Real estate without the humans, how will that work?

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Real estate, which is really one of the most high touch human industries in our economy, without the human beings, how is that gonna work? Well I think we're on a path to find out and I don't believe we're gonna like the answer.

I'm Bill Gross, this is my real estate market update. Every week I go through the real estate news and we summarize the main topic, which I think this week is about how our industry and our government regulators are trying to drive the humans out of the business like so many others.

But before we get into that, let's real quick look at where the market is and make sure we're talking from a position of statistics and knowledge, not just kind of guessing where things are going to head. In any economy, there's always two parts. There's the demand and supply. Demand is probably driven by interest rates more than anything else in real estate. And supply is the number of houses available.

On the interest rate side, we can see last week, again, we ended at a slightly lower rate, six point two seven. which is about a half percent lower than it was a few weeks ago.

It's, you know, obviously below a full percent where it was in April. And these rates are, you know, I don't know whether they'll last or not. I suspect not. I believe there's a lot of juicing of the numbers on the part of the government to try to tilt the election for those who are in power currently. But either way, the rates are the rates. It's a great opportunity if you're in the escrow to lock it in. If you're a seller and you have a buyer who's buying your property, help them get the contingencies cleared so they can close because At any point, rates can change, they go up, they go down, but they're great where they are, and as long as rates are where they are, we have plenty of buyers coming into our market looking to buy property. So I think for the current time, our markets could continue to be real healthy.

On the supply side, how many houses available for sale, that number continues to slightly decline.

We were at six hundred thirty thousand back in twenty-ninth week back in June or July and now we're to six hundred and two thousand so about five percent less homes for sale you'll notice that last year's number this turquoise was rising all year so we're about to meet across that path this was two years ago and we're about to cross that as well at the current trend lines hold you'll notice that this rate while higher than these these are all pandemic years other than last year and by far these are the lowest on record the pre-pandemic average was in the eight hundred nine hundred thousand or more properties for sale and currently about six hundred and two as long as the inventory is this low and we sell about four to five million houses a year as long as inventory is this low housing prices cannot go down nationally now in different markets of course that can change but in terms of nationally with so little demand for property there's really not much that can be done to change the housing prices.

Now, on the local market here in Los Angeles, there's a great service I use called Altus Research, and they rank our market today at thirty-seven, which it's been for a couple weeks, and it moved down from thirty-eight, thirty-nine.

It's marginally a seller's market. We've been in the forty-two, forty-three range, and the market was hotter, and it's come down a little bit. So I would say the market is stabilizing in the Los Angeles market. It's closer to a normal market, but still a seller's market, and I see that as an agent myself in terms of how many offers we get. Even properties that are not listed for sale, but are under contract, I still get inquiries on those.

Okay, topic of the week. Real estate without human beings. When I look around, I'm sixty-five years old. The changes in business, I remember when my father took me to a gas station when I was a little kid, and the independent gas operator was selling out to one of the large oil companies. There used to be independent gas stations, now they're all owned by a few major oil companies. Same with car repair, used to be independent car repairs. Now more and more, well there's still some, more and more are muffler shops of franchises or tire shops of franchises. You see with restaurants, more and more restaurants tend to be chains or regional chains or related to chains overall. What happens is when you have more government regulation and more taxes, the only entities that can survive are big enough to work their way through the regulations or pay off the regulators by lobbying on laws and creating very expensive tax structures to avoid taxes. And so we see this in the general economy. We also see this in real estate. Think about the largest company in real estate by far, we talked about this last week, is Zillow. Zillow's net worth is about eight billion dollars. The next largest is the EXP Realty at about two billion. Zillow's bigger than EXP, RE-MAX, Coldwell Bankers, Citroen, Keller Williams, all the companies that hold all those national franchises, international franchises combined, yet pays no income taxes. pays virtually no state taxes.

