Latest / Connor with Honor: AI, Real Estate and Real Life / Real estate failure may stem from new housing overbuilding October 2023 Santa Clarita Connor with Honor Fat to Fit Realtor update

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Real estate failure may stem from new housing overbuilding October 2023 Santa Clarita Connor with Honor Fat to Fit Realtor update · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_00: Hey everybody, the real estate market's been moving.
• 0:03
  SPEAKER_00: Today's October 3rd, 2023.
• 0:05
  SPEAKER_00: This is more a more in-depth look at the overall market, answering some seller and buyer questions that a lot of people have these days when it comes to real estate.
• 0:15
  SPEAKER_00: Now, the regular show included a bit about inventory, local inventory here in Santa Clarita Valley, California.
• 0:24
  SPEAKER_00: And not that I work specifically here in the representation of buyers and sellers in real estate, I also venture out other places, other cities in Los Angeles County, Ventura County, Orange County, and so on.
• 0:38
  SPEAKER_00: So as long as I'm able to know those local ordinances, restrictions, things that are going to impact local ownership, if I have access to all that information, either via an agent that I worked there with, have worked with in the past, or because I know some of the city elders or other important people that have access to that data, including their local board of realtors, once I know that I'm well capable of learning, understanding, investigating, providing what my client needs, whether seller or buyer, by the way, they do have different needs though.
• 1:18
  SPEAKER_00: So maybe a seller is going to require somebody to be more local or at least known in their local area, not be a nobody from nowhere, but a somebody from somewhere.
• 1:32
  SPEAKER_00: Maybe that's what's required to sell it.
• 1:34
  SPEAKER_00: But anyway, I look, I venture away.
• 1:36
  SPEAKER_00: I do look into those items to make sure that they're relevant.
• 1:40
  SPEAKER_00: So moving back into what's happening in the real estate world, the boards of realtors, National Association of Realtors, that's the overall governing body to real estate agents in local markets that choose to be members and realtors.
• 1:56
  SPEAKER_00: So you have to pay for it.
• 1:57
  SPEAKER_00: You can't use the name unless you are one, and so on.
• 2:00
  SPEAKER_00: So there's a lot of protection there.
• 2:02
  SPEAKER_00: When people are looking for residential real estate, usually that's that first step to a realtor because of the trade organization, of course, realtor.com.
• 2:12
  SPEAKER_00: These are very big uh real estate websites that a lot of people go to and they trust.
• 2:18
  SPEAKER_00: And then they also capture data.
• 2:21
  SPEAKER_00: So the National Association of Realtors is also very much a data capturing entity.
• 2:26
  SPEAKER_00: They pull that data, they hold on to that data, and then they're able to publish that data, and now they're that local authority about and above real estate.
• 2:35
  SPEAKER_00: There's also ethics, there's also like internal affairs, there's a police organization within the Board of Realtors that monitors the conduct of real estate agents at a local level that are realtors.
• 2:48
  SPEAKER_00: So you also have that.
• 2:49
  SPEAKER_00: There was a company, Redfin, who's a real estate brokerage, who has apparently recently advised their agents to pull out.
• 2:58
  SPEAKER_00: The politics aside, what that means to me, to the consumer, is that creates an issue where if you have one agent that happens to work for Redfin and they chose to take Redfin's order or advice or whatever it may be to sever their membership with the National Association of Realtors, and they're dealing with somebody that is a member of the National Association of Realtors, there's going to be paperwork that's going to need to be executed that's going to come from the National Association of Realtors or one of the other boards.
• 3:31
  SPEAKER_00: So you have the National, the State Level Association, then that local, the local jurisdiction like Santa Cruita Valley, San Fernando Valley, Los Angeles, so on.
• 3:41
  SPEAKER_00: There are different boards of realtors, typically that share data within these smaller areas.
• 3:47
  SPEAKER_00: But again, there's membership and there's different forms, disclosures, attorney-vetted items, legally bound items, items that have been approved through different levels included in this contract to be presented to or presented by the agent that is a realtor and the agent now who isn't a realtor because their brokerage won't allow them to be.
• 5:03
  SPEAKER_00: So people that are realtors are looking at houses listed by realtors.
• 5:07
  SPEAKER_00: Is there going to be some exemption for agents that aren't realtors to be able to show the house as well?
• 5:14
  SPEAKER_00: Or are they going to be okay to do it?
