Trump’s 1st 100 days in office and its impact on real estate

by | Apr 29, 2025 | Industry, News Feed

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As we pass President Trump’s first 100 days in office, let’s face it — It’s been one heck of a ride. No matter what side of the aisle you are on, many hoped 2025 would be the year the real estate market started to come back. Perhaps not roaring like 2021, but there was hope for lower interest rates and promises of making things more affordable, from gas to groceries to homes. 

What we have seen has been anything but. If we thought the market slowdown was tough during 2023-2024 as interest rates started to rise, coupled with the collision of inflation and high prices coming off the pandemic real estate boom, we hadn’t seen anything yet.

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Flash forward to 2025, which started with optimism for an active market, has turned out to be anything but in many areas across the country. Here’s a recap of Trump’s 100 days from the real estate practitioner’s point of view. 

Return to office and DOGE

The beginning of the year started with cuts by the Department of Government Efficiency (DOGE) and the slashing of jobs left and right. Whatever your opinion on those jobs, the point is that everyone has to live somewhere, so incomes were slashed, which affected those who lost their jobs with respect to housing, whether that was renting or buying.

Buying plans were pushed back or canceled, and in some cases, people needed to sell their property to free up cash, uncertain when they would find a job again. 

Ask anyone who has been in the job market, and no matter how talented or well-connected you are, finding a job is beyond a full-time job in and of itself, with tons of applicants vying for the same position to the point where recruiters only look at the first handful of resumes. Others lived on pins and needles, waiting to hear their fate and couldn’t plan for the future.

Return-to-office mandates also affected the real estate market, as some people had to move from the locations they had fled to during the COVID pandemic. This meant they had to sell their home, and buying at the height of the market doesn’t leave a lot of room for profit.

In addition, DOGE cuts impacted the commercial office market, which has already been struggling post-COVID. The federal government was looking to downsize a large portfolio of thousands of leases that could impact numerous cities, including Chicago, New York, Los Angeles, and Arlington, Virginia.

CFPB funding slashed

Speaking of DOGE, the Consumer Financial Protection Bureau (CFPB) funding was slashed in the blink of an eye. What was long known as a trusted institution consumers could go to for assistance with resolving financial matters, like credit cards, checking and savings accounts, auto loans, mortgages, etc., was upended. While a federal judge has blocked some attempts to completely shut down CFBP, the future of this agency remains uncertain, placing consumer protection at risk. 

 HUD Overhaul

DOGE continued on, making cuts to the Department of Housing and Urban Development, laying off thousands of employees — nearly half of its workforce. HUD addresses issues with regard to fair housing, housing assistance and community development.

Scott Turner was nominated to be the secretary of this agency, and though his nomination was not without controversy, he was confirmed in a relatively low-drama vote, 55-44. Turner said he would expand the Opportunity Zones Program, loosen zoning regulations and fees, and reduce the size of the Section 8 housing voucher program.

His confirmation hearing left more questions than answers, with few concrete plans or solutions to address serious questions about various topics, including affordable housing, illegal immigration and its relation to housing and insurance, as well as numerous critical issues.

As of this writing, I don’t think we have a good idea of what is going on with HUD since Turner was confirmed, and its impact on a myriad of housing issues remains to be seen. 

Pulte at the helm of Fannie and Freddie

Bill Pulte, the grandson of the homebuilder and founder of the Pulte Group, was confirmed as head of the Federal Housing Finance Corporation, which regulates Fannie Mae and Freddie Mac.

Pulte has shaken things up and purged 14 board members. He claims he is going to work to make buying a home more affordable and cut unnecessary fraud and waste. One of Pulte’s first cuts was gutting Fannie and Freddie minority homeownership programs.  

In addition, there is talk about privatizing Fannie Mae and Freddie Mac, but how that would be handled is tricky. Privatizing these institutions could result in higher mortgage rates, which we are already dealing with. 

More to be determined on how Pulte will make housing more affordable in light of all of this disruption. While privatizing Fannie Mae and Freddie Mac may sound like a good idea, in reality, it will be far more difficult than it appears. 

