Loading summary
Transcript93 lines
- [00:00]
David Green
Welcome to Real Talk Real Estate, the show where we cover how to build wealth in real estate with no fluff, no BS and no sales pitches. I'm David Green and I've been doing this for over 10 years. I've seen the ups, the downs and everything in between. This is the show where we pull back the curtain and show it to you too. So if you want to build wealth through real estate or you just love learning about it, you found your home. What's going on, everyone? Welcome to Real Talk Real Estate. This is the David Green show and you are watching see in Green. I'm joined today by my buddy and Austin realtor, Jordan Moorhead. Jordan joined me on a Real Talk Realtor episode that would be airing on this exact same channel. So go check that out if you like Jordan style. We talked about what's going on in the Austin market, how to buy in a market where prices are plummeting and where to find deals. And today he's been gracious enough to join me for a scene Green where we take questions from you, the listener base, and answer them for everyone to hear. Now, before we get into it, please take a minute to consider sending me a video with your Questions@David Green24.com Ask we need these questions in order to make the show. I love making these shows, so please do that. Jordan, how are you today?
- [01:10]
Jordan Moorhead
Doing great. David, how about yourself?
- [01:12]
David Green
I'm happy, man. I get to make a podcast, we get to talk about real estate and we get to give the people what they want. How's Austin real estate going?
- [01:21]
Jordan Moorhead
Actually, the last since we talked a couple weeks ago, we had a pop. We get these weird pops. I mean, I'm sure, you know, it's like going through markets declining, you know, things will be just flat or nothing's happening. Then we'll get a big pop. And we just went through a big pop and we're dealing with all those contracts now. So stuff's good right now compared to where it has been the last couple months.
- [01:45]
Tyler
Hi David. About a year ago I purchased my first property. It's a two bed, one bath condo about 20 minutes north of the Microsoft campus. And we Washington State for 440k all in Piti Hoa is about 3 1/2 thousand per month and I think I could rent it for about 2,100 per month. The twist here is that I'm going to be moving for my career to Michigan in about six months. And so I'm wondering if it makes sense to keep the Washington property or to Sell it. If I kept it, I would try and purchase a property in Michigan that had a PITI of somewhere around 2100amonth to try and let the rent from the Washington property pay for the mortgage in Michigan. But I'm wondering if that even makes sense, because on its face, it kind of pencils out, but at the same time, we're still 1500 cash flow negative on that Washington property, kind of however you slice it. And so I'm wondering if it even makes sense to not just invest that, that money back into the market and let it appreciate and then get back into real estate at a later time.
- [02:44]
David Green
All right, Jordan, now I've answered this on a previous Seeing Green, but I'm curious because I have controversial opinions sometimes. Is there ever a time where someone should hang on to a property that is losing $1,500 a month, and if so, under what circumstances do you think this should be considered?
- [03:02]
Jordan Moorhead
So I had a different view of this than most people did in 2020, 2021 when it worked really well to buy negative cash flow properties and they just shot up. I said, don't buy anything with negative cash flow. And it worked really well for a lot of people. I think the only reason you should buy something with negative cash flow is when the market is underpriced or has just such room to grow. Let's say you bought something right now with negative cash flow in a market where prices have dropped significantly and you had a lot of certainty that they were going to cut rates here soon. I may be interested in it, but fifteen hundred dollars is probably too much for me. If I was losing 100 or 200amonth, that'd be a different story. But, and I don't know his financial situation, how much money he makes. He might make $400,000 a year, in which case $1500 doesn't matter as much. But if you make a hundred or 150, it's going to affect your ability to buy that next one in Michigan. And let's say the values don't go up, they go down. You know, you'd be better off just getting out of it. I, I would lean towards getting out of that.
- [04:19]
David Green
I think that's very similar to the advice I gave. I basically said, hey, if you're wealthy like you said, and you have reason to think that prices are going to go up reasonably really good area, really good economy, really good job market, you can consider it, but that doesn't mean you should. But if any of those are not present, you shouldn't be doing this. And I think now with what I. What it looks like is going on, just from my like the gut feeling I have in the crystal ball of my bald head, I feel like we're heading into a pretty bad recession here. We overbuilt in some places. We had a crazy run up of prices and I think layoffs are coming. I don't know why we aren't hearing more people talk about it other than it's just they don't want to cause panic or there's nothing to say. But I heard Microsoft just laid off 9,000 people. I know that they're really. You were going to say that? Yeah, we'll go ahead and share that.
- [05:12]
Jordan Moorhead
Well, no, I was going to say the exact thing you just said, that Microsoft just laid off a bunch of people and now they're trying to bring in 2/3 the amount of people they laid off with H1B visas. Or maybe those people can't buy because I know they've made it a lot harder for people with visas to buy recently. So that I would probably sell that condo. Yeah, right now, if you could.