And so what you have is this massive monopoly destroying competitors. Think about me as a real estate agent. My biggest expense individually every year is taxes, federal taxes and state taxes. Zillow pays zero. So when they say they're going to disrupt the market by competing with agents like me, not only do they have an inherent advantage, but think about the implications on our economy. If the winners of the economy aren't paying taxes, who's left to pay taxes? And that's why we have massive debt. That's why we don't have enough money to pay for infrastructure and things like that in our economy. In real estate, this is now becoming a speeding rocket ship towards destruction of the industry as a result of the lawsuit. Now, this lawsuit that's going on, I talked about this for the last few weeks. This has been going on for eight or ten years. It had great impetus during the Obama administration. And when the Trump administration came into play, they turned off the Department of Justice, which was acting as a bully for the lawsuit and threatening realtors to settle. Once Trump was out of office in two thousand and twenty, the DOJ picked back up supporting this lawsuit, and the idea was that somehow, and the whole thing is nonsense, and we're gonna talk about why, I can show you why I think that's true, that somehow realtors were conspiring, the franchises were conspiring, the MLSs were conspiring to take advantage of buyers and sellers. Well, the opposite's true, if you think about it. These large, faceless companies, I mean, when's the last time you got a fair shake from Google? Or from Facebook, if you've ever done business with them and had a problem, you're never gonna talk to anybody there. That's the nature of these big corporations. I recently went to a movie, personally, and I wrote an email to a customer service saying I had a couple questions. They had forty-five minutes of trailers. I said, is that normal? I haven't been to a movie in a while. They had subtitles playing the whole movie. Was that normal? Was it because somebody requested it? Okay, if that's somebody's request. But generally, the subtitles were blocking some of the movie scene. And the temperature, normally movies are cold. And of course, all I get back is some stupid email saying, we're going to refund your money. But they didn't answer the questions, which to me, I'm not going to go to a movie again if that's the experience. It wasn't pleasant. It doesn't matter if it's free. I'm not going to spend two or three hours if I can't watch the movie and enjoy it and I can't sit in comfort. So this is what happens when you have big companies. They're not accountable to anybody. So let's take a look at, there's interesting news now because what happens is when you have tyrannical administrations creating monopolies, you end up with less players eating each other and fighting each other. And that's the case here we have in the news this week in TechCrunch, which is one of the darlings of the venture capital world.

Those are people who fight wars with money and pay off politicians. Redfin is trying to defend itself against this new real estate startup. So you might have thought the guy who was the main plaintiff in the real estate lawsuit would be a hero. Henry Ford was a hero in America. Now you might say he made too much money or did a few people fairly, but at some level, he brought down the cost of cars and made them available to the average American, put his name on the brand, and built cars. this guy though who wants it the last thing he wants is his name in front because he's really a shyster I mean he's going to make a a four hundred million dollar lawsuit settlement I don't know hundreds of millions of dollars he's investing it in some stack tar some tech startup and already redfin another company that's some favorite of all the uh venture capitalists doesn't pay any taxes is out to destroy real estate agents and and dishonestly they're not defending themselves against these guys So now you have Redfin and this other company, I think it's called Landion, already fighting, and they haven't even done any business with this new landing company. That just tells you how I think Redfin is reading the tea leaves correctly as I am, which is the goal of our regulators, our state regulators, national regulators, Department of Justice, and the venture capital firms is to have one, two, or three big real estate companies that do everything, buy all your houses through Google and Zillow. Why would that be great? Well, the answer is, you're about to see why I think the answer is. So here you have the result of this lawsuit. And I talked about this last week. You had a professor of law review the contracts. At the end of the day, did the lawsuit serve the buyers and sellers by making the relationships clear? No. In fact, here's this professor of law from Buffalo, University of Buffalo: "Most buyer forms are complicated and confusing. Buyers will not be able to understand them and will likely get burned by provisions they don't anticipate."

I see this happening already. I have very sophisticated buyers who do not understand the process and they contact me in frustration. So what does Landian, which is the venture capital firm as a result of this last super post to do? Oh, they're going to revolutionize the industry. So I love this. This is a typical venture capital kind of, you know, we sit around with a bunch of stupid PowerPoints. Do you think this is going to work? We're gonna sell your house and avoid the real estate agent. Home buyer beware, there's new laws, oh that looks very scary. And then they talk about how they make the easy listing import, they schedule tours, make offers easily, big savings. All this has been available to customers all along. There's discount real estate agents, there has been all along. But here's the funny part, when you look at their actual offering, They're gonna charge customers, forty-nine dollars a tour.