• 5:16
  SPEAKER_00: But then what's going to, if they're not realtors, where's the identification, verification coming from?
• 5:22
  SPEAKER_00: Because to be a realtor, I have to submit all sorts of personal information, documentation, I mean, all the way down to birth records at some point, fingerprints, all this stuff.
• 5:32
  SPEAKER_00: So they know exactly who this cat is.
• 5:35
  SPEAKER_00: Is that also going to be the case for other agents that maybe are working for this company now that want to come look at your house?
• 5:43
  SPEAKER_00: Where's that liability, that protection come for you?
• 5:46
  SPEAKER_00: Because they're not realtors, they're just, well, people that pass the state of California real estate exam.
• 5:52
  SPEAKER_00: That's what they are.
• 5:54
  SPEAKER_00: Maybe they'll have a lot of experience, maybe they won't.
• 5:57
  SPEAKER_00: But anyway, these are a lot of concerns that popped up.
• 5:59
  SPEAKER_00: That's why I was so wanting to publish that article and talk about what's happening in that sector.
• 6:06
  SPEAKER_00: Now, back to real estate at a local level here in Southern California.
• 6:11
  SPEAKER_00: We still have very low inventory.
• 6:13
  SPEAKER_00: That real estate, uh, having very low inventory is what's driving or keeping the prices pretty steady at this point.
• 6:21
  SPEAKER_00: The interest rates are the other reason why uh prices are staying steady as well.
• 6:26
  SPEAKER_00: They're they're kind of they're not too low.
• 6:30
  SPEAKER_00: That's going to kick off this buying frenzy that's now going to cause properties to go up, you know,$70,000,$80,000,$100,000,$150,000 in price.
• 6:40
  SPEAKER_00: It's not to that level, but it's also not too high to stop people from buying altogether.
• 6:45
  SPEAKER_00: It's pretty much in that sweet spot.
• 6:46
  SPEAKER_00: And you definitely want to check with your lender if you want to know what your interest rate would be, because it is dependent on credit score and a bunch of other variables that, as a home buyer, once you get through the approval process, you will probably need to take a couple weeks off before you start looking for houses.
• 7:04
  SPEAKER_00: I see that happen a lot.
• 7:06
  SPEAKER_00: So continuing with this trend with this limited supply and a pretty good demand, and the way properties are replenishing themselves every two, three, four days, kind of at the rate of selling, we're holding somewhere around 260, 265 active homes, condos, townhomes, for sale in the Santa Crita Valley, cities of Castella, Canyon Country, New Hall, Saga, Stevenson Ranch, and Valencia.
• 7:33
  SPEAKER_00: So in that area, about 260, 265.
• 7:36
  SPEAKER_00: We've been holding there for a few days.
• 7:37
  SPEAKER_00: I do a daily real estate update, sort of like this one, but typically not as detailed.
• 7:43
  SPEAKER_00: So moving from there, you have that variable in the market, you have limited inventory, and on the other side of it, the question then comes in okay, what's going to cause this market to change over into a market that has too many real estate listings?
• 7:59
  SPEAKER_00: A lot would have to happen for that to happen.
• 8:01
  SPEAKER_00: Number one, we're going to need sellers.
• 8:04
  SPEAKER_00: Where sellers are currently, we're going to need a mental shift for them to want to actually sell what they have and go get something else, or at least sell what they have.
• 8:13
  SPEAKER_00: To sell what they have, they're at a 2% and a 3% interest rate, typically, if they're holding a mortgage, because they did the refinance when the mortgage rates were super low.
• 8:24
  SPEAKER_00: And it was really hard to avoid because you had every lender that ever had a client reaching out to everybody they know and telling everybody, because that, my friends, is super easy money for lenders, the refinance.
• 8:36
  SPEAKER_00: So it's like just it's gravy on top of their normal commission.
• 8:41
  SPEAKER_00: So it's very, very good for them.
• 8:42
  SPEAKER_00: So that's where you have the refined market.
• 8:45
  SPEAKER_00: That is something that those sellers they're really not willing to do.
• 8:51
  SPEAKER_00: They are very happy with that super low interest rate.
• 8:54
  SPEAKER_00: They don't want to sell because if they go somewhere, usually they're going to end up buying, maybe.
• 8:59
  SPEAKER_00: That's probably a more majority of the time, but they they go and they do end up buying something.
