The Ricochet Podcast - Realty Check

Episode Date: April 12, 2024

James Lileks is back in the house, ladies and gentlemen! And speaking of houses, Jack Ryan joins the podcast to explain his war against the National Association of Realtors. (Pre-order your copy of the book he's co-authored: Bringing Adam Smith into the American Home: A Case Against Home Ownership.) Yes, you read that title correctly. Along with his fight against the "real estate cartel," Jack has his doubts that home ownership is the right move for all Americans. Plus, the reunited Ricochet boys recall how the O.J. Simpson trial changed America, and they fight fire alarms and wrangle with manly chores. - Audio from this week's open: A flashback to the 1995 OJ Simpson trial with comedian Norm Macdonald and defense attorney Johnnie CochranToday's podcast was sponsored by Fast Growing Trees & ZBiotics: https://fastgrowingtrees.comUse code RICOCHET to save an additional 15%.https://zbiotics.com/ricochet

Great. Okay. That's good. So I don't have to, the fact that I don't know who he is is not a problem. Excellent. Ask not what your country can do for you. Ask what you can do for your country. Mr. Gorbachev, tear down this wall. It's the Ricochet Podcast with Rob Long and Peter Robinson. I'm James Lalex,. Today we talk to Jack Ryan about why you maybe don't need to own a home. So let's have ourselves a podcast. In a brilliant move

during closing arguments, Simpson attorney Johnny Cochran put on the knit cap prosecutors say OJ wore the night he committed the murders. Although OJ may have heard his case when he suddenly blurted out, hey, easy with that. That's my lucky stabbing hat. It's no disguise. It makes no sense. It doesn't fit. If it doesn't fit, you must acquit. Welcome, everybody. It's the Ricochet Podcast. This happens to be number 687. Wow.

Next week, 688. And I hope I'm going to be there. I wasn't there last week for the famous 686. 687. Wow. Next week, 688. And I hope I'm going to be there. I wasn't there last week for the famous 686 because I was off in Florida. Rare peregrination to another part of the world for me. Of course, Rob Long, who's with us, bounces all over the planet constantly. We never know where he's from. I believe today you are in one of the directions that attends Palm Beach, right? I am. I'm in West Palm today. West Palm Beach.

And what is the difference between West and North and East and South, the rest of it? Well, there's Palm Beach. Palm Beach is an island, which is sort of off, you know, you take a couple, I think there's three bridges from West Palm to Palm Beach Island. So people say Palm Beach, what they really mean to say is Palm Beach Island, but they don't. And West Palm is sort of the mainland half of that, and it's considerably cheaper, and if you're here fundraising for a certain

thing called Ricochet, you stay in West Palm, but the people you meet are in Palm Beach. So if you were to map the status of the Hamptons onto the Palms, how would it work? South Hampton is Palm Beach, and West Palm is Bridge Hampton. How does it all work?

Yeah, that's a really good question. I don't know. I think West Palm would be like, yeah, Bridge Hampton, maybe, or Watermill, you know. But you never have to do that because it's the same people. So one place is empty while the other is full. They're never full at the same time.

That's true. I was at dinner last night and I was by myself and I was sitting there enjoying my quiet little, you know, one of the joys of travel is that you get to sit at a nice restaurant and have a nice meal and have a glass of wine and read your book but the people uh the table next to me was you know they were every third word was um either st bart's or nantucket or hampton and i thought oh my god these are i mean you know come on rob this is the crowd to which you and i have aspired all they're decent people but yeah how about giving us some money how about that that would be nice keep this thing going but you know that's a separate issue i just i just googled uh palm beach to see exactly where was the whole island thing and the rest of it and the first thing that my i didn't google it actually i duck duck go did because i'm i'm done with google um and the first

thing first thing that came up in the map when i zoomed out i was surprised it was palm beach canada there is a Palm Beach, Canada, and I'm expecting that it probably isn't as nice as the one you went. It's odd. In the Mexican resort where I just was, the place was absolutely infested with Canadians. I don't know why, but of all sorts. One guy would be a heart doctor. The other guy would be a pharmaceutical rep. The other guy would be a plumber. That was great. I had the best conversation with the plumbers. Lots of them. The nicest people i love canadians they're absolutely nice people and you you get them going and you sort of probe them a little bit to find out where they are about

certain things and you start gently with something like you know if i was canadian i would have not been completely and utterly opposed to the truckers. And so that sort of lets them know where you are. And then after a couple of drinks or so, and they really start to unburden, they're saying, well, of course, Justin Trudeau is Castro's son. Everybody knows it, eh? It was fun. I predict trouble for Mr. Trudeau based on my polling of the Canadians.

It's up there with talking to your taxi cab driver to get the feel of a city, but there we are. Different demographic, though. Somewhat so. So here we are, and a surprise note this week, O.J. Simpson died. I think the Norm MacDonald joke that I saw on the internet was him at an anchor desk saying,

and in a stunning development the family of oj simpson has announced that he will be buried in the same coffin as his wife's killer uh norm did write that one and was absolutely unsparing in his uh his frankness with which he addressed that well the other thing assembled this week that surfaced in in the wake of that was a interview with a jury member who said, oh, yeah, yeah, he did it. He did it, but we let him off because you generally balanced the scales, so to speak. I don't want to revisit the whole thing. Everybody knows what it was, what he did, and what the ramifications were.

But how did you feel when you when you go ahead go ahead rob well first of all does everybody i mean you know i have some bad news for you everybody all right you're an old you're an old man this was 30 years ago and it seems it seems sort of quaint now when you think about it that the kind of world exploded went insane because a celebrity uh murdered his wife and a waiter and um i have some we had some very dark jokes about it for those of us who were living in la at the time um uh murder his wife at a waiter and and they played the race card in his defense and he got away with it. And the whole country watched.

It's important to remember. This is the mid-1990s. 1995 is the year of the trial. No Twitter. Internet still nascent. People still watch that thing called television. And the O.J. Simpson trial was carried by every television outlet non-stop hour after hour the whole country watched it in a way that the whole country may have been following the Lindbergh trial but I

can't think of any other any anything else certainly nothing since the internet it seems I think it's likely to be impossible to get the whole country gripped by one crime story the way it was then. My theory is that that act of jury nullification, when the whole country saw the same evidence, and I saw a poll the other day that even 50%, that 57, what was it? There was a demographic, it was not good for relations between the races because it was 80-some percent of whites thought he was guilty, 57% of blacks, still a majority, and then the jury nullification, my theory is that was the moment something snapped.

