true? And he called me back in five minutes and said, yeah, no, he bought it. And supposedly it's turning into Soho. That, again, creates so much new relevancy, which is going to create more interest and demand. And that'll drive more traffic there. And that'll bring values up.

Are you seeing a lot of your clients leaving for more tax-advantaged states? For sure. Yeah. How does California keep up with that? Well, look, I'm not telling you or your viewers anything they don't already know, but for California, the greatest thing that has going for it has always been and will still be the weather. There is a weather tax we pay to live here. But people are starting to really question whether or not or how much that's worth. You know, LA, and I say this in all sincerity, I've lived here my entire life. I'm fifth generation from LA,

I believe is in a state of crisis of sorts. The number one thing on most people's list when they think about where they want to live is safety. And obviously, we've had a real crime problem here as of late. And when people feel unsafe, and when it's overly tax cumbersome, people start to question whether or not this is where they want to continue to live. And that's what we're seeing happen right now. Unfortunately, you know, it's like turning a ship to try to make some any of these changes. But, you know, LA and California as a whole are going to have to if they want to continue to retain, you know, these wealthy residents that pay and pave the way for the state to be what it is. I mean, you see these guys, Bezos and whatever, like moving to Florida and in the amount that they're saving in taxes, the whole house basically is free. I mean, it's not free, but.

Yeah. And they're still here. Bezos is here, right? A lot of these. You have to track your days. But you got to track your days, right? He'll spend, you know, six months and one day in Florida to be able to make that happen. But he'll be here the rest of the time or somewhere else. You don't, I mean, look, no offense to Florida. You don't really want to be there in the summertime. It's miserably hot.

California still has one of the best, well, Southern California has one of the best climates in the world. And hard to put a price on that. True story. You mentioned Palm Springs. I did. I started my career in Palm Springs, fun fact. Doing. I was on the I-team. I investigated all the shenanigans of Palm Springs. I was 19- Interesting.

At the CBS station, KPSP, shout out. I saw so much growth there specifically. Recently, we've heard a lot about short-term rentals contributing to the affordability crisis. Palm Springs has been in the center of all of the hullabaloo around that. Can you explain why short-term rentals affect the housing market so much? It's hard to explain exactly what impact it has. First of all, in an area like Palm Springs, it's the residents that live there full-time that hate the short term rentals. And they hate them for, I'll just say the sort of stereotypical

renter that it brings in someone that's looking to go out to the desert and be loud and obnoxious and party for a weekend. And you know, if you're living there full time, you moved out there for the peace and the quiet and the serenity. So that's, you know, that's the opposition that's been built up against it. The rental market has been soft as of the last 12 months, a lot of the lease listings we have have been leasing for less in recent months than they did two years ago, which is that's very much outside the norm. Usually, again, there's a trajectory upward. And I think that that's overall more commentary just about the state of the economy and the psychology as it relates to the state of the economy that there's just a tight grip on the purse strings right now. I think just

a lot of people not wanting to spend money and sellers who don't want to give up again, these historically low interest rates, but want to do something with these assets are then looking to try to short term rental them. Yeah, there are a lot of private equity companies that are also behind these deals. I think Palm Springs put a cap, right? I heard something about that. I know. Look, Coachella's once a year. It's fine. Hold on to your wallets. Money Rehab will be right back. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with

features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bank Corp. Bank NA or Stride Bank NA. Members FDIC. SpotMe eligibility requirements and overdraft limits apply.

Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. I love hosting on Airbnb. It's a great way to bring in some extra cash. But I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back,

I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. And now for some more money rehab.

Last time you were here, we really focused on the home sellers. And now we're focused a little bit more on the home buyers because as you say, they're on the sidelines. And now we're focused a little bit more on the home buyers, because as you say, they're on the sidelines or ready to pounce with inflation, and we saw it up to 9%. Can you talk to a first time home buyer or somebody who's waiting on the sidelines jumping in to see how much inflation will eat into the value of their home? Yeah, I mean, if we're looking at the forecast for what the housing market's going to do, let's talk about that for a second. The projections, at least for this year, which again is going to be somewhat of a shaky year, is still single digit appreciation. And I think