Tarrifs

When President Trump announced the implementation of tariffs, all started to go haywire with the stock market, treasury bonds and interest rates, which ultimately rolled to the real estate market. The uncertainty of tariffs and what would be implemented wreaked havoc on consumer confidence.

Homebuilders were concerned about the impact of costs on building materials and how that would ultimately cause increased prices for consumers. Consumers whose livelihoods could be impacted by tariffs were concerned about job stability and security, not to mention general concern over prices for everyday goods and possible shortages due to countries perhaps scaling back doing business with the United States, which supplied those goods. 

There has been a different narrative every week with respect to tariffs, with threats and then delays, followed by more threats, scaled-back tariff amounts and then delays. Interest rates have been see-sawing depending on what the stock market was doing. The verbal football between President Trump and Federal Reserve Chairman Jerome Powell did not help. 

Mortgage lenders shared they were going through multiple price changes during a single day, and it was difficult to counsel buyers who had just gone under contract on a home as to when to lock in a rate. 

Some buyers who were under contract to buy a home cancelled due to the uncertainty of how all of this would affect them. Maybe it wasn’t such a good idea to buy that second home if they could lose their job or their business would be impacted. Showings have been paused on properties in many parts of the country.

I experienced this on a listing I had in Florida that had great activity before the tariff talk started. Then things began to freeze with little to no activity. Others with listings in the same community reported the same.

On the West Coast, while working with a couple of different buyers who were actively writing offers, we were one of only two offers on properties.

This was very different from March, where in one case, my buyer was one of 13 offers on a property in a hot price point of under $1.4 million. The impact of the tariffs on the real estate market was somewhat mitigated, allowing both of my buyers to open escrow successfully. However, the stock market’s volatility was not comforting to my first-time homebuyer clients, as they watched their down payment money fluctuate daily. 

The bottom line is that markets, businesses and consumers don’t like uncertainty. It can be hard to plan through the unknown when the only certainty is uncertainty. 

The first four months of 2025 have been a wild ride. Real estate markets in many areas of the country were already struggling against challenges from high home prices, inflation and insurance in a post-pandemic world. Now, some of these markets are seeing sellers who bought during the pandemic at high prices sell their homes. 

Some of these properties have been lingering on the market due to being overpriced in the first place, and many properties are undergoing price adjustments to find the sweet spot at which buyers will respond. Anything overpriced relative to condition continues to sit on the market as more buyers seek turnkey and move-in-ready homes.

No one seems to have the bandwidth to take on things that need a lot of work, and sometimes it’s about price and avoiding the hassle. So, turnkey homes that are well priced will still command a premium in many markets and see multiple offers, though the offers may not be comparable to the crazy $100,000-plus amounts during the early 2020s.

Sellers are having to readjust expectations after having little showing activity or fewer offers than anticipated. Some buyers are bowing out during the counteroffer process. Consumer sentiment is fragile right now, and buyers can find many reasons not to move forward. Sellers who don’t have to sell are frustrated, and some are taking their homes off the market or opting to rent them out instead.

Will there be any winners?

New construction has been the winner through all of this, as builders have been adjusting to a different market reality over the past few years and aggressively offering interest rate buydowns and other incentives to reduce the price and credit toward closing costs, that made it nearly impossible for a buyer to resist buying a brand new home. Those sellers with homes trying to compete against these kinds of communities are facing a challenging road ahead. 

What the rest of this year will look like under Trump 2.0 with regard to real estate is anyone’s guess. While cutting waste, fraud and abuse and leveling the playing field with respect to tariffs all sound like great talking points, the reality is: Decisions have consequences. You can’t pull one lever or two or three without them affecting something else.

No one really knows which way the wind blows, and watching how the tariffs shake out is likely to impact a lot of what happens next in our industry. For some, opportunity will be created, but for others, they may be sidelined due to a lack of affordability and high interest rates. Stay tuned. 