Everybody who watched that, it's impossible to trust the justice system in the United States in the same way again. I have the feeling that that was a moment some basic faith, unthinking, unquestioning faith in institutions ended and can't be put back together again. Tell me I'm being too grim. Well, no, I think that's interesting. I was going to say kind of a parallel point, which they actually maybe cause and effect in some way, that the O.J. Simpson trial created the idea of having the TV on all day during the day at the office. Yes. the time i mean it's amazing how many you go to an office now somebody's always got the news on um and it solidified that uh or the trend that began in a few years before during the gulf war

and the gulf war that's true that's what i was going to say that kind of created cnn that's true that's true yeah and then everything else kind of i mean then i think the oj sort of created uh like the what was court tv but it's also msnbc did you know had before msnbc was ideological it was just 24 7 oj um so there you go imagine having it lapsing into a coma at the end of the trial and then waking up 25 30 years later and turning on the television and there's the kardashians are the centerpiece of the american culture i got in trouble once when i were talking about that in la and i lived i used to live around the corner from the restaurant um when i was first moved to

la live around the corner from that restaurant mezzaluna and that was the restaurant where nicole simpson went for dinner and her she left her glasses and the waiter there fred goldman um walked the walk them it was like a block and half. She lived a block and a half away. It's hard to think about LA, but people walking around, but she just walked to the restaurant and walked home. He walked there, and that's when OJ killed her and him, and I made the mistake

of saying, well, I've eaten at Metzaluna, so you know, I could see killing the waiter, but nobody let go. That was the joke that you weren't going to tell five minutes ago.

It's no longer too soon. Somebody mentioned that yes, it did happen an awful long time ago, but OJ has been a recent Twitter presence. He's actually been on Twitter for a while. They've got a whole new generation of people who sort of saw him as a sort of an outlaw figure who uh bucked the trends and defied

authority and the rest of it which is insane but um but yeah i mean the the oddest thing well not the odd the whole story is odd but having to go to jail having to go to jail for shaking for for shaking down some sort of some guys who had defrauded him in a collectibles. In Vegas? In Vegas, I mean, and then putting out a book called If I Did It. If I Did It. Not saying I did. What if I did it?

Let's just go for a minute. It would have gone a little something like this. I read yesterday that the reason that the gloves did not fit was because he'd stopped taking his arthritis medicine, which made his hands swell up. Never knew that. Oh, really? And that was one of the stupidest things, of course, that you possibly could have done. Because you put on this glove, you know, and the guy spends his time clenching his fist beforehand to get the blood there so it doesn't fit you must acquit if the glove doesn't fit you must acquit which leads to you know the idea of a

of a rhyming passage like that influencing one of the most consequential history of the 1990s and subsequently as peter said race relations and our attitude toward the justice system now wasn't my first experience with jury nullification my My wife had a bout of that when she was on a jury in D.C. So it happens. But something this large, this naked, this flagrant, yeah, it did do something. So the good news, maybe, guys, is that our faith, our lack of faith, our collapse of faith in institutions doesn't really come from COVID. We were at it 25, 30 years ago.

That's the good thing to take away, wouldn't you say? What else we can add? Well, I guess what I'd say is that the difference is that at that point, everyone's reaction sort of was comforting, right, because people were shocked and it was an unbelievable surprise and everybody felt perfectly legitimate to, or perfectly entitled to say he did it um and he did lose the civil trial later so there was some version that wasn't justice really but there's

some version of an understanding that the jury had made a terrible mistake the big surprise of course was that um that it seemed like black people thought it was okay that he got got that's what we should have paid attention to in a way that there's a right oh for whatever reason um um was the beginning of a real problem between the way the black americans viewed uh the justice system the way the white americans did um and that i think came well in la it was a little less um it was a little less surprising because in L.A., it was after the Rodney King. Right, right. So people were already aware that there was a big, big know, you see this great towering institution like the law.

And then you get close to it and you realize it's been hollowed out by bugs for 20, 30 years, which happened to us. Not the law, but, you know, in our front yard, the guy came to us and said, there's this magnificent tree that you have is actually weighs about four ounces now when you consider because it's entirely hollow inside and it's going to go over with the first wind. So we had it taken down, but I had to put something back in. What do you do? How do you know what kind of tree to put in? You know, what am I, an arborist? What am I, James Kilmer? Fast growing trees, my friends. That's what I did. And if this podcast is around for episode 6,000, I'll be here to tell you how the one I put in grew, thrived, and towers than 10,000 different kinds of plants and over 2 million happy customers in the U.S., plus me. They have everything you can possibly want. Fruit trees, they got your palm trees, they got your evergreens, houseplants, and so much more.

Like 10,000 different kinds of plants. Whatever you're interested in, they have it for you. You can find the perfect fit for your climate and your space. Fast Growing Trees makes it easy to order online, and your plants are shipped directly to your door in 1.2 days. And along with their 30-day alive and thrive guarantee, they offer free plant consultation forever. This is great. I mean, we put in some bushes a while back and I got them from the big box store and I put them in. I did a good job. I packed in all the nutrients and all the rest of it, but they died. And frankly, when it comes to the tree on the front, I don't know what to put there exactly,

because there's the soil, there's the shade, there's the position, there's the this and that. Well, that's why fast growing trees is great, because, you know, they ask, well, where do you live? What do you want? What do you like, et cetera. And you buy in confidence knowing that it comes to your door. Instead of putting something in the back of your trunk, which gets dirt everywhere, or having to hire somebody to bring it to your place because you don't have a trunk to put it in, comes to your door. I mean, that alone ought to send you directly to fast-growing trees when you need something to plant. This spring, they've got the best deals online, up to half

off on selected plants and other deals. And listeners to this show get, are you ready for this? An additional 15% off their first purchase when using the code RICOCHET at the checkout. That's an additional 15% off at fastgrowingtrees.com using the code RICOCHET at checkout. Fastgrowingtrees.com. Code RICOCHET. Offers valid for a limited time. Spring only lasts for a little while get going terms and conditions may apply and we do thank fast growing trees for sponsoring this the ricochet podcast and i'll bring you back to the state of the tree in a little while because i'm sure it's going to grow thrive and be a lovely lovely object never seen anything as lovely as a tree and now we welcome to the show jack ryan. Yes, that Jack Ryan,

the co-founder and CEO of Rex Real Estate, quote, which is the digital alternative to the realtor TM trademark. It's also the co-author of the soon to be released, Bringing Adam Smith into the American Home, a case against homeownership. Hmm. You can pre-order now to get your copy on April 16th. Jack, welcome to the show. Thanks, James. I'm glad to be here. This title. I'm right now in the last probably 24 hours or so.

