WeWork Goes Bankrupt, Home Buyers Give Up, Zillow Stock Plunges

Dave:
Hey, everyone. Welcome to On the Market. I’m your host, Dave Meyer, and today we are going to be delving into the top news topics that are impacting the world of real estate and real estate investors. And to do that, I have my friends, Henry Washington, James Dainard, and Kathy Fettke joining me. And we are going to be talking about all sorts of different things.
First and foremost, we’ll definitely be talking about the major lawsuit that just dropped, the verdict against NAR. We’ll be talking about commercial real estate and some news about what might be happening there in 2024. We got to talk about WeWork because that’s all over the news. And we will talk about housing sentiment and how Americans are feeling about the economy. Are you all ready to jump into this?

James:
Let’s do it.

Dave:
All right. Let’s start with our first headline, which is, “Zillow Plunges After Verdict on Real Estate Brokerage Commission.” So we talked a lot about what happened with the verdict in an episode a couple of weeks ago with James Rodriguez. If you haven’t checked that out, you can go listen to that. But what this article talks about is how this verdict is not just impacting the NAR and Keller Williams, the defendants in the case, but also has some ripple effects throughout the entire industry.
After the decision, shares of Zillow dropped almost 7%. It’s a very big decline. We’re also seeing other major brokerages falling like 6.2%. Redfin dropped 5.7%. And none of these companies were even named in the lawsuit. So I wanted to ask you guys what you think of all this. James, as a broker, do you see this verdict really impacting brokerages across the country?

James:
I think it’s the start of a shift. And I’m a broker and I do think that sometimes brokers are overpaid on transactions, especially with the sales going on.

Dave:
Fighting words.

James:
I’m sorry. I’m a firm believer that brokers, if you want to get paid that 3% fee that they were saying was a normalized fee, then you better put in some extra effort. The amount of extra services that we offer inside of our commissions, we do so many more things just to earn that commission. And if someone’s just putting a sign in the yard, then maybe that’s all you need and that should be a little bit cheaper.
And I could see why the stocks are going down because it’s going to start resetting the mindset of buyers. They’re going to negotiate more on their commissions because it’s going to be more of a hard cost to them. They’re going to feel the cost more. And I think that it is going to cut down commissions. And then not in the next 12 months, over the next 12 to 24, 36 months, we could see a shift in normalizing commissions to a little bit lower rate. And that’s going to be less revenue coming into these brokerages. If the commissions are smaller, it’s going to be harder to hit your caps. And I do think it is a shift in the market.
I do believe that brokers do deserve every percent of 3% when they are rolling out big marketing plans and selling that property and they’re showing every showings. But there’s going to be a difference in experience now, and I think it’s going to be way more noticeable. Honestly, I think some brokers are overpaid and they’re just working through the motions. They’re going to have to step up and provide a good service to get paid well. And I’m a firm believer of that. Get paid when you offer a good service.
So I don’t really have a whole lot of problems with it, which I’m probably one of the only brokers in the nation saying that. But I do think that this is just the beginning of a shift down. It’s going to start unwinding the normality of just, hey, this is what brokers get paid every time, and now you’re really going to have to earn it.

Dave:
Spoken like a very confident person who knows that he’s worth every penny of the commissions that he earns. Kathy, I’m curious about your view on just sort of the broader economic implications here. Because James made some great points, but until NAR makes its moves, the judge rules, we really don’t know exactly the nuts and bolts of how things are going to change.
But I’m curious. Housing is “in a recession.” People keep saying that. I know one industry can really be in a recession. That kind of defies the definition. But I get what they mean because housing sales volumes are down like 50%, and so the whole industry is hurting in terms of just revenue. I’m curious if you think this could make a bad situation even worse.

