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Investor Ban: Will It Fix Housing… Or Break It? · The Jon Sanchez Show

• Jon G. Sanchez, CEO: Good Thursday afternoon to you. Welcome to the Jon Sanchez Show on News Talk which is a pleasure to be with you and a pleasure to be with my co-host. Glad I'm not having to fly solo today, boys. I'll just tell you, I'm tired, stressed Yeah, it's the above. So I'm glad I'm with my buddies today to be able to share the... Well, both of us, for once, both of us had bad news today. my goodness. Dwight Millard of OnCue Home Loans. are you, my friend? Dwight Millard: Yeah, Jon, I'm doing okay and I love your, I just love your attitude. mean, you could be doing, no, you know, but you come on here every day with a positive attitude and that's what keeps the world going around. So I appreciate, Yeah, so yeah, it's a pleasure to be here. Jon G. Sanchez, CEO: Gotta do it, man. That's what keeps it going around. Absolutely. Thank you, brother. Appreciate that so much. Indeed it is. Thank you. Clark, I've been really to how are you? ⁓ kidding. Isn't that the truth? ⁓ You're the nice, cool, collected world, the world of housing, at least for the moment. ⁓ But we see. ⁓ Aaron Clark, Edge Realty: doing great. Gonna be a fun topic today. Dwight Millard: Yeah. Aaron Clark, Edge Realty: Hmm Dwight Millard: Yeah. Aaron Clark, Edge Realty: My world's like a parasite. hits you where you're not expecting it, you know? ⁓ Jon G. Sanchez, CEO: Yeah, yeah, yeah, exactly, exactly. where there's one problem, there's many, many more. ⁓ ⁓ it really is. speaking that, I use that analogy where there's one cockroach, there's ⁓ hundreds others. ⁓ And use that, gosh, what's it been now? Probably close to a month ago when I to see, and not just me, but everybody on Wall Street, started to see problems with these private credit funds, speaking of which. Aaron Clark, Edge Realty: Yeah, it's affecting the whole system. Jon G. Sanchez, CEO: And I spent a few minutes on the show. think it was on a Friday. Matter of fact, it was this last Friday, bringing everybody up to date. Dwight, there was a mortgage company in the UK that went belly up. were borrowing money on assets from various lenders saying, ⁓ you're the only lender on this asset. But anyways, this is the issue that weighed on the market today. And it's just getting worse and worse. And these are these private credit funds. All of a sudden there's a bunch of redemptions and this is what happens. The old cockroach theory where there's one problem, there's many more. And we've had a number of these private credit funds ⁓ from of the major Wall Street firms say, you know ⁓ you're limited redemptions, which is very normal. It's the prospectus a lot of these different companies, but people forget that. And a lot of these funds are getting hit with redemptions ⁓ and the funds like, we can't give you the money back. And so it just makes all the headlines. In the bottom line, it weighs on the market. And so you take that on top of the problem with the oil situation. ⁓ And yeah, we had us a fine mess today to say the very least. Dwight Millard: is it Jon, everybody wants their money back? Is that kind of that? I want, yeah. Jon G. Sanchez, CEO: Yeah, that's what it is. We're getting into a situation, Dwight, where is really becoming a major issue. When you get into global tensions this, and I'm talking the institutional side more so than on the retail side, what ends up happening these institutions, they start to get real panicky, right? And so they're getting hit with redemptions from their clients, right? They want their back. And so it creates this cascading effect where they start selling everything. know, frankly, that's one of the reasons that we've not seen gold ⁓ anything spectacular during this Iraq war, because are going, you know what, I've had a good run up of gold, let's liquidate it, let's get some cash going. So everyone's in the cash generation mode right now. ⁓ And again, what's happening on the private credit side of things, but also with a lot of different areas, it's happening, you know, ⁓ in, in your world. mean, you're seeing a lot of bond redemptions going on because people need the cash. They want to sit on the cash ⁓ whatever the reason is, whether it's panic or ⁓ got bills to pay. Maybe lost a bunch of money in the market from a margin standpoint or something. ⁓ But bottom line is liquidity is the name of the game right now. And if you can't provide it, you're getting pretty good. And we're seeing some of these private credit funds, stock performance is just horrific. It's just absolutely terrible. Dwight Millard: Yeah. Well, I'll see if I can research it and find it. I don't know if I'll get it. But one of the key indicators in my world is if you start selling your servicing portfolio, because that's how you get cash. So if people are experiencing one servicer to the next to the next, it may just be an attempt