My wife and I are looking at each other and saying, you know what? We might want to downsize. Kids gone, not coming back. I mean, for Christmas. But, you know, we have a lot of stuff here. We should move interest rates. And it's all predicated on the idea that, of course, we're going to own our home.

The idea that we do anything else besides own our home, to our generation, is practically Bolshevism. So you say the case against homeownership. That's the American dream, the picket fence, the 2.5, the dog. Tell us what sort of cultural Marxism you're spreading here, Jack. James, that is so funny. But you're the classic case of someone who's probably been told for a long time that the 11th commandment of life is that you're supposed to own your own home. And there's really no truth to that. I mean, it's really a buy versus lease decision, like owning a car or leasing a car or renting a car just for a few days or just Ubering.

And the homeownership is no different. There's no should to homeownership. You should look at maybe renting a home. You should maybe look at traveling around and Airbnb from place to place. It really is a question of, you know, an economic decision. It's not an emotional decision that should be made. And unfortunately, I think the, I call it the housing industrial complex, has been hectoring people for years, driven by the National Association of Realtors and others, to say you must own a home. But that's just, there's just no logic to that. But Jack, so Rob owned a nice house down in Venice Beach for many years, and then he sold it, and now he's renting. I own my own home. And this is the first moment

I've really been able to feel consistently superior to Rob Long in 30 years. But here's why I feel superior, because it makes me a better American. Thomas Jefferson, this notion of the small landholder, that ownership gives us a stake in the society, in our town. I'm sorry, Peter, what crops do you raise? I missed the moment where you were... Peter Robinson Sorghum, wheat. Gary Barrett Agrarian gentleman. Peter Robinson I attempt to raise grass, but it turns out i raise mostly crab grass

so uh so jack what you're saying here you've got it's not just the national association of realtors who are after you or you're after them we'll come to them in a moment you're attacking thomas jefferson well i think thomas jefferson you know in his day i think that uh and this is where he probably went wrong with adam smith He probably raised some crops in the backyard. He was making his shirts on the front porch, maybe. He was probably taking care of his own house. And Adam Smith said, look, there should be a division of labor. You should do what you do best.

And Peter was kind of just amazing about thinking about you, is that not only are you tied to owning a home, so it makes you immobile, so literally it's hard for you to move to your highest and best use if all of a sudden someone says, hey, forget the Hoover Institution, please come to the MIT Free Market Institute or something. Furthermore, the home ownership is asking you to be expert in something I'm guessing, Peter, you're not expert about, like electrician work, plumbing, carpentry. Any moment, Peter, that you're thinking about carpentry as opposed to how to make the world more free is a misuse of your resources. And I'm just saying that kind of

as a broad sense that I think Thomas Jefferson, if he had thought hard about this, would have said, hey, if we really want people to be the most productive that they can, they should be able to move to the place that they can find their talents most valued, which means you should be probably mobile. And second, Peter Robinson should spend no time thinking about the plumbing in his house. Yeah, well, you touch a sore point as it happens, because we're just going through the initial stages of remodeling. And you're quite right, I have no idea what I'm doing. All right. You know what's even worse about that? What? Is that the plumber and the electrician and the painters and the remodelers also know you know nothing about this topic. That's exactly right. And so they walk in the house and they

size you up pretty quickly and not all of them are this way at all. But you're the mark, Peter. Okay, Jack, from today's Wall Street Journal, I'm going to read you a paragraph or two from the Wall Street Journal and ask you what's up and then toss you to Rob, who I can tell, I can tell is gloating at this very moment. Front page, front page above the fold story in today's Wall Street Journal, cost of owning a home soars. Home ownership affordability fell to its lowest level since the 1980s last year as mortgage rates reached a 23-year high and home prices set new records. Property taxes and home maintenance costs are climbing in much of the country. Non-mortgage costs including property

taxes, maintenance utilities, and insurance make up more than half of homeownerships overall costs on and on and on it goes what the heck is going on well uh you know one is because uh there's a lack of supply of electricians and plumbers and things like that and second of course somebody has nothing to do really with housing it's just the inflation that i the administration keeps saying is solved but then as you saw last month it went up again. So part of it is that part of it is the insurance companies have to charge more for their insurance policies. But this kind of goes to the same thing I was saying before is, you know, people like you and me have to start thinking about all those things. And what we were doing at Rex is taking the brokerage fee to zero and then saying, well, how do you make money at zero? We'll manage the house

for you. Like you can own the house if you want, Peter, but you should not be the guy who's managing the house. And how can you do that now in the 21st century? We can put sensors in the attic and say, hey, Peter, it seems like the humidity in the attic is up like three standard deviations away from normal. And so we should probably send someone over there now to fix it before it's a big problem. The way that you probably find out about it, and me too, by the way, is there's a growing yellow circle in my ceiling. Yes. I have a leak. At that point, it's a $10,000 fix. But if you can pre-identify it, and now you can do this with AI and also with sensors in the home, or guess what, Peter, the speed of the air moving through your home has gone from one

kilometer per hour to three kilometers per hour, and you're traveling for a wedding or something. I think there's a door open or a window broken or something. We'll send someone over there. So one thing that should happen, independent of whether you own a home or not, is outsourcing the management of the home to somebody else. And some of these costs you just referred to get managed down because you have a professional managing those costs as opposed to people like James and Peter and Rob and Jack. So, Jack, I just want to say, you have founded Rex Realty. You've not only written a book, but your company, Rex Realty, is home management for the middle class. Is that the aspiration here? Well, the aspiration was to take these

ridiculous brokerage fees down to zero. And where that came from, of course, when I was at Goldman Sachs, we took brokerage fees for trading shares from 12 cents a share to almost zero. And the same thing can be done with owning homes. And so we were taking the fees down to zero. How do you take the fees down to zero and make money? The same way that Schwab does. They manage your cash and invest it just like a bank would do. Well, when you buy a home, everybody has to get title insurance and escrow policies, and they have to get home insurance and usually have to get a mortgage. We can do all those things for a market clearing rate that's very competitive.