this is where people have gotten a little bit lost in this, is that the deceleration of appreciation is not the same thing as depreciation. Totally. Or disinflation or deflation. Right. Okay. So prices haven't gone up as much as they have, but to even still be in the black, given everything we've been through for the last year and a half and where the interest rates currently sit is remarkable, which again, all stems back to a supply and demand issue. Thanks, Jake Howe. Soft landing for the win. It played out very differently than people anticipated, right? Everyone thought,

oh, there's a correction coming. It must come in the form of a huge drop in home values. And it didn't. It came in the form of a huge drop in the volume of homes, not the value of homes. I don't think people need to be terribly concerned about the appreciation of their homes keeping a pace with the inflation rate, Because I think ultimately, as rates come down, and as more people enter the market, you're going to see prices go up and that's going to increase people's equity positions in their homes. But oftentimes people forget about inflation when they're thinking about the growth of their home. Like when they say grandma bought a home for, you know, 50 grand, and now it's 250 grand. That's amazing. But they forgot that when grandma bought that house, movie tickets were five cents. Exactly. Yeah. And that's such an important thing

to keep in mind. 100%. Yeah. And again, that's the reason why, as I said earlier, we're probably never going to see double digit interest rates again, because it's one thing to have an 18% interest rate when the home you're purchasing is $75,000. But when that home is, you know, $3 million, it's just, it's unlikely we'll ever see those kinds of rates again, in my opinion. And when you're thinking about the value of your home, how would you suggest for somebody to factor in inflation or how to think about the value of their home keeping pace with inflation? Good question. I don't know that I really know how to answer that question, to be honest with you, in terms of there's so many things, obviously, they're going to be outside of each homeowner's control, right?

So you're not going to be able to dictate what the inflation rate is going to be. That's a little bit bigger than any one of us. So it's more, I think, people get a little bit too fixated on this notion of the investment component. And not to take away from it. It is a huge component. It's the largest purchase and probably biggest asset in most people's lives, but it's also your home, right? It's where you're going to spend time with your family and raise your kids and create your special memories. So don't lose sight of that. Historically,

home values have always gone up, right? I'm not saying that we haven't seen dips in the market, historically, home values have always gone up, right? I'm not saying that we haven't seen dips in the market, but over a seven-year period of time, historically, over the last hundred years in the United States, home values have always gone up. That means that if you bought your house on the eve of the Great Depression, seven years later, it was worth more than that, right? We're going to have correction cycles. Those correction cycles are likely to be faster and more extreme than we've seen in the past because we live in a world that moves faster and more extreme than we've seen in the past. But I just, I wouldn't be too concerned about, again, it's like I always talk to people in terms of looking at an investment property. It's like, look, if you're going to hold this

long-term, you're going to be fine. If you're going to come back to me in 18 months and ask whether you can sell it for a 20% profit, we may have a problem. Yeah, it's such an important point to underscore that a home is a home and leave some of the investment components to the professionals. If you want to flip houses, go on HGTV. This is more than just inflation adjusting the value of your home. That's exactly right. Yeah. And you really look, if you're going to approach it from that perspective of trying to make money off this as a investment vehicle, you really got to know what you're doing. I've seen so many people try to wade into these waters that have no clue what they're doing. And what was meant to be a six month project ended up taking two and a half years. It was meant to be a hundred thousand,

it being half a million. And you really have to know what you're doing. It's a profession like anything else. There's been a story that I've been wanting to ask you about. It is the squatter issue that's happening in LA. You're fifth generation Los Angelino. What the heck? So there was a big LA Times article. They put out this wild story about two real estate agents. Did you see this? Who had squatters living in one of their properties. The squatters even created fake lease agreements and they rented out a room in the house to a legit renter. They even set up the home's Wi-Fi. So wild. Bananas.

Yeah, it's wild. It's remarkable what people can do today. The fakes, the phonies, the deep fakes, it's just unbelievable and it's really hard to guard against. I had a listing in West Hollywood last year that this family literally pulled up with their moving truck. They had a whole moving truck full of furniture that they moved into the house. And the owner showed up and was like, hi, hello, hi, who are you? What are you doing here? And had to call the police and get them out of there. But like, it's wild how brazen some people have been with this. So yeah, it's challenging. And I've certainly had my experience dealing with it.