to recapture some cash. And there's billions of servicing portfolios out there. That's the easiest way, really, to get cash right now. Jon G. Sanchez, CEO: ⁓ that's a good point. That's a good point. Yep. Absolutely, absolutely. Yes, yes. No, that's an excellent point. You haven't mentioned that in a long time. I don't like when you mention that. Yeah, that just brought back some memories of 0809. Dwight Millard: No, well, I don't know that it's happening. yeah, I mean, you're seeing some pullbacks, some tightening on some guidelines, but it's not been anything that's been alarming, let's just say. But it'd be interesting to see if there is some liquidity issues and people are dumping their servicing portfolios a little bit. I'll have to look into that. Yeah. Jon G. Sanchez, CEO: Right. Right. Yes, yes, no, please, yeah, please monitor that side of it. right, folks, let me tell you what we have lined up with Aaron and with Dwight. Today, besides in the market that, of course, I'll get to in just a second, today, Washington passed the biggest housing affordability bill in 30 years. And it includes a very, very controversial rule, a new rule. Of course, it's backed by the president. I think this originally was his idea. And what rule that passed the Senate today says is, Wall Street, or excuse me, the government can ban large investors buying single family homes. We're if they already own 350 homes or more, this bill would ban them from buying any more. Now remember folks, after that 08, 09 time period and the crunch and everything that happened, the institutional in many cases were the savior, right? Because they came in and they gobbled up a bunch of houses. But when I say the savior, it depends upon what side of the fence you're on. And this is what Aaron is going to really explain. Because the supporters of this bill, and again, this only passed the Senate. They're not saying it's got much luck to go as far as the House is concerned. But what the supporters are saying is this is going to give families finally a chance to buy, right? It's going to free up some of the inventory that is out there. The critics actually say it could reduce the housing supply. could drive rents higher. It could drive prices higher, so on and so forth. So we're going to break this down and see, OK, what kind of impact does this really have on homes value, mortgage rates, the housing market, everything in general. you know, guys, it was a big deal when this bill passed today. And didn't think that it was going to happen. Many thought it was going to not get through the Senate or the House. And of course, it got through the Senate today. Pretty good majority, of 89 to 10 was the vote. And so, you know, it's designed to increase single family housing supply. That's why the president came up with this idea. They're going to give local governments to allow more building. ⁓ But the headline again, it's going to restrict the large investor. And so what we're going to be talking about and kind of debating is, does this marketplace, this housing marketplace, does it need the large investor, these big institutions that are now publicly traded, worth billions and billions of dollars, and that own thousands and thousands of homes? What happens if they're out of the marketplace? So it's going to be a fascinating topic, right, Aaron? Dwight Millard: Yeah. Aaron Clark, Edge Realty: ⁓ yeah, what's interesting too is, you know, this bill I feel really just addresses the symptom, which is the investors, not the problem, which is lack of inventory. And that's kind of how I feel about it. The concept of it kind of bugs me, but ⁓ we'll into it. Yeah. Dwight Millard: Yeah. Yeah. Jon G. Sanchez, CEO: Does it? Okay. Yeah. Yeah. Dwight Millard: Jon, think, you know, to add to Aaron's point, you know, my dear friend, your dear friend over at the Builders Association would tell you that been trying now for years to get land released from the federal government and they can't, you know. So, I mean, if you're, you know what I'm saying? I I with Aaron. Yes, that's what I'm saying. I agree with Aaron. This is back This is not a cure at all. The cure, I mean, we talked when this, before even came we talked about, Jon G. Sanchez, CEO: Mm-hmm. Yep, yep, yep. Aaron Clark, Edge Realty: Yeah, that would actually solve some issues right there. Jon G. Sanchez, CEO: Yeah, I would. You all right? All right. Dwight Millard: Hey, what about getting rid of the low-level price adjusters that Fannie and Freddie have added since 08? All that billions and billions of dollars that get taken away from the consumer. So there are other ways. We'll get into it. be interesting to maybe sometime get Dan here and shed some light about the building community just in northern Nevada and what they've been fighting, I think, for four or five years now, if not longer. Yeah. Jon G. Sanchez, CEO: Mm-hmm. Yeah, yeah, no, I agree. ⁓ yeah, if not longer. yeah, yeah, no, it's