Cara Ameer is a bi-coastal agent licensed in California and Florida with Coldwell Banker. You can follow her on Facebook or on X, formerly known as Twitter.

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Delayed Marketing Exempt Listings vs. portals: Who’s right?

by | Apr 18, 2025 | Industry, News Feed

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Once the National Association of Realtors announced a new classification of Delayed Marketing Exempt Listings, chaos reigned supreme. Industry leaders, brokerages, portals and agents have strong views on all sides of this issue. Everyone has an opinion, especially the portals and brokerages with involvement in these portals.

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They seem to be masking arguments for what’s best for the public versus those who are the very reason that the listings exist in the first place — the property owner who decides to sell. 

As an agent who works equally with buyers and sellers, I have a few thoughts based on my 23 years of being in the trenches from the agent side of the aisle and as someone who built their business solely on relationships, hard work and unwavering client service. 

Choice

With Zillow, Redfin and EXP’s latest stance against a delayed marketing option without public syndication to all websites, they are forgetting one thing: choice. If we have learned anything over the past two years, it’s about having options.

Sellers don’t have to pay compensation to a buyer’s agent if they don’t want to. Sellers don’t have to pay a certain amount to that buyer’s agent. 

Agents can no longer declare, silently or otherwise, they aren’t showing a listing if it isn’t paying X percent because it’s all negotiable, and you can now request compensation as part of your offer — and you can negotiate how it is accounted for between the offer, seller and buyer if needed. 

You can and should tell a buyer, “I don’t work for free, and here’s how my compensation would be structured based on working together.”

A delayed marketing option is about a seller making the best decision for themselves when coming on the market. It’s not about hoarding listings or intentionally harming the public. 

When you don’t have a platform like the MLS to be able to offer different options for marketing listings, whether private or public, it becomes a convoluted mess of:

  • Private social media groups
  • cryptic emails
  • Screenshots
  • Texts and info sharing of “off market” properties at a meeting or gathering of agents where you don’t truly know who has the authority to represent these properties.

In addition, there could be more than one agent who has been told by a would-be seller, “If you can find a buyer for me, I’ll sell, but I’m not signing any listing agreement.”

It’s impossible to control what I call “backdoor” behavior in this regard, and it may likely continue despite a delayed marketing option in MLS. This can be difficult to enforce, and quite frankly, we all have much better things to do with our time than run interference with this. 

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Sellers should have the various options explained to them with the pros and cons outlined so they can decide what is best for them and their situation. 

Many markets have such a disclosure, and eXp just released an open-sourced version of its own. 

Every decision in life and business has consequences — some good, some bad and some of minimal effect. Now, when given choices, some sellers may prefer to remain off the public market for privacy or safety reasons as well as those regarding their personal circumstances. 

If they don’t feel like being on 500 websites, they shouldn’t have to be, but they should still be able to be found by agents through the MLS. Are the portals considerate of a seller’s reasons for not wanting to go public? There is a phrase I heard many years ago during a training class I was taking about pricing, and it was “When was the last time Zillow walked through your home?” 

This was directed at consumers who rely on this portal and many others as the gospel of real estate when it comes to values on both the selling and buying side. We all know Zillow hasn’t walked through the home, and it can’t give context like a human real estate agent can, such as why a home on one street may sell for more than one on an adjoining street. 

It’s why the value is way off because of what the portal is pulling in around that home (like condos or townhomes) that confuses the true price range the home should be in and any other nuances that only a real estate agent knows, such as the unsightly power lines behind the property or across the street, the warehouse behind it, the flight path that contributes to a steady stream of airplane noise in the neighborhood, etc. 

Selling a home is very much a personal, emotional and business decision, and as such, the seller has the right to make the best decision possible after being informed of their options under advice and counsel of their agent. 

Real estate 411

If you have been in the industry long enough, you may remember floor time, calls from consumers regarding real estate newspaper ads, as well as those from a For Sale sign. 

In the “old days,” many real estate companies required agents to use signs that had their office phone number on them — this was long before cell phones and, of course, pagers.