And then the 6% fee on a home around where you all live is, you know, that's a huge fee. It could be 30, 40, 50, $60,000. By the way, Peter, this is the thing that's so outrageous about this whole, I call it a cartel because it is. The fees in the US are three to four times higher than they are in most other developed countries. Like how do they manage that price levitation where the fees in the US are so much higher than they are in most other developed countries. How do they manage that price levitation where the fees in the US are so much higher than they are in the UK? And by the way, just to shock you and all of your fellow listeners, this is the biggest cartel in the US, maybe in the history of the US, and I have data to back this up. So the realtor racket, I'll go ahead and concede your point by just calling it a racket.

This is one more cozy interlocking set of political and special interests that you think is about due to be disrupted by technology, and you're attempting to do it. Fair summary? Yes. And let me give you just a sense for why this is important to everybody who listens to your show and podcast. So to give you a sense, there's $3 trillion of homes traded per year, $3 trillion. And the fee in the UK is about 1.5%. The fee in the US is 5.5%. So the monopolistic rent is 4% on $3 trillion, which is $120 billion per year. Now, to put this in context, most economists think that OPEC raised the price of gasoline by 50 to 75 cents per gallon. 150 billion gallons of gas are sold in the U.S. each year. So OPEC taking middle class Americans is $75 billion, $50 billion. This is almost double the size of OPEC.

So when I call it a cartel, and by the way, the 75 out of the last 77 years, the amount of revenue that's come to realtors has exceeded the inflation rate. So the price never goes down. Why is it that only the realtor fees of all the middlemen in the country over the last 15 years, they're the only fees that haven't come down? Stockbroker fees have come down 90%, taxi dispatcher fees. Some people might remember travel agents. They used to exist. They got taken out by the internet. Everyone's fees are down 80% to 100%, except for one.

One is levitating above every other middleman's fees, and you know there's strings attached. That doesn't happen in a free market. That's another part of letting Adam Smith into the American home. Prices do not levitate normally like that or increase 75 out of 77 years. So James and I are still at you, Jack, but I have to let you know, Rob just sent a text. He's in a hotel in West Palm, and there's a fire alarm that just went off in the hotel. So, listeners, Rob will return when he's permitted back into the building. So, Jack, why is it that realtors, I mean, one argument, I've talked to people here in Silicon Valley who share this basic feeling that the National Association of Realtors is in one way or another

a cartel. But it's very, a very personal decision, and B, a very rare event in the lives of most people. So, they want someone who knows the local market. Real estate agents tend to be extremely good with people. They tend to be comforting. They tend to make a difficult, often traumatic set of decisions easier to get through. And so, in some way, they do provide value, maybe. What do you make of that argument? Well, of course, they provide value. The question is, how much is that value worth, right?

And that's something for a consumer to decide. And it's 6%. Right. So, you know, sometimes the realtor will say, I deserve my 6%. Why? Because you said so? You know, Peter, I deserve $100,000 to be on your show with you today. The other thing, Jack, that's amazing to me is that that 6% fee is totally unaffected by the emergence of online sites such as Realtor.com. People who are in the market to buy or sell their houses educate themselves enormously now by going online, learning different neighborhoods, learning the market prices. You know, not as much perhaps as a real estate agent, but you know an

enormous amount that you couldn't have known 20 years ago, and yet the real estate agents charge the same fee. James, share my outrage. Your outrage is shared by me. Yeah, I wish the fees were lower. I really do. There's because we are able to inform ourselves and make decisions and do the things that realtors used to be able to do, only them. Now, my uncle-in-law is a realtor, and I'm, none of this, none of my- Except for him. He's a good guy. He's a good guy, and he found me in my house. As a matter of fact, he found me in my house because he just showed up one day and said, Hey, I got a client who wants to buy your house. And I said, well, I live here. So what now? And we drove around for, drove around for a day and he had in his head, just sort of magic

compendium of all the places. And he found the house where I live now. And I was so struck by it that I made an offer on the spot. My day was completely turned around in the course of two or three hours simply because a realtor decided to be proactive, to use a hated word, and dynamite me out of my situation. That's irrelevant to what I'm about to say. I'm just telling you where I'm coming from. One of the reasons, though, that I put the money down on the spot was when I looked at this place, I said, I want my family to grow up here. I want to be carried down the stairs here when I'm dead. This is my place. I want... James lives in a beautiful old house, Jack, in a beautiful suburb. With a preposterous lawn that you don't find in a city such as Minneapolis.

And when I walk out of my porch and I behold this place, I have a feeling of ownership. I have a feeling of connection to it that would not be there if I have a feeling of ownership. I have a feeling of connection to it that would not be there if I was renting it to somebody. It just wouldn't. And if I look around at all the houses in my neighborhood and said, what if BlackRock owned all of these places? It would be a different place because everyone who's come here has put down roots and is committed to where we are. And yes, we have to call in somebody every day when something isn't done. I'll give you an example. This morning I had a guy come by and tune up my boiler or just give it a look, you know, figure it out.

And was that time that I spent getting him in the door and doing all the rest of it? Yes, it was. Not time that I would have spent doing anything else. But there's a series of there's an idiotic decision that was made by the people who lived there previously when they chose a particular fastener to close the doors. They're German made, they're quite precise, but they have a plastic element that breaks a lot. And so I have to install them a lot. Would it be easier for me to call up my landlord and say, come and fix this? Yes.

Do I have a sense of accomplishment I get every time by taking that out, fitting it in, working the screws, knowing exactly how it works? Yes. Do I have a connection to this thing? Because I have done the plumbing, because I have figured out the electricity. It makes me more of an American man to know and have these skill sets as opposed to having to call somebody, could you please come over and do this, knowing that at any moment, if if it struck them i'm out of there because they want to say because they want to hire they want to rent it to somebody for somebody else i am at my home because i own it and nobody's going to take it away unless of course i don't pay my property taxes in which case i'm out but you know what i mean yeah you're saying you

get an emotional uh benefit from owning the home because you become a man's man by fixing things and all that. Like a true Dartmouth man, Peter. Yes, exactly. But I see my father looking over my shoulder every time the gardener comes to mow our lawn. I hear my father saying, what? You should be. Come on. It's your house.