Kathy:
It’s a good question and we will soon see, and it will take some time for this to all play out. What I’ve been looking at, and I am no attorney here, but it seems like this is really an attack on the National Association of Realtors and their mandatory compensation rule. And this means that it’s just you have to do it. And that’s the attack. So there doesn’t seem to be any ruling against the seller covering or paying out a buyer’s agent, as long as the seller agrees to it and as long as the agent agrees to it.
I believe that’s not under attack right now, but NAR’s demand that it’s required is. So what I’m seeing is Redfin is now leaving NAR and NAR’s going to be really hurt by this. So where does that leave the industry? Really the main reason… I mean, there’s lots of reasons that there’s been a requirement for a lot of brokers to be members of NAR was to get on the MLS. But there’s a lot of states already that you can still get access to listings without going on the MLS.
So my guess is that there’ll be more and more brokerages that figure out the technology there and have resources. Because that’s what’s always been confusing to me. Rich is a broker, my husband’s a broker in California, but we don’t do real estate in California so we work with brokers nationwide. And it’s been really hard for us to get on the MLS in those states, which is partly why we have those partners in other states to help our members buy property in other places.
So to me, it’s just outdated, the system, anyway. That there’s been so much difficulty even for a licensed agent to get access to listings. It’s just weird. So I think that it’s the attack on the MLS, attack on NAR. Sellers can still put the buyer’s fee in the commissions if they want to, which is wise in my opinion, very wise, because then you can finance it. But if it’s not in there and the buyer has to hire an agent and pay their own fee, then they may not get a buyer’s agent and they might find out the hard way that they really need that agent for so many reasons.
And there’s nothing right now, there’s no regulation that allows you to finance that cost, the buyer’s agent fee, outside of it being from the seller. So they’d have to change mortgage guidelines, too, around that. So that was a mouthful. So bottom line, in answer to your question, I don’t think it will affect things very much. I think what’s affecting real estate sales is the fact that rates are so high and there’s very little inventory out there. That’s what’s affecting brokers and real estate agents more than anything,

Dave:
I tend to agree. I think there’s a lot of fear, obviously, and that’s understandable. But I think this is a needed service. Whether the payment gets changed and it weeds out some poor operators we’ll have to see. But I think, honestly, I think the biggest financial impact of this is going to be on all those politicians. I don’t know if anyone listening to this knows this, but NAR is the second-biggest lobbying group in the entire country. Only second to the US Chamber of Commerce.
Last year, they contributed $82 million in lobbying, which was way more… The second highest in real estate was $6.8 million, so more than 12 x higher than the next group in real estate. And so with them paying $1.8 billion in damages, I think politicians are going to be a little hurt not getting their campaign contributions that they usually get.

Kathy:
Wow.

Dave:
Yeah, well.

Kathy:
That’s interesting.

Dave:
Yeah. I don’t know. Maybe they’ll step up their lobbying so that they can try and get away from these fees, but it’s kind of interesting. All right. For our second story, the headline is, “Largest Real Estate Brokerages, Commercial Real Estate Brokerages, Brace for Another Year of Decline in Deals.” Basically, some of the big commercial brokerages, like CBRE, Jones Lang LaSalle, Cushman & Wakefield, a lot of their executives and their public posturing — these are public companies, so they have investor calls — have been pushing back on expectations of a quick recovery in the commercial real estate.
And a lot of these executives are saying that they think that sales might actually stay down or decline even further in 2024. So Henry, let’s start with you. What do you make of this? Do you think commercial real estate might rebound in 2024 or are we in for another tough year, at least in terms of transaction volume?

Henry:
Oh, I think transaction volume in the commercial space is going to be down. But to me, is it really a headline? Because real estate’s never been on a trajectory where we just expect sales volume to be high year over year. There’s always been ups and downs in real estate and these brokerages are aware of that. Sure, we would like to see a run like we’ve seen in the last, I would say, five years prior to this year, where it does seem like volume goes up year over year. But that’s not the norm. And so I think a lot of them are probably prepared for this.
But as far as transaction volume being done, yeah, I think it’s going to continue to be down. I think commercial, especially if we’re talking as far as office and small retail, I think the transaction volume’s going to be down. I think if you’re talking commercial in terms of apartments, large scale multifamily, commercial real estate, we’re definitely going to see some decline there. Now, I think that’s more because we’ve got some loans coming due and banks not being able to keep those things financed going forward.
Now, I think there’s an opportunity there for cash buyers to come in and scoop up some of those properties at a discount. But if they’re buying those properties at a discount, that means the commissions that those agents are making aren’t going to be what they were used to making. In 2020, people were buying everything under the sun for large prices, and the brokerage commissions were looking really good. So I don’t think that that’s going to be the case over the next year.

