It's not an affordability crisis, it's a bad economy for most Americans crisis

For a video version of this, click here: https://youtu.be/IL96qM9SZEQ

The real estate news seems to bounce back and forth between finding bad actors to blame for housing problems and the "affordability crisis," as though it is some sort of virus that has just come into our economy. But there is a simple explanation, its just that the government and their pandering news organizations don't like the answer because it points accountability back to them.

But before we get into that, however, let's review where the market is to take their comments in context.

I maintain there are 2 most critical statistics to understand the real estate market. On the buyer demand side, the interest rates. And on the seller or supply side, the months of homes available for sale, or inventory.

So, on the buyer demand side, mortgage rates closed down slightly at 7.08%, remaining over the 7% level. Still, this maintains the dramatic reversal of rates of the prior 7 month.

Inventory continues to track the same as last year, which was a record low for a year other than during the pandemic.. As I have repeatedly said, as long as inventory is low, prices cannot go down much.

Locally, in Los Angeles, the market maintained its status as a seller's market at 40.

So, in this week's survey of real estate news headlines, lots of fun stuff!

The leaking of your personal private information continues. Previously I have reported credit companies, real estate data companies, and this week one of the largest lenders, LoanDepot, announced that they had a breach that included 17 million customers.

This breach should be particularly troubling for a few reasons. First, mortgage companies have both a breadth and depth of information on customers that make identity theft so much more likely. The loan and mortgage giant company said in a data breach notice filed with Maine’s attorney general’s office that the stolen LoanDepot customer data includes names, dates of birth, email and postal addresses, financial account numbers, social security numbers, and phone numbers.

Second, many of the "customers" are wholesale customers, meaning customer brought to them by a mortgage broker, in a way the customer would not know they even applied for a loan with LoanDepot. This hack happened in October and November, and was just reported in the press as they had to file a state form, otherwise we would never know. This is another in a nonstop series that makes it clear that NONE of your personal data is safe online.

To show LoanDepot's complete incompetence, in addition to this theft of data, they were victims of a ransomware attack as well, causing them to pay hackers to get access back to their company accounts.

Goldman Sachs is projecting housing prices to continue at levels higher than normal during the past 50 years, predicting a 5.5% rise in 2024 and continuing for years after.

The key takeaway is that they are predicting inflation over 3% which makes housing a great hedge against what appears to be continued inflation.

Another government program to solve a problem has backfired, this time the data proves that New York City's crackdown on AirBNB has resulted NOT in more rental units for citizens to live in but less tourism, hurting everyone!

Taylor Jones, who is a short term rental investor, presents the data. The question is what affect have the same policies had in other states. And, again, this is a case where people who know nothing about real estate, New York City politicians, do what makes sense to them by wielding government power against a group of citizens, and it backfires.

Redfin, one of the worst sources of real estate information, continues their misinformation campaign, this time blaming boomers for tying up housing inventory.

So Redfin thinks that baby boomers, people like me, should NOT want to stay in the same house they raised their family to make room for the next generation? Personally, we raised our daughter in the house we live in and now have the pleasure of spending time with our grandchildren here. Do we need to move to some sort of adult community? How about Redfin stop blaming people and hold our government accountable for not allowing the building of more housing.

RocketMortgage stopped one of their programs designed to have real estate agents also do loans, closing down its Rocket Pro Originate program.

Good riddance! Not only does this program end up paying real estate agents for steering customers to a lender that they get paid on, but by definition how can a real estate agent who is also a mortgage originator possibility be as effective as one who specializes in either. At one point I was licensed to do both, and I realized that I could not do both, and I consider myself pretty smart and a hard worker, how did this program work? Well, it did not, its being closed down. Good!

Our state of California government geniuses have created a situation where Blackstone owes the state over $560 million, money which is taxpayer money, so no one is particularly concerned.

This was a program where Blackstone promised the state a return of 11.25% on its investments, and, guess what, its fallen way short. Imagine that. If you or I were promised such a return, wouldn't we assume it was some sort of Ponzi scheme? Well, it is, and the Ponzi scheme is Blackstone.Not to worry, they are a major donor to the Democratic party, so while the taxpayers of California may be losing $560 million, there is that.

Continuing on my theme that the government of California is incompetent, we now have a new bill that will offer first time homebuyer loans to illegal aliens.

While this is just proposed, the pattern in California is absurd policies get proposed, and either they are among the 60 or so programs that get implemented a year, so many that NO ONE keeps track of all of them, or it just moves the politics in this direction, and in California, where the average resident cannot buy a home, offering tax payer subsidized loans to citizens of the world that come here illegally would not be considered as serious in any other state.

The bankrupt Los Angles Times goes to great lengths to defend our state, the victim of policies that the LA Times has supported nonstop for 50 years, by saying something maybe a 3rd grader would answer when insluted: "...but New Jersey is worse."

The Los Angles Times properly notes that while 43 of 50 states have Californians moving there in greater numbers than the opposite, the paper seems to take pride in the fact that there are seven states so bad that more of their residents move to California. So, ignore the obvious signs of our state's decay, rest assured that citizens coming here from Nebraska, Illinois, New Jersey, and a few other other failed states means everything is really good. OK, I'll let you judge that decision.

One of the most amazing graphs I saw this weeks answered the question: "Why can the average American not afford to buy a home?"

Notice that during the time 1965 while average income has gone up 3 times, the average cost of a home has gone up by more than 5 times. The obvious answer is that during the past 6 decades, dominated by inflation, the average wage has fallen behind. That is the issue. There is no solution to housing other than a better economy, unless it is our government's solution of accepting renting a high rise over a train station and accepting that change of life style. For me, I will not stop encouraging everyone I can to pursue the American Dream, which includes buying a home with land and a yard in a neighborhood where you can be part of a community and raise your family.

So, what should YOU do?

If you are looking to buy a home and live there for a while, real estate has always been a great long-term builder of wealth and there is nothing to suggest that is changing if you can afford the home.

If you want to move or downsize, it's still a great market to sell, but a bit more challenging than in the last few years.

Finally, if you can find a property that will give you cash flow, this is a great time to get solid cash flow and enjoy the tax benefits of real estate.

How can I help you? Call, text, or email me.

Bill

Bill Gross

Broker Associate, BRE 01022275

Certified Probate Expert

Direct: 310-210-0008 , [email protected]