You should be doing that. This is, oh, well. So I'm not saying that no one should own their own home. I'm just saying look at it objectively. Look at, like, anything else you do, a rent versus buy decision, and see if, you know, on top of that, just beside economics, see if the mindshare it takes from you as well as the services you get. If you get enjoyment from it, terrific. You know, buy your home. If not, you should probably not own a home.

Jack, what happened? Because I didn't know that we would be interviewing you, I certainly didn't know you were working on a book. So I didn't pay too much attention to the story. But the National Association of Realtors has lost a series of cases in court, or they've gotten scared by some series of cases in court, and they've made some kind of concession. Can you explain the state of play? Yes, I can. So I think mostly because I've been running around to, well, who knows why, but anyway, because of our argument that these fees are ridiculous and make no sense in the 21st century, a number of class action lawyers said that we're going to sue on behalf of all these people who bought homes in Missouri and sold homes because the fee has been inflated by 4%. Take the value of all the homes that we sold, and that's what you owe us, cartel, for just Missouri.

And anyway, they won the lawsuit. The jury was out for all of two hours, which is really a short time. They basically went out for a hot dog, came back and said guilty. And the return of work of $1.7 billion, which is then tripled under antitrust law. And that was just one state. So that put the fear of every realtor out there that, oh boy, this deal is coming to an end. Now, there's another set of, there's another lawsuit out there, which is ours, because we were going around the NAR and MLS as a competitor. So there's one set of lawsuits, which are buyers and sellers of homes who paid way too much because of what I call the cartel.

And then the second is us, the only firm going around the cartel to trade homes off the MLS, which we did very successfully. And then Zillow joined the National Association of Realtors and kicked us off all the websites. One of the rules of the many rules that create this monopoly pricing is that if you are not a member of the NAR and the MLSs, then they cannot put you on the same web pages as those homes that are. Just a moment. NAR, N-A-R, stands for National Association of Realtors, and MLS is the Multiple Listing Services. All right. Yeah, I'm so sorry. Yes, exactly right. I'm glad you said that. Anyway, so the National Association of Realtors, it's a trade group. It's a trade group

that sets the rules of competition among its members.'s a trade group. It's a trade group that set the rules of competition among its members. What other trade group in the United States is able to set the terms of competition upon which its members can compete? I'm not aware of any. I don't think anyone can. But they have all these rules about how you're allowed to sell a home. They make your head hurt. There's so many of them. I can go through many of them with you if you want. But the kind of way to cut that Gordian knot, like Alexander the Great, is just say no trade group can set any rules to enhance the profitability of its members. And you're putting that group in charge of setting competition. That explains why the fees are four times higher in the US than the UK. Right. So this is a it's a big deal. By the way, Peter, since you're at the Hoover Institute and St. James, et cetera., it doesn't stop with $120 billion of takings.

You know, as James, you were saying, you do it yourself oftentimes. But guess whose jobs cluster around the purchase and sale of homes? Plumbers, electricians, carpenters, painters, their jobs are being suppressed. The wages are being suppressed because these high transaction fees reduce the number of transactions. By the way, there's a big issue with housing affordability in California that I read about. Huge, huge. Right. So there's this 5% fee on top of the value of the house. Let's not go into the time being the inelasticity or elasticity of demand and who pays incidence of a tax. top of that this there's a the nat the normal

margin for a home builder is seven or eight percent on their revenues if you took out the if you took out that five percent fee it goes to thirteen percent all of a sudden now the margins of the home builder have gone up by sixty seventy percent how many more homes get built when all of a sudden your return on investment goes by fifty percent So I really think if we take this cartel and just reduce the fees to what we're trying to do, which is zero, then you probably have a 10% reduction in the cost of housing. And by the way, the next thing, Peter, is that 40% of CPI is rent and mortgage. Rents also go down by 10% because someone's got to buy that house to rent it out or buy that townhome with the four units in it to rent it out. They're also trying to get their ROI up, so they have to tack on their rental rates, that 5% fee. And plus, there's less homes around, so that price is higher to buy that home.

So rents are also 5% to 10% higher. The knock-on effects from this cartel, as I said before, are huge, and they're bigger than OPEC. Well, not to ask a question whose answer I can presume based on the whole gist of the conversation here, but you got a point. But what would it be a greater effect to increase the stock of housing if zoning, if laws, if environmental requirements and the rest of it were dialed back a little bit. I mean, it's not either or. We can certainly do both. We're Americans walking, chewing gum. But a lot of the reason that houses don't get built is not because of these fees. Maybe that's

a consideration, but it seems to a lot of the people that I've talked to, it has to do with zoning, environmental regulations. That's what keeps putting the cost up. And the fact that because it is so expensive to build some of these things, they have to build something big that doesn't qualify as affordable. I mean, all houses are affordable at some point, but there's no incentive to build the small stuff like we used to, I mean, like we had post-war. Right now, what we need are potato fields to be turned into hundreds and hundreds and hundreds and thousands of those ticky tacky little boxes that all the little boomer children hated. But that's what we need. an economic climate that is more positive, more averse to, less averse to emboldening, burdening them with regulation, which would you take, he said, to answer a leading question to

which he knows the answer? Well, I don't know if I know the answer. Like, in Texas, I'll take the reduction of the fees because there aren't as many restrictions on building homes as there are in California. Right, right. Now in california i don't know the question is i don't know because the restrictions to building homes are so horrible why the price of homes so high because you've made the supply almost uh unmovable and people you know make more money and they move there etc so of course the prop you know i don't know i don't i don't know about that horse race that's more of a horse race but in texas alabama louisiana florida i'll take the reduction in the fees because I just made the restrictions.

Let me ask you something else. When we talk about rental, for example, a lot of people, especially those who are downsizing, like my wife and myself, say, well, maybe we don't need to buy a home. Maybe leasing a townhome is the way to go. And I will never, never go live in a townhome again because for the last 30 years, I've lived with nobody upstairs. I've lived with nobody on the other side of the wall. I live in a self-contained single-family house, which is an American archetype. The left hates the single-family home. That's true.