Dave:
Yeah. I am very curious to see how this all plays out. Some of the executives do seem to believe that we might see a pickup in the second half of the year. Kathy, what do you make of that?

Kathy:
Next year?

Dave:
Yeah, in 2024, like a year from now, or nine months from now.

Kathy:
Well, sales… Boy, this is hard to predict these days. I guess they would pick up from where they’re going to be. So in other words, I think in the next four to six months, sales are going to plummet even more, and possibly pick up from there towards the end of next year. If… There’s like three things that have to happen. There either have to be more distressed sales, prices have to come down, or rates have to come down. So if one of those three happens, then people will start to dive in. But otherwise, a lot of these deals just don’t make sense. They don’t pencil. Costs have gone up so much across the board, between insurance rates, obviously mortgages or debt service, and taxes. I mean, so many costs have gone up. You cannot pay last year’s or even this year’s prices and make it make sense.
So unless there’s, again, one of those three things that happened, and right now there’s only 2% of commercial properties in distress, so it’s not a huge issue yet. And will it be next year? Apparently there was like $728 billion that was coming due this year and about the same next year. We didn’t see a huge distress this year so will it happen next year? I don’t know. Time will tell. But my guess is the one thing that we will see is rates coming down. So will rates come down enough that it will make sense for people to dive back in? If prices come down at the same time, yes. So there’s my very long answer of, I don’t know.

Dave:
Okay. All right. But maybe.

Kathy:
Maybe.

Dave:
James, what do you think? Do you think any of those three things will happen? Will we have some distress or rates come down? Could the market find a bottom next year?

James:
I mean, we’re definitely seeing a little bit more inventory coming through on distress where banks are starting to try to get rid of things. They have some problematic syndicators that have run out of funds. I have seen a couple examples very recently where everybody invested in the syndication is totally smoked. And the banks are willing to kind of negotiate with you directly as far as paying down their balance and giving you a pretty good rate. So I do think there’s going to be an uptick in sales towards quarter 3 and 4, because I think some of this distress is just starting to come to fruition, and it takes six to eight months to get through that product. So I think it will uptick a little bit. I don’t think it’s going to be massive amounts.
And I think sales will stay pretty flat, because at the end of the day, it comes down to debt. And debt is extremely hard to get right now on large commercial, large multifamily. Even if you are getting a screaming deal, like there’s a couple properties we’re looking at recently where we’re at least 50% lower per door cost than we were looking at two years ago. And we still have to put 50% down on that building. And the amount of down payments and cash required to buy these right now, just the math doesn’t make sense return-wise.
And so that’s the struggle. And so I think when the debt’s hard to get and you have to put that much cash down and liquidity’s starting to burn up, the market’s going to be slow for the next six to 12 months. But there will be some opportunities. We’re seeing them. And so I think there’s going to be a small uptick, but it’s not going to be this massive wave.

Dave:
All right. Well, it sounds like no one’s super optimistic about commercial real estate next year. I agree. Speaking of distressed commercial real estate, how about WeWork? So WeWork filed just this last week for Chapter 11 bankruptcy. In the second quarter of 2023, they lost a cool $397 million. Which, just imagine having that problem. Imagine having $400 million to lose. That would be a fantastic position to be in. But wow. Also, Kailyn, our producer, just informed us that this is a year-over-year improvement over 2022 where they lost something like $600 million. So that is not very good.
I also, actually, I was reading a different headline in addition to this, that SoftBank, which is their venture capital firm that has been floating them, I think it said they lost $16 billion on just this one investment. And it’s going on record as one of the worst investments ever made. So again, talking about having some money to burn. Adam Neumann, the WeWork CEO, has stepped down and the future of this company is still very much in question. Henry, what do you make of this? Is it just WeWork is a bad company, it grew too fast. Do you think coworking has a future in the work-from-home era? Where do you see this going?

Henry:
Man, commercial office is just tough right now because of the limbo that people kind of find themselves in. I saw a TikTok recently where it was the state of working from home. And it was like when COVID started, it was like, “We’re all focused on your safety, so work from home as long as you need to.” And then the CEO was like, “Hey, well, we want you to work from home, but we’ll start to come back in the office a little bit.” And then it was like, “Hey, there’s no working from home. This is not what we…” And it’s-

Dave:
It was that meme that was like, “I can’t believe you thought this was going to be forever. We never said this was going to be forever.”