You know, as I understand it, and I'll be super clear, I'm not an attorney. This is not my area of expertise, not my specialty by any means, thank God. But as I understand it, squatters rights apply to someone that has been in a home for five years or more, that has established legitimate residency in that home, has paid utility bills, has paid the tax bill. So if you've just changed the locks and moved into a house over the weekend, isn't that trespassing? According to California law, trespassing is different than squatters rights. I know it seems utterly ridiculous, but they're defined differently within the confines of the California law.

So what kind of legal recourse does somebody have against squatters? Well, if someone has been there for five years, then they have to go through a formal eviction process just like they would if it was an ordinary tenant. But you'd have to be pretty obtuse to have someone squatting in your property for five years and not take note of it. Otherwise, you're just calling the police, you're calling the sheriff, and just having them kicked out. But it feels like this has become more of an issue as of late. L.A. is an interesting market because we get a lot of tourist traffic. We get a lot of fakes

and phonies. A lot of the calls we get on our biggest listings, our bigger listings rather, we have to really scrub and vet because I can't tell you how many fakes and phonies we've come across. And to your point, like people that have had fake proof of funds, fake bank statements, fake tax returns. I had one guy call on a property. It was about a $100 million property in Bel Air. And he claimed he was the grandson of the King of Jordan. I was just going to ask you, some prince probably has called you. But that's not impossible. That's not entirely outside the realm of possibility in LA. We see that stuff.

We have Saudi royals here. We have princes and, you know, the most affluent, wealthiest people in the world that live here. So that's not altogether, okay, fine. I'll go on this ride with you. And we went and saw the property and I was like this, uh, you know, usually like it just doesn't pass the smell test. Something's wrong. And I said, why don't you come into my office tomorrow and we can sit down and talk more about this because he was talking about wanting to write an offer and so forth and so i'm sitting there with my team and we're like trying to make heads like what's the over under on this guy being real and i was saying this doesn't i'm telling you this doesn't seem right and then in the distance i hear this engine this engine you hear from blocks away and i look outside and this brand new Lamborghini pulls up.

And I went, oh, okay. The odds may have shifted a little bit until he got out of the driver's side, walked around and handed the keys back to the guy from the dealership that came out of the passenger side and walked in and was like, this guy went to a Lamborghini dealership and drove up to my office just so he could pull up in it, hoping we wouldn't catch him giving the keys back. Oh my God. Wild. Only in LA. Only in LA. But what did that guy, what was the scam? That's the question. That's always the question.

To what end? And then what? Because at a certain point, you have to produce the money. Right. I don't know. It happens all the time. I don't know if these guys are delusional, if they're trying to show off for their girlfriend, they have nothing better to do on a weekend. But we always, we being, just I'll say the real estate community is always asking that same question.

For what purpose? To what end? Where do you see this going? You think that one day there's just going to be a transfer of title and we're going to give you the keys? Like, I don't know. But you have to be pretty damn crazy to even think to do that in the first place. So I guess I'll leave that there.

We end our episodes, as you know, with a tip listeners can take straight to the bank. We talked about so much. What kind of tip would you have for homebuyers today besides not pretending to be Jordanian royals? Don't be short-sighted. Kind of what I was talking about before. Understand that this is a long game. And again, there is an investment component to this. Try to find the property that feels like home and just know that the market will do its part. It will go up. It will go down. That's what markets do. They're cyclical. If anything, if the market of the last 18 months has taught us anything, it's that, oh yeah, markets are cyclical. We just forgot because we skipped a cycle and we were in a bull run for 10 plus years. But ultimately find a home that is right for you. That's affordable to you

where you're not overextending yourself and know that the market will do its part. Property values are going to continue to go up over time. You'll have opportunities to refinance. You'll have opportunities to pull out equity and leverage that to go buy other properties. But if I could go back and talk to myself 20 years ago, I would sit myself down and say, buy more real estate. Because if I would have bought more during this last 10 years, I'd be doing this virtually from a yacht. That would be lovely. Zoom works there. Yeah. I think it's really important to remember you can't control the macro economy. Yeah. You can only control your own micro economy. That's it. Your own portfolio. You're not, like you said, the macro factors are way bigger than you and I. So focus on what works for you

and how you fit within this sort of this infrastructure, if you will. You didn't bring that crystal ball today. It's broken. It's in the shop, actually. I've been going back to the tea leaves. Yeah. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive

video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.