And what we found here in Minneapolis, for example, they banned single family housing. And there was an attempt by the Minnesota state legislature to force every town in Minnesota to change its zoning laws to accommodate more density. Because density is good. And they have a whole variety of reasons that they love density. It has to do. And mostly, it's because the idea of the atomized nuclear family unit in these rows of Levittowns is antithetical to their aesthetics, their politics, and a whole bunch of stuff. So they want us all in the hives. And I hate that. That's one of the reasons that I like to say that homeownership is good is because it keeps you out of the clutches of these people who want to centralize and control and do the rest of it. When people, when the immigrants come to Minneapolis here, they spread out into the first ring suburbs and they buy up all those post-war ramblers because that for them is the good life. Paradise. Yes. So that's all I'm saying. I'm not arguing. I'm not really arguing with you at all, except to make the point that the title of your book offends me to the core of my marrow. I'm kidding. Well, it doesn't say don't buy a home. It says a case against it.

We just want people to consider the pros and cons. We don't want people to say, you know, unilaterally, this is an awful good and they march robotically to buying a home. It's not. That's really... Jack, Jack, Jack,

when does, what's, what's the publication date of the book? Not till, I think, April 16th, although I think as James said- Okay, so there's still time. There's still time. I'm going to rewrite your subtitle. Bringing Adam Smith into the American home. Everybody loves that. I mean, everybody on our side. James and I love that. Rob, if he ever returns from his fire alarm, would love that. Your subtitle, A Case Against Home Ownership. Really? I'm your editor, and I'm going to rewrite that slightly. It's a case against the crazy, out-of-date, politically-connected cartel

that's costing us all billions every year. That's really what your case is against. That is true. Isn't that right? Yes, true, Peter. And it's true. That's a a long way of saying it so if you have a way to say it shorter you know we're open to suggestions but yeah the other thing too is the case against getting ripped off by your realtor there there's your there's your subtitle okay it's okay well it's not just the realtor it's also like what i call the housing industrial complex the only country i know that subsidizes housing more than america does is china like we have this fannie Mae, we have Freddie Mac, we have all this hectoring to own your home.

I just saw that the administration lowered for Fannie Mae and Freddie Mac the amount they're going to charge to, you know, ensure that mortgage. You know, we all know how this is going to end. Every 25 years, we have a complete cataclysm and it's all because the nar and then the government is the iron lobbyist the iron triangle of you better own a home and all these subsidies and every 25 years hundreds of billions of dollars come due and like oh my gosh you know the currency's in jeopard. So it's a case in favor of a genuine market. Yeah.

Yes. Yeah, I guess it will be. Thank you for the editing help. I really appreciate it. Yes, you're right about that. It's like, yes, yes. I have nothing else to say about that. Yes, Peter, that was a better title.

Unlike China, we don't have 30-story ghost towns in Kansas. Right. Yet. And the cartel phrase may, you know, concentrate minds, but we don't actually have MS-13 style running gun battles between realtors in my neighborhood, which would be interesting. You know, they're Blazers and they're Lincoln Continentals and the rest of it. But we'll see. One exit question, Jack, and it's pretty simple. Do you own a home? Yes, I do. But there's no hypocrisy there, James, because I just I'm just curious.

I know. Well, it sounds like, hey, Mr. Smart, Alex, I just want everybody else to look at it more objectively. If it works for you, it works for you. Absolutely. Yeah. And I looked at it objectively. I had the rent versus buy decision and how much time I want to spend. And you're genuinely proud to know that I'm out there and you too, Peter, out there mowing my own lawn. I have my little thing. And so this is a whole, you know, I probably shouldn't be doing it, but I also derive pleasure from it. Yeah, but Jack, you live in Texas. Your front lawn is five acres.

Well, you know what's so funny? We do have five acres, but three acres of it is, you know, forest land, not forest land, cedar trees. And during the summer, nothing really grows because 100 degrees there for three months in a row. So turns into a desert desert. But the fragrance is wonderful. And we advise people to go if they like cedar trees, fast growing trees. Who knows what they have in their catalog? Give them a look and use the promo code Ricochet.

How about that? I just used an ad with a guest never done before. Jack, it's been eye-opening and fun and really a pleasure to talk to you about these things. And never thought about it. Never thought I would sit here and say, is it realtor like Peter's saying or realtor? It's like that temblor trembler thing. What is it? We'll just call it my cartel. The book, again, ladies and gentlemen, is Bringing Adam Smith into the American Home, The Case Against Home Ownership. And then there's 47 words that Peter added. Thank you, Jack, for joining us. The book comes out on April 15th. And we'll talk to you down the road when we have the next property collapse.

We'll call you up. Thanks for hitting the... Good to hit the book on the way out. But the website for the firm for, for Rex real estate is rexhomes.com rexhomes.com. Okay. Jack, take care. Give a love to Texas. So great talking to both of you. Thank you so much. Take care. All right. See ya. And you know, I've James, you can't leave that house. You have a beautiful, it's a beautiful home. It was built by craftsmen. You have a beautiful yard. I know. The gazebo, the old growth, old growth is the wrong term,

but the established, the old, the big old trees. It's just beautiful. I know, it's 30, 40 trees I have. You know what it costs to mow that bleeping lawn? I mean, again, I'm going to say to my wife, I want to mow the lawn this year. I want to buy a lawnmower and do it. And she'll look at me and say, no, you won't do it, though. That's the problem.

But I will. I will. I absolutely will. And I have a corner lot, and it's so damned big. When was your house built? 1915. 1915. One of the first houses in the neighborhood in Tangletown that was all plotted out.

It used to be, as a matter of fact, it was a local businessman and politician owned the area, and he had British investors. So he named the street after a British politician, which I find interesting. Nobody really in the neighborhood knows that. And how many square feet? It's a big, beautiful, I mean, it feels substantial. It feels like a certain vision of America, the teens, the 20s of the last century. Well, it is.