Then it evolved to both company and agent phone numbers on the For Sale sign when someone was actually in the office to answer the phone. During floor time, which was highly coveted, it was up to the agent to work the lead and convert it to a listing or sale. It was yours to take the ball and run with it. Embrace it, work it, own it. 

Information was more limited at that time, and we didn’t have all the ways to quickly and easily do a ton of research and vetting on people we met. Many of these inquiries were simply people looking for information as they were driving or walking by.

Sometimes people would call in asking if we could help them locate a property they saw for sale and attempt to describe the street or area where they thought it was. Again, no interest in engaging further. 

You could spend hours researching and sending information to prospects who had no intention of buying or selling (at least with you). All of this was done at no cost, of course. But an attorney would have definitely charged by the hour for their time. 

The Sitzer | Burnett case and related copycat lawsuits wanted to clarify, as part of the settlement, that our services are not free, which our industry used to tell buyers . 

Too many consumer portals have contributed to a DIY, instant-gratification attitude among the public when it comes to real estate, at no cost to the consumer. Click here to see a house, and — boom — numerous agents are blowing up the consumer’s phone with calls and texts. 

And as CoStar CEO Andy Florance recently explained in his op-ed on Inman, they are royally confused as they just wanted to see the house, had a few questions or thought they were contacting the listing agent, and no one who is calling them can answer their questions. 

The consumer has no idea of the difference between the listing agent and any number of agents calling them. Many consumers get quite upset to learn that the agents they are talking to are anyone but the listing agent. Some demand to get the name of that person, so they can talk to them. 

Is an agent who’s paying big bucks for this kind of lead inclined to give them that information? These portals create the notion that we are a free service at the end of a 1-800 line that can answer all sorts of questions, provide guidance, information, and insight, and then drop everything to show them a home. They have no idea how we are compensated or where the money comes from. Is that really what we want to be known for as an industry? 

As real estate coach Darryl Davis articulated, these portals are not our friend, and never were. They exist to make money and confuse consumers and agents alike. As it is, we can’t manually edit any of our listing information once it has been syndicated if things are not accurate from the IDX feed.

Have you ever had a seller ask why their listing had discrepancies on the portals versus what they are seeing on the public and private MLS links you shared? Lots of luck calling one of these portals to try to correct it — there is no one to get assistance from.

It’s unacceptable that our industry turned the spigot on to allow our data to be syndicated across hundreds of websites, and we have no direct way to seek resolution from them when there is an issue with how our listing, profile or other information relevant to our business may appear inaccurate, duplicative and confusing. 

These portals were given our data with no accountability on how information is depicted or if it needs to be modified or corrected. All of this reflects poorly on us as a profession, as we are viewed by the consumer as one and the same. They don’t give away our information for free — they make agents pay for it by buying leads so they can make money off ZIP codes, territories, etc. 

They aren’t transparent about how many agents have subscribed to buying leads from a particular ZIP code or a specific area. They don’t tell you that you have to be a really, really big player (to the tune of spending several hundred thousand dollars a year) to get their cream of the crop leads and live transfer calls — it’s purely pay to play. If you have an unlimited budget and the bandwidth and manpower to incubate and service these leads, then it may work for you. 

Yet the overhead associated with this from a brokerage, team and individual agent standpoint can put even the best into a financial hole if very few of these leads close. 

With rising interest rates, rising home prices, inflation, tariffs and overall economic uncertainty, who is really profiting from selling all of these leads? The agents running around with them are expending a tremendous amount of time and money running helter-skelter from one home to another. 

More inventory on the market, along with price reductions, causes them to freeze up like deer in headlights. When an agent wants to cancel or modify their subscription, good luck. They all love autorenewals, and you can’t magically talk to someone when you want to cancel, so you have to spend copious amounts of time going up the chain to find someone to help. 

The public has no idea how these portals work, and they don’t care. They just see them as a means to an end when finding a home to buy, but that doesn’t mean every seller has to have their property listed on them if they don’t want to. The public can find them, however, by working through a reputable agent.