a point to wait. right. Well, lot of things obviously in the housing world, a lot of things going on in the stock market. Let me get the bad news out of the way and then I'm to build up to what happened to going into the close today. So was a tough one right from the get go. Pre-market, we were down 200 to 300 points, nearly 400 points. Matter of fact, ⁓ right the open, we were down almost 500 points. So you know it was going to be a rough one. What we didn't get today that we've received these last couple of days is kind of by the dip mentality. These last few days when we've dipped between five to 700 points, the buyer stepped in. They tried doing that again today, but the sellers absolutely dominated. Every time it was the whack-a-mole game, once again, every time the stocks started to rise, the sellers, and they just pounded this thing down. I think now, guys, I'm starting to feel, and again, this is just from experience, I'm starting to feel two different things. Number one, I'm starting to feel fatigue, meaning investors are getting very fatigued with the oil and the war headlines. Then you throw the private credit headlines into there. you add in the other issue, which is what I said a couple of days ago on the show. And I said, you know, I hate to say this, but here's the reality. We have not had one of these big, what we call a flush on Wall Street. And flush is designed to scare all of you that are listening to us right now out of the market, right? This is where you have in a very, very abrupt thousand, 2000. some crazy massive sell-off that lasts literally, in most cases, just a few hours or a few minutes sometimes. But it's enough to scare investors. They dump their stocks. Institutions jump in. They buy the stocks. The market runs back up. in most market corrections, you eventually, not always, but you eventually end up having one of these flushes. We have not had that. This has kind of been the underneath the bed type of market conditions these last few weeks. ⁓ It's just painful. ⁓ You start to pull the splinter out and your finger feels a little bit better, meaning the market goes up for a day, and then the splinter goes right back in, market goes back down, and you're in pain. That's what I'm starting to feel right now that we're seeing going on with investors. It's just a lot of pain at this point. They're selling a lot of things. Not everything is going down, but you look at this whole oil situation, have the airlines just getting tanked. I Southwest Air today down seven and three quarters. You have the truckers, Old Dominion down $12.54, a little over 6.5 % loss. Cruise lines down almost 8%, Tesla down 3%. I mean, the list goes on on. again, they kind of throw the baby out with the bathwater. They back to the liquidity issue that a lot of people are not really paying enough attention to, but that's why gold prices today down $53.40. Guys, in day where the market did what it did, you should not see gold prices go down. If things were acting normal, you see gold prices surge, but they're not. Let me tell you when we come back from the break what we did, give you some more of the reasons behind it, and then we're gonna get into our topic today. The investor ban, is it gonna fix the housing market or is it gonna break it? The boys will let us know. Let's turn it over to Kristen Snow. She's in the Right Now Traffic Center. Hello, Kristen. Welcome back to the Jon Sanchez Show, a Newstalk with Dwight Millard of OnCue Home Loans and Aaron Clark of Edgerility. All right, we're going to be getting to our topic again. Big ban. what the government wants. They want the big boys, the publicly traded companies that came in and swooped up thousands thousands of homes after the financial crisis that if you own more than 350 homes, you can't buy any more. yeah. How's the Senate today? We're going to talk about the pros and the cons of this. And again, you'll find out. They're saying not much likelihood it's going to pass the house, at least under its current version. All right, so let's get the news out of the way today. Like I said, it was a tough session going right from the pre-market all the way into the close. We finished down 739 points on the Dow, 1.56 % loss to a close of 46,677. The Nasdaq lost 404 points, 1.78 % closing at 23,111. And the S &P gave up 103 points, 1.52%. It's just 6,672. And I want to throw the Russell 2000, the small caps in there. That was a 2.12 % loss. So this is the analogy I was saying before we went to the break, where it's like you get a splinter in underneath your fingernail. It hurts, and then you pull it out, and it still hurts, and then you get another one. That's the pain that investors are starting to feel. I'm starting to feel that investors are really starting to get into the investor fatigue mode, where they're trying to sit here and go, how much more is this going to happen? Because what we're seeing happen, guys, is a lot is You know, it's a