Henry:
Right. Yes.

Dave:
It’s just a complete 180.

Henry:
But that’s kind of like, as a former corporate person, I felt that. Because I was like, that is kind of how the messaging is always around things like this. And I think that we’re just kind of in this limbo space. There are very few companies who still fully embrace it and allow people to work from home. But I think a lot of companies are kind of in this, “We’re still feeling it out.” So there is some, “We’re going to allow for some of it, but in certain situations we’re going to require you to come in.”
And so I think that the coworking environment is kind of feeling some of that people in limbo because they don’t know if they’re going to be able to keep it up. And so some people are just saying, “Hey, we’re going to go into the office.” And some people are still paying for co-working space. But there’s much less people that are willing to pay for a small co-working space now than there was at the beginning of COVID. And I think that you’re just starting to see the impacts of that. And even large companies renting large office space, there’s less of them that want to do that because they have found talent that they can hire that doesn’t live there, and it’s working well for them.
So I don’t know, man. Until this limbo period kind of clears itself up, just this coworking idea, I don’t know that it’s a solid business plan if that’s your only revenue stream. Because the office, it’s just in limbo all the way around. It’s a tough market to be in. It creates opportunity because you can buy this. I literally went and looked at an office building this morning that was listed for 1.5 million, and the guy was telling me, “Look, man, I’d let this thing go for a whole lot less than that right now.”

Dave:
Great negotiating tactic.

Henry:
Right.

Dave:
Just walk in the door and he drops the price without even saying anything.

Henry:
But the way the office was laid out is it was broken out into a lot of little single offices, and that’s what I would’ve had to do to get this thing to cashflow, which is rent out individual offices. And so although I think there is probably some market for that, it’s not the majority of the market anymore. So I don’t know that this strategy, this revenue stream, is going to come back. Definitely not in the volume that they were used to.

Dave:
Yeah, I mean, I just have strong feelings about this because I used to work in a coworking space and it was actually great. And when I moved to Amsterdam, I thought about it. And WeWork was like 800 euro a month, so almost 900 bucks a month to get a small office. I rent in Amsterdam. So I was like, “I could just rent a bigger house for 900 and get more bedrooms and just work from home.” It’s just a bad value proposition. But back then, prior to COVID, it was cool.
And so people were willing to pay a premium to be in a cool space, and they are really well-designed. But the value is atrocious. And so I think it’s no longer cool. It’s sort of like a joke among a lot of investors about WeWork. And so no one’s willing to pay that premium to be in a space that honestly doesn’t offer a tremendous amount of value. So I’m not optimistic about WeWork’s future. James or Kathy, do you have any thoughts about WeWork?

Kathy:
Yeah. I mean, it was treated like a tech company and it was never a tech company. It was always a real estate sort of hack, where you’re leasing space and leasing it out. It’s not a new concept, but it was created as if it was. So it garnered far too much attention and got far too much money, and they went out and got far too many expensive leases. And now it’s really the office building owners who are going to pay the price for this. Because they’re all over the country, all the big cities, they are not going to receive their lease payments, or their payments at all.
I think that it’s like a divorce with hundreds of people involved. It’s going to be a nightmare as all of these property owners try to collect through this bankruptcy process. So as a landlord, this was probably something to think about. Who’s your tenant and what’s the guarantee here? And there really wasn’t one. It’s going to just further… It’s kick the horse while it’s down. I don’t know. The saying, you know?

Henry:
You can’t kick a dead horse in the mouth.

Kathy:
Thank you.

James:
There you go.

Dave:
No, that’s not right. That’s not close. I was just giving you the benefit of the doubt.

James:
I think Henry nailed it.

Kathy:
I think that’s just how they say it in Arkansas, maybe. I don’t know.

Dave:
That’s right. That’s right.

Kathy:
But I’ve made investments in real estate that I wish I hadn’t. But I did not ever buy office and I feel very, very proud of myself for that. Because this would be a hard time to be in office.

James:
How did these guys not realize 12 months ago to throw in the towel? “We just lost $600 million. Nobody wants to work from home. Let’s double down on this and keep investing millions of dollars.” It makes no sense to me.

Dave:
It’s crazy. I can’t believe SoftBank keeps giving them money.