Now, anybody here who watches this, if you've ever bought a house before, did you pay to go look at a house? No. They're only gonna charge you forty-nine dollars. And I will say, I've had customers call me that I wanted to show, and I couldn't make it, and I paid a colleague fifty bucks, sixty bucks to show a property. But I paid that as an agent, I don't charge my customer. I would never offer that, have a customer pay that. Price per offer, a hundred and ninety-nine dollars. Last year the average buyer who closed escrow wrote five offers. So you're gonna write one time, two times, three times, four times, five before you get into escrow? I don't think so. Do you feel like that's a good deal? Anybody here watching this, buying a house, who's paid money to write an offer? No, never happened before. Now, what they do offer is that, in this case, they're showing you how much little you pay, and then they'll also offer to charge you a flat fee, I think of fifty, a hundred bucks. Which again, if you get the house, that's great. The problem is not filling out the paperwork and sending it to the listing agent and getting it approved. The problem is getting the house. It's working with the listing agent. It's convincing them to accept your offer. It's negotiating. It's getting the lender on board. It's getting the lender to talk to the listing agent. It was as easy as submitting forms. Facebook and LinkedIn and Google would have all the real estate business. It's not because, for the most part, it requires human beings. And this landing company, it's so funny. They're going to charge you to show you a property. That's been free my entire career. And that's the success. So we end up with contracts that buyers can't read. Oh, here's another one. You can't look at a property without signing a contract. The contract includes your compensation. So now you can't even go look at a property without picking a realtor, committing to them, and signing some sort of a commission agreement. I guess it's cancelable and negotiable and all that, but my point is most buyers aren't going to know that. So now you have to pay to see a property, you have to sign a contract to see a property, you have to commit to an agent with a commission, you have to pay to write offers, you have to pay for a consult. That's not progress. Now if Landion and Redfin and Zillow and government regulators and the Department of Justice are successful at destroying the real estate agent business, if they're successful at that, then there'll be no alternative. You'll have to pay fifty bucks to go look at a house. It shouldn't be that way. Just like when Uber started, it was very cheap, and their whole existence was they were violating local laws. They raised enough money through venture capitalists to fight the lawsuits long enough to put out of business taxicabs to create a dominant presence, and now they've both raised their rates, and if you're a user, in my experience, lower the quality of the service. And that's what's gonna happen with real estate. They're already gonna charge fifty dollars just to see a property that was free. Last month it was free, now thanks to Mr. Stitzer's lawsuit, you're gonna pay fifty bucks to see a property. And one night you're gonna have to write an offer. Stupid! Can I just say, stupid. Okay, so at the end of the day, I think it's worth paying attention to all around us as consumers, we have a choice. You know, I feel bad, I saw this local fruit vendor two blocks from my house. And my wife and I used to go there, he had great fruit. But we also knew the man, we knew his wife. And you know, we purposely used him because it was great fruit first, and we felt like supporting him. I guess we didn't do it enough because he's got a business. And I think at the end of the day, I wanna be competitive. I wanna be valuable to my customers. I wanna save them money and get them houses they otherwise aren't gonna get. And otherwise I understand you're not gonna use me. But to assume that it's better to destroy an industry because it'd be much better to have Facebook or Google represent you buying your houses, I think you're making a big mistake. And I think that this is the result of we have these government officials and these lawyers who've never bought or sold a house. Never work with a buyer or seller of a house who are creating national policies without discussions, without input, and without practice, and without the earned experience and knowledge of the actual business. And it is destructive. It should be mocked. It should be fought at every bet. And here you have Redfin who refers to the lawsuit literally in their own words as their partner in arm because they wouldn't destroy the real estate industry. They just want to end up being in play. along with Zillow. These are companies that do not support our country, do not support your state, do not support your community, and at the end of the day, as customers, I don't believe they give you good service, and as realtors, for sure they don't give us good service. Okay, that covers that topic. I'd love to get your feedback. How do you feel about the new contracts? How do you feel about paying to see a property? How do you feel about paying to write an offer? you don't have to with me if you're gonna buy a house let's talk about it I'll refer you to an agent who'd be glad to continue to give you great service at a reasonable price and only charge you if you buy a house and not up front.

Let's take a look at the news real quick we're going along in this segment so I'm going to go through some of the rest but some great stuff this week I think in the news that should not be missed one is kind of what I call the magic of interest rates you know It's not the interest rates aren't important. I track them every week. But it's like magically there's some unicorn or dragons that affect the rates. It's not a factor of the government spending money doesn't have or the economy growing or not growing or people having money to buy things or not or invest or not. It's always a magical thing. Here's an example, JP Chase. Don't forget this is the private banker to Jeffrey Epstein and the private bank goes to the international slave trade, sex trade that Chase was involved with. Their top economist says the Fed should cut rates by half a point this month.