it's a 1 % loss today. It's one and a quarter percent tomorrow. So it's not that big flush that I was saying in the last segment, but it's 1 % 1 % 1 and a half percent. And before you know it, you know, you really find yourself in a situation where, geez, you know, we're in a correction mode. We're down 10 % very easily. Year date, we're just, yep, by paper cut, yeah, by splinter. Year to we're Aaron Clark, Edge Realty: death by paper cut. Dwight Millard: But you know, it's amazing say that. ⁓ been talking about this now probably for a couple of years now is just the consumer is fatigued on everything, housing, groceries. Now got to add this to it. You know, there's just so much, you know, bandwidth of most people just, it's hard for them to ⁓ sort it to sort the nuts and bolts out of everything around them. ⁓ the less can dig off the plate, the... Jon G. Sanchez, CEO: on everything. Yes. Yep. Yep. You're right. You're absolutely right. Dwight Millard: easier it makes them to kind of find some decision points. Jon G. Sanchez, CEO: You bet. Here's what we said on a year-to-day basis. I used to say this to Friday, but let's bring it out. For the year, the Dow's down 2.9%. NASDAQ's lost 4%. S &P 500, negative 2.5%. And Russell, which was up at our best level, we were up a little over 6%, if I remember right. Right now, we're up just 0.3 % of 1%. So again, nothing significant at this point, but it starts to add up, like I said, these losses over and over again. All right, let's hit the commodity side. Big, strong day for oil. $8.84 rise, $95.42. So let's bring you up to the date on the latest headlines. I told you yesterday that news services were reporting that a few tankers were being hit by drone shrapnel, causing some damage. Okay, we come into today. Evidently, more is starting to happen. We had the new Khomeini indicate that he wants to keep the strait closed, which again, all that means is he's threatening to do more damage to any ships going through there. Then we had the Secretary Chris Wright, who just the other day came out on X and said, ⁓ yeah, we're going to start escorting vessels through the Strait of Hormuz. Well, he came out today and said, well, he ended up correcting himself. Remember, about an hour later, the White corrected him, I should say. ⁓ He said, we're going to start escorts. Market got excited. Oil prices went down. Then the White House came out about an hour later and said, no, don't know the Secretary is talking about. That's not the case. Now we fast forward to today. Chris Wright came out. told CNBC today that the US Navy is not ready to escort tankers through the strait, it aims to be able to do so by the end of the month. All right, guys. So there's the latest of what happened today. We're reeling with, I know, Aaron, you gotta laugh. We're still reeling with what happened yesterday. So yesterday, remember, as I on the program, the International Energy announced 400 million barrels of strategic petroleum reserves of the 32 countries the world. we're going to be released. So they're going to open up the spigot. But I was critical of that yesterday. And I said, wait a minute here. We don't know who's doing what. In other words, how many barrels each country is doing. We didn't know what the US was going to do until later in the evening. So 400 million barrels, largest ever, ever in history, largest release from strategic petroleum reserves ever in history. So it's a monumental event. But again, devil's in the details. When's it going to start? What kind of oil is going to be released? I mean, all these different situations. Now, later in the day, the United States government came out and said, OK, here's what we're going to do. We're going to release 172 million barrels of the 400 million barrels. That's a significant sum. OK, but here's the downside. Again, devil in the details. It's going to take 120 days before they start releasing it. Guys, we're talking. Dwight Millard: Ciao. Hmm. Jon G. Sanchez, CEO: Four months. Can you imagine four months? Now, let's use the United States. And again, this news came out after the show yesterday. Let's use the United States as an example. If it's going to take the US four months, does that mean it's going to take everybody else for their $230 million barrels? Is it going to take them four months? mean, where would oil prices be at that point? Dwight Millard: Mm-hmm. Mm-hmm. Mm-hmm. Jon G. Sanchez, CEO: And this is what I said yesterday on the show. said, look, this is great that they announced that. I did the math. And I said, look, you've got 400 million barrels that these countries are going to release. We're losing 20 million barrels a day because the strait is essentially closed. 