And under our new practice changes, consumers will need to engage with an agent who has written documentation on some level to purchase a property, whether you go through the listing agent or a buyer’s agent. 

Fear: False evidence appearing real

If you’ve been in real estate a while, you’ve likely heard that acronym bantered about through tough markets, challenging situations, and working to overcome objections with buyers, sellers, and potential prospects. 

For these portals and brokerages that rely on them to feed their agents leads, they are operating from a position of fear that something will be taken away, but packaging that fear in disguise as advocacy for “the best interest of the public.” 

They are fearful that there will be fewer listings for them to generate revenue from because the listings are essentially paid ad revenue on their websites. They have to sell leads, and the more leads they sell, the better they do, however they choose to structure it. 

The portals are scared that sellers will elect not to make their listings public with this option in place. Sellers have had this ability all along, regardless of this new classification in MLS. It’s just that there hasn’t been a cohesive platform to keep track of this information or a way to always be aware of these properties. 

The sky is not falling. Just like the practice changes post Sitzer Burnett. There was a ton of fear about how agents would get compensated. Would sellers be willing to pay compensation to a buyer’s agent? What if they didn’t? What if a buyer couldn’t or wouldn’t pay if a seller wouldn’t? 

A million questions arose out of fear, understandably, and for the most part after working through the initial bumps in the road, it’s business as usual. Buyers are signing buyer representation agreements, and agents are requesting and receiving compensation as part of an offer being made. 

The same potentially paralyzing fear appears here. Many sellers will want their listing to go public and appear across as many websites as syndication will allow. These are the same sellers who typically want a sign in their front yard, a broker open and public open houses. 

At the same time, there are sellers who don’t want a sign or a lockbox, or maybe a lockbox is not appropriate for the kind of home they are selling. They don’t want any kind of open house and would prefer to be quieter about their home sale. That’s OK.

And some would-be sellers or those that expired have had bad experiences being on the “open market” for all to see before, including:

  • Agents and prospective buyers who didn’t respect their property
  • Agents and prospective buyers who showed up late for showings
  • No shows or appointments cancelled at the last minute
  • Agents and prospective buyers who left lights on, doors unlocked, let children run amok, etc.

Their trust in our system was eroded, and rightly so. The buyer representation agreement process may change some of that, rather than the prospect requesting to see a house with the click of a mouse and getting an agent who knows nothing about the listing to show it.

They have not qualified the prospect too much because they’ve been coached not to get into 20 questions and wait until you are at the property. That house now serves as that agent’s “field office” to try to build rapport with the buyer. 

Is that scenario really in the best interest of a seller? 

At the end of the day, the portals will have plenty of listings on their sites. There will still be listings that go public and appear on these portals. I don’t think nearly the number of sellers who choose not to be publicly listed, at least initially, is going to cause a lack of listings on these portals.

And portals only benefit those who create them. Content is king, as they say, and those with listings control the content. Where that content goes ultimately is up to the driver of that content, who is the seller. 

More inventory

The ability for a property owner to go into a delayed status just might create more inventory than previously has been available. It creates an avenue for sellers who may otherwise have been uncomfortable going on the market because they had to be all in or nothing at all. Even though sellers had the option to opt out of an IDX feed, an agent’s mantra was always to promote going on all those sites for obvious reasons.

But what’s good for “all” may not be good for one — just like how sellers used to be told they “had” to offer X amount of compensation to the buyer’s agent in MLS or the listings wouldn’t be shown. No one wanted to test that theory by daring to put $1 in the co-op compensation field in MLS, and quite frankly, many of us didn’t even know that was an option until all that came out in NAR’s defense in the Sitzer | Burnett case. 

This option allows sellers to get their feet wet in a comfortable way. Agents with buyers for whom it is a fit will share the information with buyers. They will have confidence and clarity that the agent representing the property is truly authorized to do so.