I mean, the man who built it was a candy maker. Minneapolis was a locus of American candy innovation in the 1915s and 20s. And he was a guy, the man who invented the Mars bar. You've heard of the Mars Candy Company, Milky Way? Yes, yes. Lived down the street, around the corner. Really? And the guy who built my house made a candy called the Walnetto, which would later be popularized on the Laugh-In television show many

decades later when Artie Johnson, the pervy old man, would offer it to Ruth Buzzy, you know, on a Walnetto. But for years it was famous, and he made so much money on it, he eventually moved away after 10, 15 years or so and left the house, and it had four owners. And there's a lot of history in it. No, I don't want to leave it. But at the other hand, you know, you downsize and you look at the room the child grew up in, and it's now sort of a museum to their youth that they've cast off themselves. You look at all of this territory that you have to maintain and the rest of it, and you look at your utility bills, which are extraordinary, and the property taxes, which are absolutely crushing in a testicular fashion. And, you know, my wife's looking around and saying, I'd like to retire. Do we, you know, at some point, at some point, at some point, it's going to be hard for us to get up the stairs. Now I'm, you know, we're both vital bursting with rough American spirits, but you know, best case scenario is I can't get upstairs. So, I mean, it's something that we've been thinking,

never wanted to do this, but that keeps you from making decisions that perhaps you ought to make. You know what I'm saying? And the thing that happens sometimes is you don't actually know what you should do. I mean, you know you're going out tonight with friends, and you know you're going to have a good time. I know you might feel... I'm back from my fire alarm for this. This is fantastic.

I came back for two things. I came back to interrupt James' segue, but just in time to hear him say, I mean, I don't know if I'm going to be able to keep moving up and down the stairs. That's all I needed to hear. Well, what robbed so efficiently derailed was the idea that sometimes you go out and you know you're going to have a great time and you maybe are thinking about what's going to be waiting for you the next morning.

Let's face it, you have to earn a night with drinks. You don't bounce back the next day like you used to as you age, perhaps. So you got to make a choice. You can either have a great night or a great next day. I don't like that choice. And that's why I'm happy there's Z-Biotics. Z-Biotics pre-alcohol probiotic. It's the first genetically engineered probiotic. And it was invented by PhD scientists that tackle rough mornings after drinking. Here's how it works. When you drink, alcohol gets converted into, you know, fun, brilliant,

witticisms and the rest of it, but it also gets converted into a toxic byproduct in the gut. And it's this byproduct, not dehydration. That's what's to blame for your rough next day. Now, Z-Biotics produces an enzyme to break this byproduct down. And it's designed to work like your liver, but in your gut,

which is where you need it the most. So just remember to drink Z-Biotics before drinking alcohol. Drink responsibly and get a good night's sleep to feel your best tomorrow. Interested? You should be because it's effective. Go to zbiotics.com slash ricochet to get 15% off your first order when you use the coupon code ricochet at the checkout. You can also sign up for a subscription using our code so you can stay prepared no matter what the time or the occasion might be. You hate to run out of this stuff when something, when a great party opportunity presents itself. Zbiotics is backed with a 100% money back guarantee. So if you're unsatisfied for any reason, they will refund your money. No questions asked. Nope.

Head to Zbiotics.com slash ricochet and use the code ricochet at checkout for 15 off thank you zbiotics for sponsoring the podcast we do thank zbiotics for sponsoring this the ricochet podcast well rob how was your fire drill did you stand around outside with your head with your hands in your pockets waiting for the teacher yeah i have to say i was that guy i was so like this stupid. I was in the room, and then I heard the alarm. I could hear it. Maybe you even heard it on the track. It went on and on and on.

And then they finally knocked on my door and said, sir. Okay. But I was that guy. I was like exactly every firefighter's nightmare. The guy who's like, I don't smell smoke, that guy. Which doesn't... But it turns out, of course, that it was just... I don't know what it was.

But then we sort of stood outside for a while, and then the fire truck came. And I am, I was angry Joe taxpayers saying, you know, that took about 15 minutes for that fire truck to arrive. They must know it's also not real. But there you go. So I had my grumpy old man fixed for the day. But unfortunately, I missed it. I missed it. But it would sound like a really very interesting conversation.

Really interesting. And the only thing I was going to add to it was that I have had my, most of my life as a homeowner or even renter has been in places surrounded by hippies, elderly hippies who bought their near me uh in the old days for no money and are now multi-millionaires and all they do is complain about it um and uh the idea of the of the the the home as a slow moving but surefire lottery ticket uh it's going to be very hard to unlock from people's brains and buying patterns but yeah i'm sure not that not that it shouldn't be but i just think it's gonna be very hard to try to convince people that um this thing isn't going to be worth 10 million dollars someday isn't you said isn't going to be well it depends where it is and what condition and all the rest of it i had a homeowner smoke situation this morning

when a smoke alarm, we got about 15 of them in the house, went off. And the first thing I did when I heard it was pretend that it didn't happen. And the second thing was to sort of gauge how tired I was. Can I sleep through this?

Because the process of walking through the house, doing my bad-like echolocation to find out which one of these damn things is doing it is impossible. And so I went back to sleep and I was, I, I slept through its periodic chirping of the ceiling, ceiling bird only to wake and find that my wife was already downstairs having coffee and breakfast and wasn't particularly pleased at all.

And she said that, you know, she was woken up very early in the morning by the smoke alarm i said yeah and she said well why didn't you fix it and i said because i was tired because because you says you saw i slept right through it why didn't you fix it well that's your job. Oh, yes, yes, yes, right. It is my job to do these things. And so I had replaced the batteries on every single smoke detector in the house before we left, because the house sitter, I didn't want her to wake up at two o'clock in the morning and have this happen to her. As it happens, the house sitter did send me a little text saying one of

the smoke alarms is chipped. What do I do? And so I sent her to get a battery and tell what it was consequently i discovered that all the batteries that i had put into the smoke detectors expired in 2023 they'd never been used but apparently at some point between november 23 and march of 24 they all swooned took to the couch drained you know like a consumptive from the 19th century pale and and dead. And so there's nothing I could have done. When I finally found the smoke alarm that my wife was complaining about, and that, to be fair, so was I, it was a non-standard battery ever ready that went into it that I did not have an abundance.

So I couldn't have done anything about it anyway. But it's like, just take the battery out for heaven's sakes. I mean, honey, I've been doing that for months. There's probably only three of these things in the house that work anyway. Oh, I shouldn't have said that. So, no, anyway, if I'd rented, would the landlord have come by at 4 o'clock in the morning to take the rent? Well, that I have to say is the appealing part of Jack's business. I mean, I don't know how widely available it is.