- [05:36]
David Green
Even if you're gonna lose money or you sell for less than you thought, what stops people from selling at a lower price is they feel like they're leaving money on the table a lot of the time. That's an unreasonable belief. It's like it used to be this much, like that was the high and it's dropped from the high. And there's this assumption people have that it's going to go back like that's what it should sell for. It's kind of like if this baseball player had the best year of their career ever and now we just assume that they should do that every single year. That's not really fair. You should probably compare them to all the other baseball players, not compare them to their own best year. That kind of thinking will get you in trouble because you'll hang on to a property thinking values are going up. What happens if they keep going down? What happens if after Microsoft lays people off, Boeing lays people off and then the whole Seattle area starts to have like not only jobs laid people off, but now all those people that got laid off, they all hit the job market at the same time and now there's competition for jobs. So employers are like, I could pay half as much. I got all these people that want to work. And now your current people that thought that they were financially secure, they're getting worried because they're working more hours for less pay. And what do you do to get out of that? That's literally the opposite of the market we've had where there was too many jobs, not enough workers. Increased pay accompanied that, and then real estate value skyrocketed. So rather than thinking about the best case scenario and thinking that's your baseline, maybe just be glad that you got out of it, you didn't lose more than you did.
- [07:02]
Jordan Moorhead
I think that's great advice. Get out while you can.
- [07:06]
David Green
Sweet. All right, let's get to our next question here. And this is from Tyler.
- [07:12]
Jordan Moorhead
So thank you for all.
- [07:14]
Nikki Vong
Hey, David. My name is Tyler. I live in New Jersey. I invest in Ohio. I've been listening to you for a really long time now.
- [07:20]
Tyler
So thank you for all the knowledge.
- [07:23]
Nikki Vong
Right Now I have nine units or nine houses and 11 units. I'm closing on another one in two weeks. That brings me to 12 units. So I'm wondering, my question is, when is it okay to start looking at real estate as something to rely on income wise? If I do the math, let's say I have 20 units right now.
- [07:41]
David Green
I have 11.
- [07:42]
Nikki Vong
I'll have 12 in the next couple weeks. Let's say I have 20 units at $350 in cash flow. That's a pretty substantial amount of cash flow per month. So I'm just wondering when it's time to look at that as, like, a valuable source of income.
- [07:56]
David Green
All right, Jordan. So this was another question that I'm bringing in as a repeat because it's really controversial and you get different takes from different influencers. So some people say, invest in real estate. Build up your cash flow, Quit your job, quit everything that you hate, Live off the cash flow, drink martinis, buy a yacht, be surrounded by gorgeous babes, and it'll fix all your life's problems. Other people, which I'm on this side, are like, hey, cash flow is notoriously unreliable. You may think you have cash flow and then you go through a recession or something breaks in the house or your tenant goes through hard times or Covid comes whatever. It's just scary to say I'm going to build a foundation of my economic life on cash flow from real estate as opposed to having it be icing on the cake. I tend to get kicked around by my contemporaries in this space for telling people that I don't like quitting your job to get into cash flow unless you're paid off and you got a lot of money. But I am humble enough to accept I could be wrong about this. Do you. Which side do you take? And under what circumstances would you advise somebody to start living off their cash flow?
- [09:02]
Jordan Moorhead
I think I'm a little bit in between the two. So I don't, I don't think you should live off your cash flow or even try until you have about twice as much as you think you need. But at the same time, as you said, it's very unreliable. I saw a friend early on do this. He was living off the cash flow of just one property and it was just enough to fund his modest lifestyle at the time. The problem came when both furnaces broke in the middle of the winter and it killed all of his cash flow or it killed all his reserves. So he didn't have a lot in reserves and he didn't have that much cash flow. He had enough. And when a big problem came up, he was in trouble. So I would be scared to do it with about, with less than double what you think you need. So 6,000amonth. Wait till you have 12,000amonth because then if you lose some rent one month or you have a big, a big expense, it's not going to kill you. At the same time, I think cash flow gives you more of the ability to do what you want with who you want in the workspace rather than not work at all. I think most people are going to do that too. I don't think they're going to not work and sit on the beach.
- [10:15]
David Green
What do you think about the advice that on one end of a spectrum you have a W2 that you hate, on the other end you have cash flow from real estate that you bought. And most people are told, pick a side. What do you think about this idea that there's a spectrum and somewhere in the middle of that is build a business in real estate, whether you're flipping houses, whether you're a buy and hold investor, a short term rental investor, a real estate agent, a loan officer, or some combination of all of these. But you're doing something in the industry that you like, building up business, building up revenue, like problems that need to be solved, that people come to you for hiring staff and training them and then not having like completely passive income, but passiver income because you can get a big chunk of your time back overseeing other people that are doing the job because you provided them opportunity and training and like being a business owner as opposed to just a buy and hold investor. Sure.
- [11:12]
Jordan Moorhead
And I think that's more even the ability to choose of what you do. So rather than doing every little job because you have to and you have to make every dollar Growing your business, you can hire that admin to answer the phone, or you can, if you're in the real estate sales business, you can hire a transaction coordinator to do the paperwork. Or if you've got a real estate team, maybe you hire buyer's agents where you don't work with every buyer. And I think I'm coming from that lens. But yeah, I think it's. It's an addition to what you're doing. I don't think it's a replacement necessarily for me at least, but it gives me the ability to do what I want when I want and work on the projects I'm interested in.