Buyers may have a less-pressured showing experience rather than not being able to see a property until an open house. While the portals and some brokerages are pontificating about potential lack of exposure, let’s not assume every seller wants hordes of people traipsing through their home at any given time. There are safety and security reasons, not to mention the wear and tear that comes with foot traffic.

The reality is agents aren’t likely to have manpower or a security detail at every entrance to the home front and back, posted at every room, and in the garage to keep track of people’s comings and goings.

I recently attended an open house for a home my buyers were interested in, and it was only available for viewing that weekend. It was an absolute zoo. It was an occupied home that was all fixed up and turnkey. Every door to the home was open, and I couldn’t tell if an agent was present.

No one was by the front door or entrance to the home. The garage looked like they took all the belongings in the house and put them in the middle of the floor — anyone could have gone through that and seen what they could find, not to mention tools and an expensive classic car parked in there.

At one point, I thought the agent may have opened the house up and left. The backyard was xeriscaped and lacked ground cover. People were walking in the yard, getting sandy dirt on their shoes, and going in and out of the house.

The carpet ran up the stairs and through the second floor and was starting to look pretty beat up from all the footprints. I finally found the agent, who honestly looked like any consumer who could have been coming through. I asked if shoes should be removed, and they said it didn’t matter. I couldn’t help but think how dirty the floors were starting to look. Is a scenario like this really in the best interest of the seller? 

So let’s not assume there will be fewer options for the public if a seller doesn’t opt to go on the portals. If a seller wants to transition to a public listing, they have the option to do so in the MLS and should not be penalized because they didn’t choose that option initially. We don’t have the right to tell owners of private homes where their home has to appear and on what websites and when. 

Lawsuits, litigation and lawyers — oh, my

Those against the delayed marketing option claim this is opening up the industry for more litigation. I would argue that any sort of “forced” or “mandatory” requirements of having to go public on the portals are equally prone to litigation. It smells a bit like antitrust with strong-arming.

They are saying an owner of a home has no choice but to go public out of the gate or forgo the ability to appear on their portals. EXp has gone so far as to say that it will respect seller privacy, but that privacy ends with going into MLS. Doesn’t sound like much choice to me. 

Private listing networks

Let’s not confuse delayed marketing with private listing networks. These two are not the same. Delayed Marketing Exempt Listings allow listings to be shared among MLS members who can match buyers with sellers in this status. Private listing networks provide a seller an option to test the waters, so to speak, within a brokerage, but it’s quite a narrow set of eyeballs.

And when Compass launched their Compass One portal, several other brokerages followed suit or felt the need to let the public know they have these, too. So with all these “private listing networks,” what’s truly coveted and special anymore?

The reality is that no brokerage or person holds the key to off-market listings. And there are numerous strategies agents use to uncover them, as many of us have done for buyers focused on a particular neighborhood or kind of home in an area they want to be in. Working these angles can take quite a long time of sleuthing, mining owner data about years of ownership and equity, communicating with numerous agents, walking the streets, talking to neighbors, sending letters, notes, posting on social media, and rinse and repeat.

In my piece regarding ways to move through the off-market debate, I articulated that a happy medium was necessary, and a delayed marketing option is exactly that. The seller gets exposure to agents who may have a buyer without having to go on display to the general public if they don’t want to. I am not suggesting that keeping listings from agents outside of a particular brokerage is the right thing to do. 

As our industry continues to evolve, disruption continues to reign supreme. Choice and flexibility must remain at the forefront of all we do. Our business demands it. No two consumers are alike, nor are their situations. People can be complicated for a variety of reasons.

Buying and selling is a highly charged and emotional process. In 2025, we need flexible business options to meet people where they are. We still have a long way to go, and no agent or consumer should be told it’s this way or the highway when it comes to how a seller chooses to market their home. It’s their home, their choice. 

Cara Ameer is a bi-coastal agent licensed in California and Florida with Coldwell Banker. You can follow her on Facebook or on X, formerly known as Twitter.