James:
VCs just love spending money on ideas. But why haven’t they pivoted? The problem with WeWork, is just for the working professional and COVID has reset that mindset of you can work from home and you can run a professional business off Zoom. You don’t need that meeting room anymore. And that’s been reset in the consumer space with people that run small businesses. But why wouldn’t you pivot to where people have to go?
Why isn’t WeWork turned into a giant studio for hairdressers, where they can have people come up, go to a private… Because you have to go to that brick and mortar. It would be cheaper than going to a salon at that point. Or just anything that needs to be done. It could be a Botox person, it could be a massage therapist. Where do you have to go that you want to subsidize your cost? But there’s been no pivot. They’re still just marketing to a dead pool. It doesn’t make any sense to me.

Kathy:
Well, their CEO stepped down, so maybe you need to talk to them.

Henry:
I was going to say, James is about to start getting emails. And then you’re going to see a headline, “James Dainard hired as WeWork’s New CEO. Big Industry Pivot.”

James:
I’ll take a run if there’s a good signing bonus.

Dave:
Well, Adam Neumann pivoted. He left the company and just started a whole new company called Flow. And despite him running this company into the ground, he’s raised $350 million from venture capitalists already. So clearly people have a short memory. It’s unbelievable. All right, well, that one we were just venting about, but it’s fine. It’ll be an interesting story to watch to see if it can make some sort of miraculous recovery with James as the CEO.

Henry:
The new CEO.

James:
I think I’m going to be kicking some horses in the mouth or whatever that was.

Henry:
Only dead horses, James. Only dead horses.

Dave:
Dead horses. Yeah. No animals were hurt in the filming of this podcast. This is just figurative. All right, for our last headline, it reads, “Housing Market Fact or Fiction: 49% of Americans Now Believe it Is a Bad Time to Buy Real Estate, with 32% of Americans Saying They Believe They Will Never Be Able to Afford Their Dream House.” Wow. All right. So let’s just start here. Kathy, what do you make of this pessimism for Americans about the housing market?

Kathy:
Sadly, it’s lack of education. And I’m doing everything I can to change that, as are you, as is everybody here. It is just simply people don’t know what they don’t know. You can buy a property with 3% down. Now Fannie Mae came out with 5% down for multifamily people. This is huge news, huge. This means that you can become instantly an investor. You could possibly live for free if you rent out the other units. And when I say multifamily, I mean one to four. It still falls under Fannie Mae guidelines. This is big news. It used to be 20, 25% you had to put down to get multifamily through Fannie Mae. So just know that when rates are at 8% or 7 or whatever they are, they will come down. Mark my words, someday they will come down. And right now, with this many people thinking that, this is your opportunity.
Because now with property sitting just a bit longer than they were, because there is more fear, you can negotiate where you couldn’t for many, many years. Unless you’re a Henry or a James. But not everybody has those skills. But right now, it won’t take a lot of skills to negotiate a good deal. And pay the interest rate. It’s not going to be a huge difference for a median price home that you can refi later when there is a frenzy. When rates come down, you will have more competition. You will not be able to negotiate the price down as well as you can today. And you don’t have to put a lot of money down. So let’s just keep educating people.

Dave:
Yeah. Kathy, I think for a lot of people, they might want to. But what do you make of the people who just feel like this is out of… It’s not that it’s just bad, that they just feel like it’s completely out of touch. Henry, do you get that sentiment for people who are just seeing these prices skyrocket?