- [11:49]
David Green
Yeah. And I like this strategy more, which is why I'm sharing it. Because if things go wrong, like if things go wrong with your portfolio, like you mentioned, two water heaters go out, there's nothing you can do. You are now broke. But if things go wrong in your business, you can jump back in and you can work again and stabilize it. And then you could go back to taking time off if that's what you want to do. But I think it's better to look at this situation, say, why do I just want to not do anything all day? Is it that? Or do I just not like what I'm doing and I want to do things that I enjoy more? In which case, if you come a business owner, you can hire out the parts that you don't like to the person who actually does like that. A lot of people don't think about that, but when I was in real estate, I hated giving people keys on closing day. I don't like all those emotions. It's awkward for me. I would always avoid it, but. But for most realtors, that's their favorite part. If that's all that they had to do all day, they would be happy as a clam. I didn't love showing houses. Most realtors love looking at all the houses and listening to the people talk about what they think when they see a house. I liked negotiating the deals with passive aggressive, rude agents. And most people hate that. They don't like the conflict. Right. So there was this synergy where what I liked about the job is what they didn't like, which meant they were happy to work doing that part and I was happy to not do it. And then I didn't hate work because I got to do the parts of work I like. Now you're a realtor and you're an investor. Have you found this to be the case in your business or do you think I'M off.
- [13:19]
Jordan Moorhead
No, absolutely. And there's just parts that I'm not good at. So the paperwork. I'm terrible at making sure all the paperwork's done and where it needs to be. And I hire people to do that stuff. So I get to do what I want and I don't want to stop doing it because of that. I think what you referred to is people getting this cycle of burnout or hating what they're doing and have to get out and they look at real estate as their way out. I don't hate what I'm doing, but I get to choose what parts of it I do. Just like you said there.
- [13:48]
David Green
All right, moving out of the videos. Let's get into the comment section here, guys. And remember, if you're listening to this, I would love for you to go submit videos. Head to my website, davidgreen24.com Ask where you can submit your videos with questions about the economy, about real estate, about how Jordan became so handsome. Anything that you're thinking, we want to hear it. All right? In this segment of the show, I like to cover comments that came through on YouTube on social media. Typically it comes from the Spotify or the YouTube sections and then we comment on it. Nikki Vong says, I'm under contract currently with a proposed rate of 6.99 on a 30 year fixed. We have 23000 in concessions. We're currently planning on doing a 2:1 buy down, but I'm wondering if you think that is the best option in the current state of things over a standard permanent buy down. Jordan, do you have any thoughts on the 2:1 buy down? As a realtor, do you see this very often?
- [14:40]
Jordan Moorhead
Yeah, I love the 2:1 buy down right now. Personally, I think if you're a gambling person or think rates are going to go down that it's a great way to save a bunch of money right away and the seller pays it. There's something I didn't know about the 2:1 buy down until a few years ago is they put that money in escrow. So it sounds like 6.99 is the base rate. You'd be down at a 4.99 for the first year, let's say year two, when you're about to go up to that 5.99, rates are there. You can refinance and take whatever's left over in escrow, put it towards the mortgage balance. So I love the 2:1 buy down.
- [15:22]
David Green
Then do you want to explain just like what it is if someone's not Familiar with hearing it.
- [15:26]
Jordan Moorhead
Yeah. So two one buy down is in this case the rates of 6.99, which is I think not the worst rate you could have right now. Like what David's saying, they can be higher 6.99. So first year you're going to be down at a 4.99. Then at year to the beginning of year two, it's going to go up to a 5.99. At the beginning of year three, it's going to go back to the base rate of 6.99. I'm not just saying I like this. This is what I did when we bought a house last year. So I, I really like the 2:1 buy down.
- [16:00]
David Green
It's not the same as an adjustable rate mortgage. It sounds that way. Adjustable rate mortgages are different. This is, you have to look at it like I'm getting a 699, but I'm getting a little bit of grace for the first year and a little bit less on the second year and then it kicks in just to buy me a little bit of time. Now this makes more sense when wages are going up because you're like, hey, in two years I should theoretically be making more than I am today. It becomes a little bit less valuable if wages don't go up or if they go down. You just have to make sure that you can afford it and that maybe you save that money. Like make the same payment that you would have made and put the rest towards principal or put the rest in a savings account just in case. But yeah, I think that's a good plan there, especially when you get the seller to pay for the cost of the 2:1 buy down, which is what Jordan will do if you use him in Austin.
- [16:44]
Jordan Moorhead
Yeah, and that's a good point, David. I probably wouldn't do the two one buy down if I had to pay for it. But getting the seller to pay for it, I think it's a phenomenal idea.
- [16:56]
David Green
All right. From Mama. Building an empire. 30 houses in one year. Pimpin. This was for a realtor who sold 30 houses in his first year. On the Real Talk realtor episode from OC Real Estate Guide. I love his perspective. Great conversation from Taylor Barnard. David, I'm too big of a chump to send a video message, but I recently inquired about getting pre approved for a traditional loan for a second duplex. I currently have an FHA on our duplex. The loan officer at my credit union told me that not only would we have to put 20% down for an owner occupied multifamily that we would need six months of reserves equal to six months of rents from all four hypothetical units saved. None of this seems correct. Have you ever run into this, Jordan, where credit unions have different standards than loan. Loan brokers?