Maybe it's only available in parts of Texas. But Rex Real Estate, Jack started it as an alternative listing service so that you could get out from underpaying the realtors' fees. I don't know how that piece is going, but he's clearly at war with the National Association of Realtors. But now they're starting a kind of home management business where they'll take care of that appeals to... Yeah. So, here's my confession. The last time the ceiling bird, I love that term, started chirping in the middle of the night, Robinson's solution to the problem was, I went around the house and removed the battery from every single smoke alarm in the house.

Yes, only solution. And we have been living with totally disabled. I would yank them out of the ceiling if I could figure out how to do it. Wait a minute. This is not the correct solution. This is not the correct solution. It is the top of my form. It's the best I can do.

It's not the worst solution either, by the way. I've got CO2 detectors everywhere in the house. The guy came, the guy who came today to look at my boiler, my high efficiency furnace. I had a great conversation, by the way, with the Canadians in the bar about my high efficiency furnace. I showed them a picture of it because I'm so proud of the thing. And the pipes are so gorgeous. They're copper. It's like this. You feel almost Canadian. Well, they were just, hey, hey, look at this guy. He's got the Honeywell zones. Look at that.

You know, it was just fantastic. Another thing that was fun, and I'm sure Rob and Peter, you find yourself in this situation too, is that you can talk to any, if you read about everything, if you follow the news, if you read the Twitter, if you just pay attention to the world, there's a fighting chance you can start a conversation, you can have a conversation with anybody about what they do because you know one thing, right? Or because you've heard one thing. So a couple of these guys I'm talking to,

I said, you know, what do you do? And they said, well, we work at this big steel mill. Wow. And so me and my cubs standing there, you know, in this tropical night, 80 degrees, wonderful breezes, you know, tan, wearing my white shirt and the rest of them casually says, so how much of your output is, you know in this tropical night 80 degrees wonderful breezes uh you know tan wearing my white shirt and the rest of them casually says so how much of your output is uh is you know how much of your material that you get these days is recycled and their eyes they light up it's like we got a guy who knows about steel and on the way well it's about 100 and you know the thing is is

that even though the quality is lower we can mill it to 1.5. And so on they go. And it's great. And I learned something as opposed to just saying, oh, that's interesting. I, you know, seen pictures of Bethlehem back in the old days. Anyway, so the guy who came in and looked at me this morning at my stuff said, you usually start to get worried if you got 200 ppm of carbon monoxide, you got six or something like that. And he's patting me on the back like i personally did it but you know yes peter you're right the idea of having somebody to

combine all the sensors and the rest of it that's all well great that would be bliss that would be because you don't because when you see when you a leak when you find something's wrong there is a there's a sense of of financial dread that grips your heart with its cold hand. And I understand that. I really do. But there's something to be said for knowing I'm responsible for this, not the landlord. A nation of renters is not a nation of people who are involved and connected as much as they are. It's a nation of people who feel responsible for something rob how has renting changed your life do you feel a lesser american i well i know it was

no i don't i don't know at all in fact i uh i feel unburdened like it's not my problem that it not being my problem is important thing look i think having a house is a great idea and i know maybe it works maybe it doesn't uh and i had a house for a long time, but just at a certain point I have no, put it this way, I don't feel the tug to buy or own anything. I'm just trying to get through next Thursday at this point. When my parents retired to their little retirement home, I found my father sitting out on the deck, and at the worst worst possible time because there was a guy who worked for the complex mowing the lawn and it was loud and what are you out here and he's oh no i just

like watching somebody else do it yeah must be i get that i really do this year for the first i got my snowblower working up again because i got tired of paying these guys to come and do it. And it's great because if I'd paid them, I would have paid them every month to come and shovel nothing because we had no snow. But at the end of the season, we get dumped. We get dumped. And it's warm, too. Oh, heavy snow. It's the worst kind. So I go down there and I start up the snowblower, which works this year,

thanks to the son of my friend, the crazy yoke, who can bring any engine back to life, anything. I mean, my God's sake, if you give this guy a rusty Model T that's been sitting in the forest for 70 years, he'll have that thing tuned up and going in five minutes. He's amazing. So the snowblower starts, and I go into this mass of sodden snow, and I end up writing a column about it, at which point I said that putting the snowblower into this slushy bank was like eating a sodden pillow with your dentures out. And so what happens is that line, which is just a throwaway line in a column, somebody liked it, sent it to the New York Times. up in frank bruni's roundup of sentences of the week in the new york times right under a compendium of pieces from that idiot who wrote the piece in the atlantic magazine about hating cruise ships

rob and i are always awarding you the sentence of the week why is it that you wait until frank bruni to mention this um i i guess i don't know why i i don't i really i don't understand that james because i am old enough that even though they have squandered every single jot iota of their institutional gravitas, I still regard being quoted in the New York Times as something of an accomplishment. That's how old I am. I remember OJ. I remember that. You remember OJ and the New York Times.

I remember Thomas Jefferson. Well, you go back a little bit farther than I. Let us bring our affairs to a close here and remind you this is brought to you by the Ricochet Audio Network. Join Ricochet. Right, Rob? Join Ricochet. You're out there, you know, getting there. I'm out here hustling, man.

I mean, if you enjoy this podcast and you're interested in keeping this project alive, we would love to have you join. And I'm not saying that if we had commercials for Jack Ryan's company in a couple of weeks, it would make us look like total shills, but maybe wait three or four months before pitching those. Oh, listen, no. I was just talking to him five minutes ago. Oh, good. Always on the hustle. Speaking of hustling, hustle yourself over to Apple Podcast.

Give us a five-star review. And while you're at it, check out The Diner, which is my new podcast. Well, new in the sense that it started in 1997 when memories of OJ were still fresh and has been going low these many years. And thanks to the brilliant production work of E.J. Hill, actually gives you an audio experience

that's just grand. So, yeah, go check that out. We do not thank E.J. Hill often enough. Well, between his audio skills and his Photoshop skills and the rest of it, just the uncreative genius of Ricochet. And speaking of Ricochet to come, there will be more Ricochet to come in a different web form. But we're just figuring out the bugs. In the meantime, what exists is the site we love and know. And then if you haven't joined,

you should because it's the place you've been looking for. The sane, mostly civil, mostly center right place on the internet, ricochet.com. It's been grand being back together with you guys again, and we'll see you next week. We'll see everybody in the comments at Ricochet 4.0.

Next week. Next week, boys. Next week, fellas. Ricochet. Join the conversation.