• 9:04
  SPEAKER_00: Now they're going to be carrying an interest rate that's 3% higher, 4% higher.
• 9:09
  SPEAKER_00: And for a lot of sellers, potential sellers that might have already moved, that's uh a hiccup point or a speed bump for them.
• 9:17
  SPEAKER_00: Can't get past it.
• 9:18
  SPEAKER_00: That's just just so we're gonna stick where we are, even if we're outgrowing it, even if we're uncomfortable, we're just gonna stick here and see what happens.
• 9:25
  SPEAKER_00: So they're locked in at that interest rate.
• 9:28
  SPEAKER_00: Maybe they can leverage some of that money that's in the equity in that residence to now go purchase the dream home, their next home, their move up home.
• 9:36
  SPEAKER_00: So these are other options that a lot of people have now because how solid this market is and how high it happens to have gotten.
• 9:46
  SPEAKER_00: So you have that, you have the sellers not willing to sell.
• 9:49
  SPEAKER_00: So then the other factor to bring in this market is going to be from new housing.
• 9:54
  SPEAKER_00: So, where would more inventory come from besides people that own their houses wanting to sell it?
• 9:59
  SPEAKER_00: Well, more inventory is going to now come from new housing.
• 10:03
  SPEAKER_00: So now we have to look at that.
• 10:04
  SPEAKER_00: And if you look back at 2007, that market debacle, new housing kind of closed their doors.
• 10:12
  SPEAKER_00: What seemed to be six, eight months prior to um the uh subprime bank falling and then causing the house to tumble.
• 10:21
  SPEAKER_00: Clever, yes.
• 10:23
  SPEAKER_00: Uh, did they know something?
• 10:25
  SPEAKER_00: Don't know.
• 10:25
  SPEAKER_00: It's really hard to say.
• 10:26
  SPEAKER_00: Uh smart, they had good, they pulled out the right time.
• 10:29
  SPEAKER_00: Well, yeah, they did.
• 10:30
  SPEAKER_00: They were able to save whatever.
• 10:32
  SPEAKER_00: But now we have new hills, new housing building as fast as they possibly can.
• 10:37
  SPEAKER_00: They still can't keep up with demand, and we still have the supply chain problem that we experienced back during COVID.
• 10:48
  SPEAKER_00: So, that being the case, how's that move forward into today?
• 10:51
  SPEAKER_00: Well, you fix, you get lumber and everything else moving faster, stifle inflation a little bit more.
• 11:00
  SPEAKER_00: We might have a perfect storm where new housing might be able to overrun the market.
• 11:04
  SPEAKER_00: And if that's the case and they oversaturate, we have too many residences, which is facts as they may.
• 11:12
  SPEAKER_00: I think I read a study, we're like 12 years from that at their maximum build-out capacity.
• 11:17
  SPEAKER_00: So that would still take that long.
• 11:19
  SPEAKER_00: But again, it is going to cause prices in the resale market to soften.
• 11:24
  SPEAKER_00: It's also going to depend, though, on the new housing, where they're located, who the builders are, what the special assessments and Melaruz are, those extra taxes that if a builder wants to, they could pay it up front, and then maybe increase the house a certain percentage or price, and then pass that cost on to the homeowner if they really have to.
• 11:48
  SPEAKER_00: But instead of doing that, they say, well, we'll just divide it all up amongst all the homeowners and they can pay it in extra taxes and uh special, special taxes and that and Melaruz.
• 12:00
  SPEAKER_00: That's maybe going to be too much in some areas.
• 12:04
  SPEAKER_00: You also have the homeowners' associations.
• 12:06
  SPEAKER_00: What is that cost?
• 12:08
  SPEAKER_00: What's that number look like?
• 12:09
  SPEAKER_00: So then you have also that's going on, at least in the resale market, insurance companies, even the new housing, too, they're going to run into this.
• 12:17
  SPEAKER_00: Insurance companies in the state of California are leaving hand over fist.
• 12:22
  SPEAKER_00: We have very few that are remaining, and we have even a few that are leaving, but they're going to keep in force the policies they have here, but they will not allow for any renewal finding people that currently hold it.
• 12:36
  SPEAKER_00: So this is a ticking time bomb of real estate, and we have to have that insurance problem solved before we really know where the clearance is in this market and where we'll we where we are really headed.