- [17:43]
Jordan Moorhead
Yeah, they have overlays. Or I may be missing the term and you would know better than me, David. But they make up their own rules on top of Freddie Mac. So Freddie Mac said, here's the guidelines. The credit union says, actually we want to make it a little stricter so our loans look more attractive. And that's happened to me a couple times. I don't like working with credit unions most of the time on government sponsored loans like that, like Freddie Mac or Fannie Mae just go to a loan.
- [18:14]
David Green
Why don't people go to loan brokers? That's what we do at the one broker. So like basically you go to 100 credit unions or 100 different banks. We go to them all for you. And we, we already have them on speed dial. We talk to them all the time. We don't have to go to them, honestly. They give us their rates every single day and their loan programs. And then we look at them and we go, oh, this would be the one that has the best price. Or they're doing a low down payment option that no one else is doing. Or if you can buy down the rate that normally costs 6,000, but right now it's only 2,000. Like we have all these options that it's our job to know it. And yet people will still manually go to all of these places. But just call us at the one brokerage and let us do that for you. So sorry, Taylor Barnard, but you learned the hard way what happens when you use an inferior loan officer. Were you gonna say something, Jordan?
- [19:03]
Jordan Moorhead
It's in. Again. Again, this is not advice in any. I would say it's probably most likely going to be 5% in six months reserves. That's what I've most recently heard. And David, again, you'd know better to be on that.
- [19:16]
David Green
It's more. I think the 20 down on a primary usually isn't the case for a duplex. It should probably be closer to like 10 in most cases. But that's because credit unions are lending their own money. They're not doing Fannie Mae Freddie Mac loans.
- [19:28]
Jordan Moorhead
Oh, I, Yeah, I just think of things as whatever the Fannie Mae Freddie Mac guideline is. And that's all I know because I've had to learn them from going through these deals with different people.
- [19:38]
David Green
Yeah, credit unions are kind of like, we lend out our own members money. So we want to be more conservative than normal. So we want a higher down payment to protect ourselves. But if you're going to a loan broker, they'll find the bank that's like, dude, we just got a whole bunch of money from somebody. We need to figure out a way to lend it. Like, who do you got? And we're like, well, if you could do this rate, we could do it. And they go, deal. We got all this money. People don't realize that's how banks don't always just give you the same rates. It depends on, like if they're flexed with capital, if they're not fluxed with capital, what their leadership thinks is going to happen with the economy. And even if they think rates are going up or down, if they think rates are going to go up, they don't want to lend their money. They make their rates more expensive because they want more capital for when rates go higher. If they think rates are going to go down, like right now, they'll give you a better rate before the rates go down because they're like, hey, it's at 7% right now. If we can lend it at 6.8, that's a hell of a lot better than if it goes down to five and a half. And so you'll get the better rate. But you don't know as the consumer what they're thinking. That's not your job to know that. Your job is to go to your job and do what you got to do at your job. That's why you should go to the professionals.
- [20:46]
Jordan Moorhead
Yeah, get a broker. That's all you got to do.
- [20:48]
David Green
Get a broker. All right. From someone, but no one. 10. Great episode. Thanks for the insight on low balling. That's from my episode that I did with Jordan here on Real Talk Realtor. Now, Dest Wallace has a scam comment on here and I want you guys to be aware that this is going on. So they'll say along like a paragraph that looks like it's somewhat relative to the episode. And then they will get other fake accounts that they managed to reply to their own comment and start a whole conversation going back thinking that it looks like it's actually transparent conversation between different people commenting. But it's not. It's all just a way to try to get you to go buy their crypto or put money in their bank or whatever. So when you see those like they're having a conversation with themselves, don't think that's real.
- [21:37]
Jordan Moorhead
From usually Mentions crypto, too. It's not real.
- [21:41]
David Green
This one says this. It's always a good time to invest in real estate. Various stocks like gold, silver and digital currencies. Thanks to Vasil Krall, trader for the training.
- [21:50]
Jordan Moorhead
Yep.
- [21:50]
David Green
Yeah, Scam. Rg RJV Realtor says, I think I'm gonna get your ego. Is not your amigo tattooed somewhere? We said that during the show. And then Grayson Jacob said, using housing as an investment should be illegal. If you don't live in the house, you shouldn't own it. What say you, Jordan, to this belief that owning a rental property should be illegal?
- [22:13]
Jordan Moorhead
Absolutely not. I think it's the way that the middle class can become millionaires and build generational wealth to pass down to their family. I think it's a way you can provide good housing for a lot of people that couldn't have otherwise bought. A lot of people don't want to buy, you know, a lot of people don't want to maintain real estate. So I don't see any reason why it can't should be illegal. Landlords are generally good people and generally are trying to buy nice housing for them.