Henry:
Oh, I understand looking at the high prices and looking at the high interest rate and thinking, “There’s no way I can do this.” But what most people do is all they do is look and make a determination of what they can’t do, without actually doing the research and figuring out what’s truly possible. And Kathy is right. The education just isn’t always right in front of people’s faces. And so they don’t know that yes, it seems unaffordable, but there are ways that it can be affordable for you. Now, is it going to be like buying a house at a 3% interest rate? No, it’s not.
But there are programs, there are down payment assistance programs. And in most states there’s a down payment assistance program. Now, the qualifications for those programs are going to be different from state to state, but you’ve got to go do the research to figure out is there a way that I can get in and afford the down payment? Is there a way that I can get in and negotiate a rate buy-down? Now, if you couple this along with the NAR decision and now they got to go pay for a realtor to help them negotiate these things, it’s going to be more difficult.
But yes, you can buy your rate down, especially lots of new construction. The builders are offering to buy people’s rates down. Sellers who have homes sitting on the market right now are willing to do rate buy-downs for buyers who are going to make offers on their properties. But unless you have a very experienced agent or somebody, a friend or family member, who has some of this knowledge or expertise to kind of guide you along the way, people just have no idea that they can actually afford to buy a home. House hacking, the multifamily thing that Kathy was talking about, yes, that is a doable strategy for people, but it’s also overwhelming and intimidating if you’re thinking, “Well, I don’t think I can afford a single family home. Why would I even go out there and look at a duplex or a triplex? The prices on that are more expensive.”
They also don’t know that your mortgage or your loan product will typically allow you to count the rents that that property is currently getting as income for you to help you qualify for that higher purchase amount for those new properties. There’s just a lot of education that people like us have because we are in this business and study it that the normal buyer doesn’t. And so we’ve got to figure out some way to continue to educate people that this can be affordable. You just have to know what to go look for. You have to know how to apply for it, how to qualify for it, and how to position yourself so that you can take advantage of the opportunities that are out there. Because I believe this is a phenomenal time to be buying real estate.
This is the time you want to buy real estate, because the interest rates are high, which means exactly what Kathy said. You can negotiate more and better terms for yourself. You can get into a property at a lower price because you can negotiate that price down. And then at some point, I agree, the rates will come down. Is it a year? Is it two years? Is it five years? Who knows? But when they come down, you can always refinance and get a lower interest rate. So I’d rather buy at a lower price at a high interest rate than buy at a higher price at a lower interest rate because I can always refinance my interest rate. So this is a great time to be buying. You just have to know how to go do it and what to look for.

Dave:
All right. Well said. And yeah, there are a lot of new programs, too, in addition, where you can now include some of your rental property potential from an ADU in a mortgage, which is a new rule. So that’s another option. James, I’m curious, though, these types of surveys, investor sentiment, is often a really good indicator in a lot of industries. When you see expectations of inflation to go up, inflation usually follows up because people demand more wages, companies demand more prices, that kind of thing. Same thing with consumer sentiment.
Do you think that this bodes poorly for the amount of transaction volume or any new supply coming on the market next year? Because if people are not feeling it, whether they’re right or wrong about that, it’s still reality. And so if people aren’t feeling it, do you think that’s going to carry into the 2024 housing market?

James:
Yeah, I mean, I think the 2024 housing market’s going to be fairly flat for the next 12 months. And I think that is… I mean, we’re seeing less loan apps being applied for. There’s less buyers walking through properties. But things are selling. And so it’s already here and we’re in the middle of it, where it’s just kind of this slow grind. I think part of it is people want housing, they have to buy… The people that need housing are just buying what they can afford, and they’re okay with that. I mean, going back to what the statement is, Americans feel they can’t buy their dream home or never afford their dream home. Who says your dream home is supposed to be your first house? I mean, give me a break. It’s short-term pain, long-term gain. My first property was not my dream house. It was a grimy, crusty condo that was disgusting and it was what I could afford.
And I bought it and I improved it, and then I traded it. And then I traded again. And that mindset grinds my gear. It drives me nuts. Because I’m like, at what point do you think you just get your dream house? This isn’t Barbie World where you just get the house. You have to earn it. And every time you do a real estate transaction, you’re slowly starting to earn it. It’s all about getting into that first property, getting some growth, reinvesting the growth, and then getting to your next house. It’s taken us five homes, five times we’ve sold our primary homes to get to what I would call my dream house. And it’s still not my dream house. Because my dream house is on a lot of water, on a lot of property, with a big boat out front. But I can’t buy that right now and that’s okay. I can go try to earn it.
It’s like, get to work. And part of that work is you take the first step and you buy the property. That’s your first step. It doesn’t have to be your dream home, it’s about just getting in the game. And if you don’t get in the game, you can’t move forward. I heard the same stuff in 2008 when the market was crashing. Why would you ever buy real estate? It’s going in the toilet. There’s no money out there. It was the best time to buy it. You were getting all your closing costs paid for. The rates were lower. They had every reason to get into a house, but no one wanted to do it.
So it’s the same thing right now. It’ll be a phase. The mindset will change. But if you think you can’t afford your home right now, I feel bad for you because it is hard. Trust me, I don’t like my payment on my new house either. But it’s getting us in the game, find out what you can afford, and then it’s short term. You’re going to trade it out two years later. It drives me nuts. You don’t get your dream house. That or go work for WeWork and get a big signing bonus and then go get your dream house.