Okay. He says the Federal Reserve should cut their interest rates by half a point this month. You know, market rates have come down a bit. Why should the Fed cut the rates? What's the purpose of the Federal Reserve? Is the Federal Reserve's job to push the economy or is the Federal Reserve's job to reflect the economy? And that's one of the things where I think when people get political, they have an agenda. And keep in mind, JP Morgan would make billions, if not more, trillions in value if rates come down. Because they're buying and selling instruments, and the lower the rate, the more valuable the assets they have in their hands are worth. And so what they're really saying is the federal government should help us make an extra ten billion dollars or a hundred billion or two trillion dollars. Believe me, the last person JPMorgan's worried about is you. If rates go too low and create long-term inflation and destroy our economy, believe me, they have plenty of gold and plenty of other hard assets and other ways to protect themselves. So when a J.P. economist says what the Fed should do, the Fed theoretically should answer to the population, to the people, to the country it's elected and built to serve, not J.P. Morgan. The last thing we need are bankers telling the Federal Reserve what they should do, especially when those always line up in their interest financially. And again, we're in the mess we're in because bankers like JP Morgan have had so much control.

Here's another example I think of kind of companies not, first using interest rates and second of all, not serving customers and consumers. UWM, most people don't know who they are but they're a huge, United Wholesale Mortgage, huge lender to many mortgage brokers throughout the country. So they're the kind of company that does mortgages without really having consumer feedback and that's, To me, any company that's based on not working with consumers as part of their business, they do that because they are not worthy of working with consumers. They act like they want to make money without getting dirty talking to the dirty masses. But in reality, they're just a company that would destroy our economy as long as they came out on top. And so they debut a new, seventy-five base point incentive for refinances.

Here we have an economy that's starved for home buyers, and we have homeless people who can't afford houses, and people can't afford houses, and UWM is taking their capital, not helping that, the opposite. They're gonna refinance people who have houses so they have lower rates so they stay there and don't sell their house. I'm sure it's good business for UWM and their customers. It's just bad policy for us as Americans. You wonder, well, How can they happen? Wouldn't they price the loan based on the cost and a fair profit? Why would they incent one kind or the other? And I don't really know why I don't know the company that well. But again, I think you want to look at when companies emphasize refinances, they are making the problem worse, not better. They're showing up partners in helping us as an economy solve the problem.

Here's another article from J.P. Chase Morgan, again the private banker to the international sex trade Jeffrey Epstein. Cash could stay attractive for months despite rate cuts.

So on one hand you had one arm of J.P. Morgan saying we need to cut rates. Here you have another public relations release saying even if rates are cut it won't affect the value of cash, meaning we're not gonna invest in your economy. We're not gonna take our money and if rates go down, we're not gonna use that to invest and help you make money. We're gonna hold onto ourselves and benefit and just pocket the profits. And so cash is considered attractive. This is the same JP Morgan that's telling the Federal Reserve that they should lower rates. So I don't know one way or the other what they're really saying.

Here's another one, again, under interest rate kind of magic. I just feel like, of course, the lower rates go, the more people can buy a house, the more everything is more valuable because there's more money in the economy. It's not magic, it's just simple mathematics. Yahoo! Finance is reporting "Mortgage rates falling to five percent would get this party started."

I don't know what this party would be, but if mortgage rates are currently at six, getting them down a quarter percent will make things better. Getting them down to five, of course, but four, better yet, I guess, more activity yet. So again, sometimes I feel like the press puts these numbers out to get headlines, but it doesn't do is help people, because the reality is, if you can afford a house now, you shouldn't wait till rates drop to five percent if they're going to drop to five percent because you want the house now and the rates dropping your later five percent you can refinance and benefit from that versus if you wait till they go down to five percent, you're gonna stand in line with all the other buyers who are all of a sudden motivated to buy a house since rates are at five percent and the party started. So the last thing you wanna do is wait for the party to start.

Okay, also in the news this week, Los Angeles under bad policy and also dehumanization. This one kind of combines both at one time. You have city planners who've never bought or sold property, developed property that are going to change zoning laws dramatically here.