- [22:45]
David Green
Let's assume that landlords are scumbags. Let's just say for the sake of this argument, they're terrible people. They punch babies. They like Nickelback. I don't get why people always hate on Nickelback, but that's always the punching bag joke, right? And we get rid of them and we say, you are not allowed to own a house unless you live in it. What do the tenants do? Did we just make every tenant homeless? Or is the assumption that now someone has to sell their house to a tenant who becomes the owner, and the tenant has to take on the responsibility of maintenance, repairs, taxes, all things that they probably can't do anyways, which is why they're renting? And we think that that's like, are we now going to force banks to make loans to people that are not qualified because that's the only person they can buy this house? And then what happens when that person doesn't save money, doesn't make the mortgage payment, just like they can never make their rent payments. And we have these houses constantly going into foreclosure because the only people that are allowed to buy a house or someone that lives in it? Well, now banks have to raise their closing costs and they have to raise their interest rates on everybody to make up for the losses of the people that are constantly foreclosing. And down payments are going to go up a ton, which the tenants probably can't provide in the first place because most of the time they're scrimping to make first and last month's rent or whatever. Would this even logically work? Even if landlords were terrible? Could you pull this off?
- [24:11]
Jordan Moorhead
No, I don't think so. And it leaves out that there's some people who want to rent and there's nothing wrong with renting. I think this belief comes from the belief that corporations own so many houses. And when you really look at it, I look at houses all day long, I don't find many houses that are owned by the same person even. And they say corporations when an LLC owns a few houses and an LLC might be you or I, David. So that's not a big corporation. But no, it couldn't work. It won't work and it's not a solution to affordable housing of a solution to affordable housing is what they've done here in Austin and they've let people build as much housing as they possibly can which push rent prices down. And all these people that don't own houses now can rent a lot of times for cheaper than buying a house.
- [24:59]
David Green
That's a great point. Yeah, more supply. That's how you bring down home prices, not more regulation. Which ironically you only get more supply if you remove regulation so it becomes easier to build. Well, if you creates the problem, if.
- [25:11]
Jordan Moorhead
You do not allow people to own rental property, supply will drop dramatically because there's no reason to build all this extra housing.
- [25:18]
David Green
Yeah, there's going to buy it. You're just going to have a bunch of houses that are falling apart. No one's taking care of them. The people who do take care of their houses don't have incentive to do it because the comparables are terrible. So no one wants to buy into that neighborhood. There is a reason it works this way, folks. That's what I'm trying to say. It's not perfect. It's probably the cleanest shirt in the dirty laundry and you're not going to get perfect. Also from my live that I did last night on interest rate drops likely coming, which had no idea. I couldn't predict that Jerome Powell was going to resign today, but it sure makes me look like I can predict the future. So when is the crash in California since it's being brain drained? I love the show, David. That was from a comment I made about if you treat the smartest, wealthiest people like garbage, they're going to leave you and they're going to go somewhere else. And I refer to that as brain drain. A lot of smart people have been leaving California and going to Texas, which is why Jordan is doing really well over there because the best and brightest of California moved to Austin. Ilya said that was Microsoft's second round of job cuts recently. So the 9,000 jobs that were recently cut were not the first round, they were the second. Did you know that, Jordan?
- [26:29]
Jordan Moorhead
Yeah, yeah, I happened to watch Bloomberg every morning and I saw one a week before and the next one came up and I said, wow, that's awesome. They're doing a lot of this stuff that's terrible for those people.
- [26:40]
David Green
And from my episode of Mortgage Monday, episode 69 with Christian, the commercial real estate show, Lynn Tran said, speaking my language, I'm working on with Wyatt on my loan now. Well, that's awesome, Lynn. If you see this, I just became your best friend because if you, if you use the one brokerage I heart you, you can email me for anything that you ever need and I have your back. Wyatt's also a great loan officer that works with us. I'll bring him on the show sometime. Good work, gentlemen. Thank you. With about 9 exclamation points. Cre the information in this video is gold. Thank you. Both me and my wife will be your client from house hacking till maybe commercial. Oh, that warms my heart too. And that was a pretty popular show. Apparently people liked hearing about commercial real estate. So make sure you check out Mortgage Monday and Real Talk Realtor to the David Green Show. All right, moving on out of the comment section, we've got the real news report. So Jordan and I are going to cover a little bit of what is going on in the world of real estate in the news, in addition to what we covered with Jerome Powell stepping down. All right, this comes out of REI Lens.com what investors need to know in 2025 the year 2025 brings a series of challenges and opportunities for the real estate market. Considering the high competitiveness of the area, staying in the know is essential if you want to succeed. Home prices have seen an almost 4% annual gain, bringing solid returns to investors willing to take the leap at the right time. Nonetheless, while the real estate market can differ from one state to another, some trends remain consistent. Keeping an eye on them Investors can determine if the buying conditions are right for them so they can make a profitable decision. This article will discuss the most important trends so you can stay informed. Changing interest rates, which Jordan and I covered here earlier, have a huge impact on the value of real estate. So make sure that you don't take those for granted. You follow Mortgage Monday to get your rate increases. Also, if you want to sign up for my free newsletter, head to real talk real estate.com text-letter and you can sign up over there. And if that's too hard to remember, just remember davidgreen24.com join and check the box that you want to be in the newsletter. In every newsletter, I put that week's current rates. Government policy. For instance, in 2009 the government issued a tax credit for first time homebuyers and this assisted 2.3 million people who purchase homes between 8 and 2010. Do you remember that, Jordan? This was like the Obama credit.