400 divided by 20 is 20. So that means we've got 20 days. ⁓ the oil was released today, the 400 million barrels released today, you've got 20. There you go. That's exactly right, Mr. Clark. Aaron Clark, Edge Realty: 20 days, four months from now. Crazy. Dwight Millard: ⁓ Jon G. Sanchez, CEO: So really, what difference does it make? now if we use, hold on one second, now if we use the US as a proxy, again saying it's gonna take the US 120 days before they can release anything, how long is it gonna take these other countries, right? So again, job owning seems to be, I'm go back to my investor fatigue comment, job owning has been saving this market, and I'm talking the oil side as well as the stock market side, it's been saving it for the last week or so, week and a half. I don't think, what I saw today with oil prices rising, I don't think today, or I think today was kind of the turning point where investors went, show me the money. The Jerry Maguire show me the money, this kind. They're like, show me the oil. Show me the Don't just tell me, show me the oil. And no country's doing it. Dwight Millard: Well, I was just gonna say, Jon, mean, just even go down 30 days from now on what you were just saying. mean, commerce is just gonna stop. ⁓ what point, I mean, ⁓ is it in California? You've got 7.83 a gallon some places. ⁓ I at some point in time, people are just gonna say, it's easier for me to stay home than, I yeah, ⁓ I don't if anybody really, yeah, oil lockdown, there you go, yeah. Jon G. Sanchez, CEO: Oh, it's starting to, yes. Yeah, yeah, yeah. Aaron Clark, Edge Realty: It's gonna be the oil lockdown. It's gonna be like COVID, but oil. Yeah. Jon G. Sanchez, CEO: Well, Well, the oil lockdown, yeah. Well, I gotta add one quick point before we go to break. So I'm gonna give you guys a little bit of naval knowledge. When I studied to get my Coast Guard captain's license, I had to study about this thing called the Jones Act. Well, I hadn't heard about it for a number of years since I studied for the test. Heard about it today. Trump administration came out and said, we're proposing, I should say, we're proposing... Dwight Millard: Yeah. Jon G. Sanchez, CEO: to eliminate the Jones Act for 30 days. I may be going, what the heck's the Jones Act? This is an act, guys, that goes back to 1920. So it's over 100 years old. It was an act that was written after World War I. And what this act said, and this is national law. What the act says is, if you want to transport any goods from one US port to another, you have to use a ship that is flagged in the US. It was built in the US. It was, or it is manned by a US crew. So in other words, it's all US. Okay. Trump came out today and said, we're thinking about eliminating that for 30 days. What does that mean? That means every Tom, Dick and Harry foreign vessel can come into our country and transport whatever the product is from one US port to another. And the logic is I saw, I found a study JP Morgan did back in 2022. And they said, and again, this was in 2022. They said, by eliminating the Jones Act. And we've done it just a couple of times in, I'll call it last 20 years. It would have saved the consumer 10 cents a gallon because you're going from basically one East Coast port to another East Coast port. So that was another thing that the market went big freaking deal. Number one, we don't understand what the Jones Act is, but it's only for 30 days. You're just considering it. And really, is it going to make that big a difference in the price of oil? I don't know. Dwight Millard: you. Yeah. Jon G. Sanchez, CEO: But is that a scary thought, knowing that we can have Chinese vessels, we can have any vessel flagged anywhere from around the world come into our ports? The US shipbuilders guys, the US port right now, they are furious at this. They are furious. Because I'll tell you, knowing Mariner law, this is a prize act that no one wanted to give up. I ⁓ honestly very shocked that the president came up with that idea today. So we'll But that's the latest kind of the carrot out there that they're working on something. Dwight Millard: Yeah. Jon G. Sanchez, CEO: Thank goodness that they're doing that, but I still don't see anything that's really gonna calm these oil prices down. I really don't. All right, let's turn the door to Jack Welcome back to the Jon Sanchez show on Newstalk 780 KOH with Dwight Mellard of OnCue Home Loans and Aaron Clark of Edge Realty. Alright, once again we finish down 740 on the Dow 1.56 % loss. NASDAQ gave up 404, 1.78%. S &P lower by 1.5 % and the Russell 2000 declining 2.12%. Another strong day for oil. Overnight, failed to mention this, overnight we did touch a bit over $100 a barrel which we hadn't been at in quite a few days. We closed at 95.42 up $8.84. loss on gold to $5,126. Seven basis point increase on the 10-year to yield to $427. Dwight, how do we do on the 30-year mortgage or dare I ask? Dwight Millard: Let me, yeah, no, don't ask, but let me put it in perspective, Jon. I don't like words like spike in the commentary, right? Rates spike, but anyhow, we were a week and a half ago, Jon, we were bragging about 5.99. We broke that six. Today you're up 11 basis