The Expert Podcast

Affordable housing homelessness, even the real estate market. Are some of the biggest topics of conversation in the current economic environment. Everything from people who are living on the streets don't have a house to live in at how to solve that problem. to people who rent an apartment and want to actually buy a house or paying too much rent. That's a huge problem.

There are even people who are…homeowners that want to move but can't move because they can't sell their house or buy another house. What's going on with all this. In fact even the global. Nationwide problem of inflation is related to housing costs In fact, the biggest factor in inflation according to the CPI is house inflation or. Residents inflation, it could be rent It could be mortgage.

What's going on. What's going on is there are not enough homes to go around. And…

This is not something that happened overnight. It's something that's been building up for many years. There are about 5 million more people that need house than there are houses for them to live in…

It's not necessarily a matter of money per se Some of it is some of it's the houses are too much but if there were 5 million more homes, The cost of the homes at every level would be more attainable at the lower level. People would buy them Think about it. as of a couple of years ago, you could find plenty of houses for. 200,000. And at three to four to 5% interest, you'd be paying about a thousand dollars a month for your house Maybe 1200.

That's very affordable for a large number of people. In fact, there's almost nobody. That is paying for their residents You know they're not living in a tent or living in a homeless shelter. Anybody paying for residents paying more than that. So if you were paying for.

Or an apartment. or for a duplex or roommate, you're probably going to be paying a thousand bucks a month. At up until 2018 or 19. You could actually find a house that you could have a mortgage. For the same price now.

There's other requirements You have to have a down payment probably have good credit but leaving that aside for now…

Fast-forward to 2020 or 21 Well, $200,000 houses are not as rev prevalent, prevalent, but. They still exist. You can check out our website homes cheap. And we feature $200,000 houses all over the country. All parts of the United States, coastal cities inland cities near big towns rural.

$200,000 houses are definitely doable. But even if you find one. The game has changed because now your interest rate is six or 7% taxes are higher…

property insurance is higher So now you might be spending two or three thousand a month. It's a whole different world. Not everybody is in the mood to pay 2,500 for a mortgage because with a mortgage now you have other responsibilities. You have to repair the house maintain the house.

You can't just call the landlord when the sink breaks Right You have to. do this yourself So going from a thousand or 1100 to 2,500 is a big deal. Why did that happen Well the reason it happened. Is because. There were three factors like a perfect storm One is the low interest rates Two or 3%.

Everybody wanted to get a house. Number two. Is the pandemic May people more nesting in there? Intentions. They didn't want to be bouncing all over the place moving around and they wanted to move from apartments.

High rise Mid-level. Duplex type apartments. People didn't want to be dense in that living structure They want it to be in their own. family home. So the market exploded.

Well now there were bidding wars Remember? 2020 21, there were bidding wars on property. Home value shot up. The median home price went from two 40 or two something like that to now for 24 30. Not quite double We're pretty close.

So. For the average person now instead of buying a decent house for two 50 or two 60 at 3% interest and having a couple of grand for a mortgage now you're spending four 50 or 500 at 6%. Now you're spending four grand. For your mortgage tax insurance. Whole different ballgame, right…

There…

There's no solution that's happening Here's a perfect example. And Los Angeles, they know they need to build houses. But the city council is not allowing construction to happen. This is the problem. In most jurisdictions.

The planning, zoning permitting. Is not allowing construction to happen at a fast pace. There's other obstacles in the construction industry. There is supply chain issues There's lumber prices There's labor there's skilled trades. Leaving all that aside.

The private sector construction industry could solve those problems If. They had an open playing field to build houses. The problem is if you're a contractor if you're a builder, if you're a developer, You can't get homes through the approval process, right? And these are cities that say that they want to build more housing They want to build more workforce affordable housing. But they're not allowing these projects to go through Why is that Well some is bureaucracy.

Some is the old NIMBY problem Not in my backyard People don't want to have density They say they do but when it's right next door, they don't want to have density. And…

quite frankly…

government employees. officials are scared. They're scared that if they approve. You know a 20 unit. Apartment complex right next door to single family homes.

Then they're going to get voted out office by the people who live there…

Whether that's true or not it's unknown but that's what they're scared of…

And then there's the financial aspect of it Does the PR the project pencil out on numbers. Because just to break ground that's some of these projects you have permit fees impact fees, approvals. you'd have to wait two or three years to get the permits done which means you have carrying costs that by itself get sometimes make the numbers not work, not for the builder developer just for the end user. Right The builder developer they built they just get paid for their labor their construction. efforts and materials.

But whoever is the end user that's hiring the builder or contractor. They may not be able to make that project work because of the built in. Cost or. Even the uncertainty it's going to happen right here Los Angeles. if they are sitting on plans if they're preventing building from happening if you're an investor or somebody wants to build this project, And you're not sure if they're going to let it go through Why put millions of dollars into buying land, getting, architecture hiring a contractor only to find out all your money is wasted.

Because the government agency that. Is behind this development authority. Blocks it…

This is. One of the most frustrating things as a builder because the market is demanding begging for more housing and as a contractor or builder. You can't do it. And. The public is begging for it.

But the. Agencies or the bureaucracy is standing in between that success happening And it would solve a lot of problems even for the government because they want to get these people off the streets and have affordable workforce housing, drop some comments below let us know what you think from your point of view.