- [29:05]
Jordan Moorhead
Yeah, I do. I don't, I don't remember hearing about anything of it coming back, but I.
- [29:10]
David Green
Do remember that no, it wasn't anything in the big beautiful bill for this because I think Trump understands that we like we don't have enough supply. We don't need to tell people here's some money to go buy houses. It just pushes up prices further. This was the first time Homeowner act. Oh, with the first time Homeowner act of 2024 introduced, history is likely to repeat itself as first time home buyers can get access to 10% of their home price. Demand is likely to boost if people can catch wind of this incentive. Is this a scam? No. They have a government website here. The first time home buyer tax credit. I do think I remember hearing something about this. It's not for everyone though. Does this sound familiar to you?
- [29:47]
Jordan Moorhead
I heard something about it, but I feel like if it would have been a big deal I would have known.
- [29:51]
David Green
More about it allows a first time home buyer of a principal residence a tax credit for 10% of the purchase price of the residence not to exceed 15 grand. That's why we didn't hear about it.
- [30:03]
Jordan Moorhead
Oh yeah, so it doesn't matter.
- [30:04]
David Green
My market $150,000, it caps out at 15 grand which is not nothing. But it's definitely not. I mean 10% of a $800,000 house $80,000 tax credit, you're not paying taxes at all. The bill revises the income formula for determining the maximum allowable credit amount and replaces the limitation on the credit based on the purchase price which was currently 800,000, with the limitation based on the area median purchase price. It revises rules relating to transfer and recapture of the credit and to members of the armed forces. Well, I don't have I've heard anybody in the real estate space talking about that. So you heard it here first Folks, you can check this out@congress.govbill118-congress.
- [30:51]
Jordan Moorhead
That would be a pretty good. I mean it's great benefit for people.
- [30:55]
David Green
Yeah, I mean, I'm a fan of anytime you take less money from people and you let them keep more of it and then they can spend it instead of giving it to the government. I think that it helps small businesses, it helps the economy. I would much rather see that than just taxing people and then it goes to pay somebody's salary that sits around and eat the pizza and take naps all day. Okay, let's look at forecasts in the four top markets. A reminder that real estate is local. So we're going to cover four markets. I believe one of them is yours, Jordan.
- [31:32]
Jordan Moorhead
It's the top market, huh?
- [31:35]
David Green
As real estate agents and brokers prepare for 2025, they will need to consider how national forecasts, including predictions of More transactions in 2025 apply, apply to their local market. Austin. Here's what to expect seeing in 2025 stability returning after a wild ride. Austin was one of several pandemic boom towns to experience massive price growth starting in 2020, followed by a significant slowdown in sales and declining prices over the past two years. That downward trend is expected to continue in 25, but the market is stabilizing. Overall, our home prices are still very much elevated relative to where they were prior to the beginning of the pandemic, which is true. Do you want to speak a little bit, Jordan, about what happened with Austin specifically during the pandemic?
- [32:20]
Jordan Moorhead
Yeah, during the pandemic, obviously everywhere interest rates went below 3% for a lot of people. And that was amazing for buying homes because it dropped the costs significantly and people were able to pay more for properties. So they bid them up everywhere. But here in Austin, a lot of people decided they wanted to get out of California or New York or the Midwest because of COVID restrictions and just because they had been thinking of making a move. I would say that most people just thought Austin was a cool place, it was booming and everybody started to move at once and they were paying a hundred thousand dollars over on a five hundred thousand dollar house. The real estate market was crazy. We had lines around the block to go see the house because you can only go one person at a time in the house. It was nuts. So prices went up stratospherically. In two years we went, we were 20%. One year we were 18, it was nuts. Prices went up almost 50% in two years. And then rates started going back up and prices Came back down probably. You know, I, I don't, I don't think you can say prices are still above pre pandemic levels in all areas or. Sorry, yeah, but we're around 20, 20, 2019 prices depending on where you are.
- [33:45]
David Green
Yeah. Now it was because you guys were very popular when the, when like the more blue areas were shutting down. Texas kept a lot of stuff open so everybody wanted to go there.
- [33:55]
Jordan Moorhead
And Austin was attractive to a lot of people from New York or California because it has a lot of the similar vibes that those places did and the people feel comfortable here. And maybe there was people that moved from California or New York that you lived in Austin already so you came here.
- [34:11]
David Green
Now California is on here too. Many are leaving but the demand is still high. Where do we want to go here? The state has around 40 million people in a market where underbuilding has been a trend for years. So even though people are leaving California, we still have more buyers than we have homes to put them in. So California is expected to stabilize a little bit going into 2025 even though it's not going to be affordable. Shocker. California taxes the ever loving crap out of people. So nothing is cheap there.
- [34:44]
Jordan Moorhead
They're.