points, which is big in one day, two price changes for the worse, 6.35 on the 10 year. Matter of fact, Jon, you're 15 now is at 5.95. You're only five basis points away from the 15 year going back over six. So it's been in the fives for so long. So it's just, you know, as you've said, as oil goes, so do the rates. So. Jon G. Sanchez, CEO: Isn't that something? Yep. Well, and again, we got to watch this liquidity squeeze, guys. If this private credit situation, as we discussed in the first segment, if the private credit situation worsens and liquidity continues to squeeze investors, going to see them continuing to sell bonds. And that, of course, has an inverse effect to the yields. Yields go up. The bond price comes down as the selling pressure exaggerates. So yeah, Dwight, got a lot of forces against you right now, kind of like the stock market. yeah, Misery loves company, my friend. Misery loves company. All right, let's get down to our day's topic again. We had a very interesting situation unfold out of Washington today. And I this was a shock to a lot of people. So Senate the biggest housing affordability bill that we have ever seen. Well, let me rephrase that. 30 years is what they're saying, but this is called, since we've ever seen it. It's got a new, controversial new rule. Remember, this idea was floated by the president. ⁓ And what this you're gonna find out. could ban large investors from buying single-family homes. we got this argument going on. Now, I just want to be real clear with everybody. This passed the Senate. They're saying this is not going to pass the House. The House its own version. So as usual, if this thing die, then they'll come together and take a little bit of the House's side, a little bit of the Senate's side, and go for there. bottom line is, let's to discuss what happened. So as I said earlier, it was a big, big. victory 89 to 10, was the vote. what this is designed to do, as I said, it's gonna increase single family housing supply, it's gonna give local governments incentives to allow more building, but gonna restrict large builders. Now remember, we have a number of large builders out there. Invitation Homes, Homes for Rent, Tricon Residential, Blue Rock Home Trust, ⁓ those are a couple of names that a lot of people know about. Those are publicly traded companies ⁓ that again, out, they gobbled up thousands and thousands of homes when the ⁓ housing crisis I know eight no nine and then bundled them together, created a publicly traded company, which Dwight, do you remember Corey and I predicted that the exact same thing was going to happen? Remember when Corey would share his stories? I'm sure you heard him too, Aaron, you know, where he was getting calls. You were probably getting calls from big institutional investors saying, Hey, we want to buy, you know, whatever 100, 200, 300, 500 homes, whatever it was. And, Corey and I both said they're going to, they're going to bundle them up. They get a big enough, they're going to blow them off. They're going to sell them off to wall street. And sure enough, they did exactly that. Dwight Millard: ⁓ yeah, ⁓ yeah, yeah. Jon G. Sanchez, CEO: What we're going to discuss now is, could this make the housing market worse from a supply and demand standpoint, et cetera? Aaron, let's kind of talk about, let's get the negatives, right? So we're going to show you some negatives and show you some positives here. Let's about, could this kill the build to rent housing? Aaron Clark, Edge Realty: I mean, I think you totally have that potential situation because if these institutional investors can't come in and, ⁓ focus on housing purchases, which they've been doing, which remember the return on investment for them ⁓ the funding for increasing building projects and things like that, which would include those, those housing markets. And we see them all over town popping up kind of a ⁓ new but they're gaining traction fast. Jon G. Sanchez, CEO: But what? Yeah, stop right there. I'm glad you brought that up. So a lot of people are not aware of that. So there are housing trucks being built not to be sold, but to be rented by some very, very large national developers. Aaron Clark, Edge Realty: Mm-hmm. Correct. Correct. It's like an apartment complex, but instead of them being condo style units with shared walls, they're individual homes within a community. Some of them will have club houses and things like that, just like an apartment, but you still get that vibe and feel of a single family residence. So remember that, like I was saying earlier, that it addresses the symptom, which is the investors, but not the problem, which is the lack of supply. So if you, if you steal the investors potential of coming in and dumping money into the market of housing, Jon G. Sanchez, CEO: Mm-hmm. Aaron Clark, Edge Realty: then what's their incentive to continue to grow the housing on ⁓ whether ⁓ what projects. Jon G. Sanchez, CEO: Well, as we're going