Kathy:
And this is not a new story, you guys, at all. I’ve been around a few decades, and I could tell you in the seventies, people were complaining that prices were too high. In the eighties, they were. In the nineties. This is always a story. So you just have to understand that inflation is driving prices up. If you’re not on the bandwagon of getting into the things that inflate, you are going to be left behind.
My dad bought an incredibly expensive home in the seventies that was a whopping $90,000. That was considered out of reach for people. So you guys, this is not a new story. You just have to get the education. And also you have to have good credit. You have to save money. These are the things that are required generally in buying a house. You don’t just get one.

Dave:
All right. Well, I have a lot of things to follow up on here. First and foremost, what is the price tag of James Dainard’s dream house? Because I don’t even know if I’ve seen a number that high in my life. So James, keep working, man. You’re going to get there one day. Second thing. Kathy, I haven’t been to your house, but it sounds like you are living in your dream house. Is that right?

Kathy:
I am, except in November.

Dave:
Why? Did it rain one day this month?

Kathy:
We will gladly accept the rain. We need the rain. It’s the wind. We get the Santa Anas, and you just literally can’t go outside it is so windy.

James:
Oh my gosh. I thought I was going to crash last night in the plane.

Dave:
Oh, gosh.

Kathy:
Because of the wind?

James:
Oh my gosh. I thought I was done for.

Kathy:
It’s insane. So November’s the windy season. It kind of goes through February, but this is the worst. This is also the fire season. So yeah, I love it here, except November.

Dave:
Henry, do you live in your dream house?

Henry:
I do live in my dream house, but I am… Kathy, I don’t want to hear you say nothing about nothing about nothing. If you got to stay inside of a house, that’s the house I want to stay inside for two days while it’s windy outside. Get out of here.

Dave:
Dude, I’m sitting here in Amsterdam. It’s literally rained 17 days in a row. I haven’t seen the sun since September.

Henry:
Kathy lives in Barbie’s Malibu DreamHouse. Yes, I do live in my dream house. I am not telling you this from my fancy boat either. I have a picture that made… James’ boat is probably in this picture somewhere. That’s as fancy as I get. No, but I do live in my dream house. And just like James, I traded five times to get here. And that’s the best way to get to the house that you want to have. If I would’ve just depended on getting a raise or promotion at my job and then buying a more expensive house, it’d take forever. But because you’re buying and trading and real estate values tend to go up, you’re able to kind of move a little quicker.

Dave:
Yeah. I also think the idea of a dream home just is kind of crazy.

Henry:
It is crazy.

Dave:
Your idea of what you want is probably going to change. And I grew up in a situation where my parents had a nice house, but they were stretching to afford that. And I’ve never wanted to be in that situation where you’re… They call it “house poor.” So don’t want to keep increasing my housing expenses proportionally to your income. So I just think this idea that there’s this dream house out there and that’s some destination you necessarily need to arrive at, is probably a product of that $82 million of NAR lobbying and marketing budget that they’re putting out there.
All right, enough with my tirade. Let’s get out of here. Thank you guys so much for joining us. James, Henry and Kathy. Kathy, again, congratulations on your new grandbaby. Thank you all. Oh, Henry, your daughter’s here too.

Henry:
Say hi.

Kathy:
Hello.

Dave:
We have an on the market debut right now.

Kathy:
Oh, both of them.

Henry:
Yeah. Say hi, guys.

Henry’s daughter:
Hi, guys.

Dave:
Amazing. We’re going to take it out of here with Henry’s daughter just being adorable and saying goodbye to all of us. Thank you all for listening. We’ll see you next time.

Kathy:
Bye.

Henry:
Bye-bye.

Dave:
On the Market was created by me, Dave Meyer, and Kailyn Bennett. The show is produced by Kailyn Bennett, with editing by Exodus Media. Copywriting is by Calico Content, and we want to extend a big thank you to everyone at BiggerPockets for making this show possible.