- [34:45]
David Green
Their gas is supposed to hit $8 a gallon. Wow. Get out of there just in time. There's a new gas tax coming. As if it wasn't a hard enough economy as it is. They're going to increase the cost of gas which is probably a way to like punish everyone for not having electric vehicle. But then they'll say we don't have enough electricity for the state, there's rolling blackouts now we have to charge you more for your electricity and the next thing you know they found a way to tax you on both even though they weren't going to be very transparent. That's the California way. Florida buyers are still flowing it as tech and the finance sectors grow. Inventory in Florida surged in 2024 from rising home insurance rates. God knows that's true. More intense weather damage and high home prices put a damper on the market. As a counterbalance to those issues, job growth has been strong and in migration remains robust. As the chief economist at Florida Realtors. The thing that's different now is that a lot of the job growth is higher tech jobs and finance, whereas tourism, our bread and butter is actually not powering our resurgence since the pandemic. Something not mentioned here, Jordan, is the talk of New York getting a self declared communist mayor. Do you think if the winner of the Democratic party's Nomination. I can't remember his name, but he said he's a communist. He wants to basically seize the means of production. He wants to force grocery stores to be run by the government and everything else. If that happens, do you think we'll see more people leaving New York and heading into Florida?
- [36:13]
Jordan Moorhead
Absolutely. Florida and Texas. Zoron Mandanmi is his name. I keep pronouncing the last name wrong, but yeah, absolutely. I don't know why it wouldn't happen.
- [36:25]
David Green
Have you practiced your New York accent to be able to help these people buy a house?
- [36:29]
Jordan Moorhead
No, but I am. Advertising listings in New York City are nicer, higher end listings. I have social media ads running in New York City now, so I'm trying to take advantage of the fear that this guy might get elected.
- [36:41]
David Green
Here's a couple things you need to learn, all right? First one, hey, I'm walking here. You gotta drop the R's.
- [36:49]
Jordan Moorhead
I like New York. I feel bad for all the people who live there that think this isn't a good idea.
- [36:56]
David Green
You're held hostage by all the people that are like, hey, sounds good to me. It's free and it's cheap. They're not the ones that have to pay for it. So, yeah. You also might need to get used to serving. Like, what do they eat over there? Bacon, egg and cheese bagels. It's like a big thing in the morning.
- [37:11]
Jordan Moorhead
My wife would love that if we had good bagels here.
- [37:15]
David Green
So in addition to the breakfast tacos that tend to dominate the Austin scene, we're going to bring in bacon, egg and cheese. All right, and then lastly, we've got Virginia. A return to office mandate could shift market dynamics. As the seat of the federal government, Virginia's housing market can sometimes be out of step with the rest of the country, given the high number of civilian and military government workers in the state. Price said that the market tends to underperform when the rest of the country is booming economically, but overperforms when it slows down. That makes a lot of sense because if you're the majority of your jobs are government, not civilian, then when the civilian market is doing great like it has the last 10 years, Virginia is going to look boring. But when everybody else is scared and it's crashing, Virginia is going to look really solid. One wild card that could affect the local market is the return to work policies, which President Elect the Don has repeatedly threatened to fire federal employees that are working remotely if they do not come in the office, something that would impact those who live farther from government office. Buildings and are weighing in the possibility of a lengthy commute. If Trump's threats translate to policy shifts, then people are going to have a tough decision to make, adding that it could lead to an increase in short term rentals closer to Washington, D.C. Mr. Moorhead, what say you?
- [38:31]
Jordan Moorhead
I think it could lead to an increase in short term rentals and I think it could lead to an increase in demand for housing in the area. If you have to come back, I know I'm selling a house, a duplex in Minnesota for a guy who works at a company that called all their workers back and two of his colleagues had to move back to Minnesota from Florida. I think that same thing could happen. People don't want to lose their jobs. They move back to Virginia from Florida or wherever they are.
- [38:56]
David Green
Solid point. Yeah, I am pretty bullish on Virginia and I think I'm going to be starting a real estate brokerage out in that area and recruiting agents because I think that it's like a solid market where there's still going to be transactions happening for the exactly the reasons mentioned in that article. So there you go, folks. That is the real news report brought to you by the talented and handsome Jordan Moorhead and the bald and fast talking David Green. All right, out of my social media this week in the quick hitter section, we have Maddie eights reptile saying Mr. Green is looking jacked. Hope you're well, sir. Jordan, do you think that he's right?
- [39:36]
Jordan Moorhead
Yeah, you're looking jacked, man. You're getting in the gym looking jacked.
- [39:40]
David Green
It gets harder and harder the older that you get. I was in the gym like twice a day when I first moved out to Oklahoma. I was doing really good. In fact, I think that long talk you and I had, I was like getting ready to go in the gym and then I had that stupid shoulder injury that's been bothering me for like five years flare up and I couldn't go at all. I have an appointment with an orthopedist finally tomorrow to see what's wrong. I'm worried it's going to require surgery. And I stopped going and then I started going again, even though it hurts really bad like a month ago. And so I slowly got more into getting jacked. And do you think that there was a guy named Jack that was really strong and people in his hometown started saying that you look like Jack if you hit the gym?
- [40:20]
Jordan Moorhead
I think he's trying to jack something up. Probably more likely maybe it's a guy named Jack?