• 12:51
  SPEAKER_00: That's something else that's causing the market to strain a little bit.
• 12:55
  SPEAKER_00: Also, you have some homeowners' associations that are in lawsuit.
• 12:59
  SPEAKER_00: That happens a lot.
• 13:01
  SPEAKER_00: So that's really nothing to be super panicked about.
• 13:03
  SPEAKER_00: But what is that lawsuit?
• 13:05
  SPEAKER_00: Is it, doesn't see, that's why talking about being local, that's super important if I have access going out of Santa Cruita Valley, if I'm going to Aliso Viejo, for example, going to list a million dollars of property there.
• 13:20
  SPEAKER_00: More than likely I can learn that area and figure out all of these different things.
• 13:24
  SPEAKER_00: But it's going to require me knowing an agent there, knowing somebody that I trust there that I can talk with and get all this information.
• 13:32
  SPEAKER_00: Or if my seller feels more comfortable, that same agent would probably be a fantastic choice for them to hire via a referral from me.
• 13:42
  SPEAKER_00: So that's something else that I do explain in this process.
• 13:46
  SPEAKER_00: Where we are with inventory, that's it.
• 13:48
  SPEAKER_00: We do have new housing.
• 13:49
  SPEAKER_00: We'll keep watching them, of course, as everybody will, because they're coming out with some great stuff.
• 13:55
  SPEAKER_00: Also understand that new housing need to cooperate with your agents.
• 13:58
  SPEAKER_00: So if you do have a real estate agent that you love and trust and so on and so forth, give them a call and say, hey, listen, I'm thinking about buying a new house.
• 14:07
  SPEAKER_00: What can you do for me?
• 14:08
  SPEAKER_00: And I'm sure they'll be very happy to set up times and showings and locations, just like I will.
• 14:14
  SPEAKER_00: And times, showings, locations at the different new housing tracks kind of give you and yours a tour so you kind of see what's going on, what they offer.
• 14:23
  SPEAKER_00: And the nice thing about that is they're probably not going to hold any punches if they're a good agent.
• 14:28
  SPEAKER_00: They're going to actually communicate with you and say, you know what, the homeowners association fees here are huge.
• 14:34
  SPEAKER_00: And even at build outs are going to be this.
• 14:36
  SPEAKER_00: Or, hey, you know what, this isn't bad because they're in second phase and the price change was at least$15,000.
• 14:43
  SPEAKER_00: And you see what I'm saying.
• 14:44
  SPEAKER_00: They can get there and they can get to the bees' knees of this whole thing.
• 14:48
  SPEAKER_00: They can talk about the the CFDs or those special taxes that we talked about earlier.
• 14:54
  SPEAKER_00: They can tell you what those are.
• 14:56
  SPEAKER_00: Maybe they can kind of give you an idea because they're going to know what questions to ask.
• 15:00
  SPEAKER_00: How long are they going to go?
• 15:01
  SPEAKER_00: How long do these Melarus last?
• 15:03
  SPEAKER_00: At some point, do they get paid off, or is there a chance they'll continue forever?
• 15:09
  SPEAKER_00: And maybe in Stevenson Ranch, I know two different areas where the Melarus are coming up, about to be paid off.
• 15:17
  SPEAKER_00: Curious to see what that's going to look like.
• 15:19
  SPEAKER_00: If it's been solved, if there's no increase, or if one of the people or entities that are taking for the Melaru special tax, which could be lighting, which could be infrastructure, which could be schools, which could be streets, which could be a lot of things, are those going to be satisfied completely, or are they going to be asking for, hey, you know, we really still need it because we have this issue and that issue.
• 15:46
  SPEAKER_00: And if we don't get it, then we're going to have to pass it on to the homeowners through their homeowners association dues and fees.
• 15:53
  SPEAKER_00: There's just so much to look out for.
• 15:55
  SPEAKER_00: So make sure you're choosing someone that will watch out for you.
• 16:00
  SPEAKER_00: I'm Connor.
• 16:01
  SPEAKER_00: I appreciate your time.
• 16:02
  SPEAKER_00: Thank you for listening to this wonderful week of October 3rd update.
• 16:06
  SPEAKER_00: We'll have one next week for you, uh, somewhere around Tuesday, Wednesday.
• 16:10
  SPEAKER_00: That's usually a good day because Monday clears the air with the new real estate news.