And one of them is they're gonna allow churches to build homes. So think about that. Now, I don't know about you. I'm a religious person. I'm not Christian. So when it says churches, it may or may not include synagogues. It probably does, though by nature, I'm religious. We have small parking lots because we walk to our synagogue, the nature of religious Jews. But okay, I'm all for more Catholic churches. I think they're great. I think when people are religious and turn to God and want to improve themselves morally, we have a better society. And so I think what this does is two things that are wrong. One, it turns the pastors and the leaders of the church into becoming real estate developers rather than churches. I mean, what they're saying is, hey, don't worry that you have less people coming to your church. Instead of working on attracting people to church, become real estate developers. Sell the property or rent the property and become a nonprofit or have people live there and you sell them food. The whole thing is just so sick. Why would we have the government telling churches to build on their parking lots? I don't understand that. Now, if we're saying the churches can do whatever they want on their land, and that's new, I believe they could have before anyhow. But to say that they're encouraging them to destroy the... the size of the parking lot the less people come to church just to build houses because the city is unable to build houses or unwilling to build houses otherwise to me just is a very creepy proposition I guess that's just the word that comes to mind.

Here's an update on the affordable housing. We have a state government that does not wanna let cities decide what cities wanna be. Beverly Hills does not wanna have as much affordable housing as the state government is forcing it to. for whatever for right for reasons

Beverly hills has designed itself to be a high quality city they have very little crime because of the great zoning and regulations they're very little crime they have larger lots for their homes and because they have low crime and nice properties their properties are worth a lot and businesses go there do really really well and say California which now has the largest population of poverty in America Says, no, we don't want Beverly Hills to be nice. We want Beverly Hills to be as crappy as the rest of the state. So you need to build affordable housing. And of course the city's gonna fight that, and the government's suing, and this is going on and on and on. It's gotten ugly to where the Beverly Hills, they can't even issue zoning permits for additions and things like that for houses. And so you have to ask the question, do you want the state to tell the city what your city component of housing has to be? To me, that does not seem like the American way. It does not seem to be freedom. People should be able to gather together, they form a city, and then have rules that work in their city. We're not saying that people can't come and buy houses in Beverly Hills. I don't live in Beverly Hills, by the way. I live south of it. My synagogue's in Beverly Hills. And I thank God for that because Beverly Hills Police Department gives us great security where LAPD has allowed riots in front of synagogues just a few blocks away. So to destroy the city of Beverly Hills and make it more like Los Angeles, to me, doesn't serve anybody. But our governor and our government system is intent on making Beverly Hills as lousy a city to live in as Los Angeles. That's very sad. Speaking of the city government, though, how effective are they actually at real estate?

This was an amazing article, something that I've known about for a long time, but it just came out and I just wanted to share. I couldn't wait when I got this one. The VA has to build more housing on the West L.A. campus.

Have you ever driven down Wilshire Boulevard near Veteran Avenue? It's a huge facility, huge campus, and for years was completely empty, it seemed. But in reality, not only did that build housing where there was older housing had to be replaced, but they actually leased out property to UCLA, to local schools, to Brentwood School, for example. And so rather than using the land to help veterans have houses, The VA in West Los Angeles has been making life great for UCLA students. I believe Jackie Robinson Baseball Stadium is on the VA leased land, as well as the Brentwood School, which is a very expensive private school. And it's interesting that in Los Angeles, which is very much pro-public education, that they would have a sweetheart deal for the Brentwood School. And so at the end of the day, here's a case where you have land bought and owned by the Veterans Administration not being used for VA housing. literally being used by other organizations, and you know people got paid off to do that. You talk about tens and hundreds of millions of dollars of the most viable real estate in Los Angeles. This is Wilshire Boulevard at the four oh five. There is no land, I can imagine, certainly commercial land in Los Angeles, that would be worth more than development right there. And this has gone on for decades, that politicians and developers have been paying each other and making profits off of land that should have been used for a veteran. So I'm not a veteran. My father was. My father-in-law was and was a colonel and then he ran a VA clinic. So my wife's a military family. And again, this just shows how everything the government does despite their state intentions just doesn't work. It's one thing to say you want to build housing for veterans, they're not doing it. They could have sold this land and given it to veterans to get medical care elsewhere. They could have sold this land and given it to veterans to go buy houses elsewhere. Instead, they leased it to organizations to make money The government officials, you know the government officials end up with jobs with these people, end up with stipends from these people. You know how all that works. It's just disgraceful. And the people are picking that. The veterans are picking that. It's only because the veterans are so disempowered, old, and have such bad health care that they're not riding in the streets over this. But it really is disgraceful.

So, what should YOU do about buying or selling real estate in today's market?

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]