- [40:26]
David Green
Your idea sounds much more reasonable. Mine sounded A lot more fun to bring up on a podcast. If I get big enough, can we get people to start saying you're looking David? That's the goal. Yeah, right. Like how big do I have to get before people say that you're looking green?
- [40:43]
Jordan Moorhead
You're gonna get huge. You gotta get Ronnie Coleman sized.
- [40:46]
David Green
Yeah, well, I don't know if I can afford those steroids. Felicia Rexford says, always spitting facts and fire. Thank you for that, Felicia. And Boston Real Estate Walker said David Green. Groupies, Greepies, what a time to be alive. Which is pretty funny. That was from a post I put up where I was at a South Florida real estate meetup and there was a bunch of us in the picture and the name came up for Greepies. If you're a groupie, if you're a groupie and you're listening to this, do me a favor. One, comment on the show, tell us what you think, and two, go to davidgreen24.com ask where you can submit your question to be on the show and we will react to that. The property of the week this week is Heavenly Peaks. This is a cabin in the Smoky Mountains. A breathtaking six bedroom cabin nestled in the heart of the Smokies. This luxurious retreat is perfect for families or groups that are looking to relax, reconnect, and take in the natural beauty that surrounds them. Whether you're looking for a peaceful mountain morning or a cozy evening by the fire, Heavenly Peak is your perfect home away from home. And wait, folks, until you see these photos. All right, this is probably my favorite one. These are all the views. Three different decks, full wraparound decks on this cabin. And these were the new photos that we had taken here. So I put in a little wall with Nerf guns. We put some bunk beds in the common area. You can't quite see, but there's an arcade game right here on the side. There's, this is the top level. There's three levels here. There it is. There's the arcade game with some of the wall art that I bought. This is the other side of the room. So you've got crazy views from up here. And foosball, a little dual video game system, some air hockey. That's a popcorn bar that we put in. And then in the middle of the room there's like a big screen 75 inch TV with a couch, surround sound or a sound bar. So the kids will be very happy upstairs while the adults can go down here into the middle floor. This is a coffee bar that we had put in and a movie viewing area with another big screen TV and a farmhouse table with a sound bar there. These are the views that you could be enjoying while you drink your coffee and enjoy your vacation. Let's see if I can get one. There we go. Then you got a pool table, a poker table and a little area to sit and watch the game while you're waiting for your turn. Are you much of a billiards player there, Jordan?
- [43:21]
Jordan Moorhead
I like to play. I'm not great, but I like to play.
- [43:25]
David Green
Who doesn't, man? It's like one of the most. It's so simple. Hit a ball into another ball with a wooden stick. But it's fun.
- [43:32]
Jordan Moorhead
Yeah.
- [43:32]
David Green
And it allows you to have good conversations with other people.
- [43:36]
Jordan Moorhead
Yeah.
- [43:37]
David Green
Take time.
- [43:37]
Jordan Moorhead
Have a good time.
- [43:38]
David Green
Yeah. There you go. That's Heavenly Peaks. If you guys want to see some of the other properties, you can follow us on Instagram @CTC Getaways for Coast To Coast Getaways. And let us know you're a fan of the David Green Show. We'll talk about getting you a discount on your future stay in next week's episode because we're already pretty much running out of time here. We're going to cover some improvements that I did to short term rentals. I'm going to start sharing those on every episode. So you can see some before and afters of work that I've been doing on the cabins, which is how I hurt my shoulder, ironically enough, taking drop tile pieces out of a ceiling and replacing it with a nicer one to create like a speakeasy look. And I tore something in there. And now it's really, you can actually see if you watch the video that like one of my shoulders is sitting lower than the other one from that injury, which I think is like your body readjusts to try to avoid having the difficult part that gets hurt. But that's why I'm looking a little more Jill and a little less Jack. But thank you for that comment, whoever made it because if I didn't get comments from my listeners, I'd probably never get them at all. And thank you, Jordan, for being here today and joining me with the show. Any last words you want to say before we get you out of here?
- [44:44]
Jordan Moorhead
I would say, you know, just in general, real estate is always a great investment. You just have to find the right deal for you and you have to make the right decision for you. Like we were talking earlier with the guy who had the fifteen hundred dollar loss on his condo. He was going to have maybe it makes sense to sell that you can't be so dogmatic that you're stuck and I'm never going to sell. Sell. The only way to make real estate is hold forever. Sometimes you got to pare down the bad investments and move them into better investments. But just stick with it and you'll be massively successful over a long period of time.
- [45:17]
David Green
Sweet. All right. Thank you for that, Jordan. Thanks for being here folks. If you would like to have a question answered, go to davidgreen24.com ask and if you want to reach out to me to learn more about having us manage your short term rental, visit one of the ones that we already have. Getting a loan with the one brokerage, whatever I could do to help in your wealth building journey. All you got to do is go to davidgreening24.com and hit the chat button and just tell us what you're looking for and how we can help you. I can connect you with my cpa. He's great. Lots of stuff. You tell me what you need and I'll do what I can to help you. As always, thank you guys for being here. Please remember to subscribe to the show and to comment and let everyone know that they should be listening to. We'll see you guys next week on the David Green Show.