to just yeah, but as we're going to discuss the counter argument is now it's going to open up the housing market for the retail. All the shoes ever since we're talking investors, the retail investor, right? The guy or gal that wants to go buy that first family rental, maybe a small duplex, whatever the case is, and get into the housing game. Now they're going to go, hey, we're competing against the big boys of Wall Street. We can come in and start to do that now. So. ⁓ Aaron Clark, Edge Realty: Well, and I think that's the surface assumption that we will see. Because I think instantaneously, if this were all to come together in a year, first year or two, we might go, ⁓ it's working. But time goes by and those institutional investors are dumping inventory and things like that, and they're pulling out of housing projects and markets, we're going to go back to the original issue, which is going to be worse, which is the lack of supply. Jon G. Sanchez, CEO: Yes. That's right. Mm-hmm. Mm-hmm. Aaron Clark, Edge Realty: You wanna fix the problem, you've gotta start at the heart of the problem, which is supply, supply, supply, supply. ADUs, multifamily, all that stuff, you have to increase that. Jon G. Sanchez, CEO: Mm-hmm. Right. argument, of course, again, those are against this saying, wait a minute, it's going to reduce rental availability. We know we have a rental challenge in lot of states around country. And most importantly, it's going to put rents higher. As you said, Dwight, the beginning of the show, I'll give you full credit. The consumer is stretched. You tell them, ⁓ because now the problem is going to get even worse. Now rents are going to go higher. Landlords are going to love it, right, Aaron? mean, this is going to be. Dwight Millard: Yeah. Aaron Clark, Edge Realty: ⁓ yeah. They're already salivating. Jon G. Sanchez, CEO: isn't really going to make it look good to to be a landlord. They're already That's right. That's right. ⁓ Dwight Millard: Yeah. Yeah. Jon, there was nothing, in my opinion, was nothing proactive in this, nothing about acquiring land, giving land, selling land to the states, know, on you know, local and counties, you know, to keep their hookup fees and all that. All this was, it's defensive. I mean, We're just, it's reactive. It's too, it's Jon G. Sanchez, CEO: Mm-hmm. I'm glad you said that because here's my opinion of the bill. And again, this is just the Senate bill. This is a pacifier for the public. This to me is a prime example of politicians saying, let's use my term, let's jawbone, let's let the public think that we're doing something great. We're looking out for them. We're going to open up inventory. But as we all know, lot of politicians don't think very clearly or they think with their donation checkbook. reality, I mean, you two are both experts in this area. It's not going to help, right Aaron? It's going to make the problems worse, right Dwight? It's going make the problems worse. Aaron Clark, Edge Realty: No, and if you were to actually poll the public and you say, how many homes, what percentage do you think of homes are owned by institutional investors that own 350 plus, you're gonna get an overwhelming response that's gonna be 15, 20, 30, 50. They're gonna have these massive numbers. And so from that idea, you're gonna think it's gonna create a huge massive change in the market when in reality it's like three to 4%, that's it. Dwight Millard: Yeah, yeah. Three to 4%, yeah. Jon G. Sanchez, CEO: What's the real number Dwight? Yeah. What's the real number Dwight? That's right. Dwight Millard: Yeah, yeah, yeah. 574,000 homes nationwide are owned by institutional investors. Three to 4%, yeah. So we're attacking the three to 4 % problem. Jon G. Sanchez, CEO: Yeah, yeah. Dwight, how many houses are owned by institutional? And what is that, 3%, 4 % if I remember? Yep, there you go. So we're attacking these companies. And again, it's spitting in the wind in the big schema themes. 3 to 4 % of homes that are out there, they're not the, I love what you said, Aaron, I'm going to repeat you. They're not the problem. The problem is lack of inventory. the problem is they should be spending this time to figure out ways to, again, free up some of the federal land that is out there that You know, there's a bunch of empty sagebrush. Exactly. Loan incentives. mean, there's a million things they can do. Aaron Clark, Edge Realty: expedite permitting processes. Dwight Millard: Yeah, yeah, yeah. Jon, it's like eating 25 cookies a night and I'm gonna give up one. Jon G. Sanchez, CEO: You're right, yeah, yeah, there you go. Good analogy. Let's wrap it up. Now I'm hungry. I'm gonna wrap it up with Kristen Snow, the Rain Out Traffic Center. Kristen. Dwight Millard: Give up one. Jon G. Sanchez, CEO: Welcome back to the Jon Sanchez show on Newstalk 780 K which with Aaron Clark of Edge Realty your phone number, sir. Aaron Clark, Edge Realty: 673-6700. Jon G. Sanchez, CEO: Dwight Millard of OnCue Home Loans, your phone number, sir. Dwight Millard: Yes, sir. 775-240-2022. Jon G. Sanchez, CEO: Thank you, fellas. All right, we're discussing this bill that passed the Senate today that wants to basically ban any of these large institutional home builders, investors, et cetera, from owning more than 350 homes. I want to clarify one thing before we run out of time. If you go and you read the bill, here's the gist of it. if you own, if you're, again, one of these large institutional investors, you own 350 or more single-family homes. You're done. You can't do that. They don't want you to own more than 350. companies that add to the housing supply through building or serious renovations would be able to own more homes than 350, but would need to sell those homes after no more than seven years. So there's little caveat there. OK, boys. Now, this passed the They're saying that the House version is completely different. This current Senate will not go through the House. We'll see what happens. I don't even know when the House is going to vote on this. imagine probably fairly soon if the Senate just voted on this. let's come back to you as the realtor of the group. What's advice? Let's look two scenarios. Let's look at the scenario that this thing passes. Let's say that House version is very similar to this one. You're capped at 350 homes. Look in your crystal ball. Where are we looking at as far as home prices increasing, decreasing, rents going up, rents going down? Aaron Clark, Edge Realty: I mean, I think you're gonna see increase in home pricing and I think you'd see increase in rental pricing ⁓ are prevented. Yeah, it's not gonna help. Jon G. Sanchez, CEO: So both bad for the consumer. Then why in the hell would the government want to pass a bill that's bad for the consumer? Aaron Clark, Edge Realty: Because it's perception is reality and to people that don't understand what this means, sounds amazing on the surface. It sounds awesome. That's right. Jon G. Sanchez, CEO: ⁓ Unless they listen to this show. That's exactly right. Dwight, go back to your point for those that may have just joined us for this last segment. How many homes in America are owned by institutional investors? Dwight Millard: Yeah. What? 594,000 nationwide, which is three to four percent. Yeah. Yeah, and you know, Jon, if those home prices go up, we already know the mortgage demand is gonna go way down. you know, now we're gonna, now we gotta hold the other problem. What are you gonna do now with all, yeah. They're gonna have to them rebuy the houses again they were trying to get rid of. Yeah. Yeah. Jon G. Sanchez, CEO: Yeah, so dropping the bucket. So you're gonna. Yes. Now we gotta hold another mess. Thank you politicians for creating another mess. Thank you politicians if this thing goes. We're not gonna get too excited about it. We wanted to bring it to you. As Dwight said, this is broke today. So we jumped on this story for you because again, so many of you do own real estate, whether it's obviously your primary or the rental side of things. Aaron, what's kind of your final advice for someone right now? I'm going to take the words out of your mouth. I think you're going to say wait and see, right? Because obviously we don't know what the outside of us going to be. Aaron Clark, Edge Realty: ⁓ yeah, as far as the bill goes, wait and see. Again, if you're doing something, if it's within the budget, none of this stuff should impact your decision. Keep moving forward. If not, and you feel uncomfortable, then wait. There's nothing that hurts you either way. Jon G. Sanchez, CEO: Yeah, beautiful. Dwight, about you? Dwight Millard: Yeah, I agree. think, you know, figure it out if it gets to that point. But yeah, I wouldn't my plans because this has been introduced. ⁓ And so people supported it ⁓ for re-election, sure. ⁓ Jon G. Sanchez, CEO: Yeah. Yeah, yeah, no, that's a very, very good point. we will see what happens with it. We'll keep you updated the more that we hear. I want to throw this in very quickly. Tomorrow is really important day from an economic We have the Fed's measure of inflation, which is the PCE prices. We have those come out We've got the second read of the GDP number for the for the fourth quarter of last year. We'll see if we get another revision. Remember, you get three reports. This is going to be the second one. So we'll see exactly what that number shows. But this PECE number is a very important one. And then we've got University of Michigan Consumer Sentiment Numbers, the preliminary report. This is that survey of consumers. And it's for the month of March. So very interesting to see what the consumer's feeling about everything that's been going on. So real important day tomorrow. Going to be busy. Don't miss the show tomorrow night. Thanks, boys. You did a phenomenal job, as always. And thank all of you for listening. We'll see you tomorrow on the Jon Sanchez Show. God bless.