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BiggerNews: “Boomtowns” Are Declining…It’s Time to Take Advantage

by | Oct 11, 2024 | Investing, News Feed

Real estate “boomtowns” present a massive opportunity to investors in 2024. A few years ago, buyers were fighting tooth and nail to purchase properties in Austin, Boise, Phoenix, and other red-hot markets. Demand was growing in these cities, and prices were shooting up with no end in sight. But then…it stopped. Prices started declining, vacancy rose, and investors were stuck holding onto properties now worth less than what they paid. The interesting part? These market declines might be only temporary, and those who don’t buy now could be kicking themselves a few years down the road.

To give us insight into which boomtowns are worth buying in and which are worth ignoring is Matt Faircloth, multifamily real estate investor. He saw many investors rush to these real estate boomtowns during the peak and are now struggling to fill their rental units as the boom became a bust. He’s identified a sneaky strategy that allows you to buy properties at a discount in these markets to make money while the FOMO investors search for an exit option.

We’ll talk about the cities with the most hype, the ones worth investing in, the future boomtowns that most are ignoring, and the massive opportunity of “economic spillover” that could lead you to markets with the best future potential.

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Dave:
When I say the word boom town, you probably think of some old wild west situation. Maybe someone goes, strikes gold or strikes oil and then sort of magically and overnight this entire town springs up around them. And that of course creates all sorts of opportunities because the whole economy is growing, but it also presents risks because when things grow that rapidly and there’s all this speculation going on, there’s no assurances or guarantees that it’s going to keep growing in the same way or at the same rate. In some ways. The same thing still happens today. Cheap costs of living, remote work, flexibility and corporate investments have rapidly increased populations in a lot of markets, probably in the Sunbelt while taking those benefits away from other places. And it’s tempting to want to invest in those markets. I think everyone looks at them and has some interest in them. But the thing is that these trends aren’t a secret and multifamily supply and a lot of investment and competition are sort of rushing towards these places, and that has created a boom, but it leaves all of us investors wondering, is it still a good time to invest in these markets or have we sort of missed the boat? Or if you’re already investing in these markets and they’re experiencing a little bit of a pullback or a correction, what do you do? Today we’re going to get into everything about Boomtowns.

Dave:
What’s up everyone? I’m Dave Byer back for another bigger news episode this Friday. Since we’re talking mostly about multifamily supply here, I wanted to bring on a guest who one understands multifamily but has also done single family investing and also has just been around for a long time and invested in a lot of different markets. So I’m bringing back one of the first people I befriended when I became a BiggerPockets employee. That’s Matt Faircloth from the DeRosa Group. Matt has been a full-time investor for almost 20 years, and you maybe have read his book, maybe you’ve seen him speak at BiggerPockets, but he is just a wealth of knowledge about all things real estate. But today I’m excited to hear from Matt about which fundamental metrics investors need to research to determine if a BoomTown market is still heating up, maybe it’s overheated or you’ve already missed the boat. We’ll also talk about what to do if you’ve already invested in an expanding market and you’re now seeing rent drops or maybe even price drops. And make sure to stick around to the end of the show because Matt and I are going to name a few markets that aren’t yet Boomtowns, but could be soon. Here’s me and Matt

Dave:
Faircloth. Welcome back to the BiggerPockets podcast. Good to see you, man.

Matt:
Great to see you too, Dave. Thank you so much for having me.

Dave:
This is fun. We’ve interacted at BiggerPockets in so many different ways, but I don’t know if we’ve ever had this one-on-one podcast vibe before.

Matt:
I’ve never been one-on-one with you if she brought gloves or not. But at the end of the day, you and I have been on many, many shows together with others, but we’ve never done just a Dave and Matt Fireside chat, so I’m really grateful and looking forward to this today.

Dave:
Yeah, I think this is going to be great. And we’re talking about a fun topic today with Boom Towns and some of the areas of the country that are just going absolutely crazy, and I wanted to just get your opinion on what’s going on here given your extensive experience in most real estate things, but also just in your commercial real estate multifamily portfolio. You’re operating in a lot of the, I don’t know if you’re operating in all of them, but you’re certainly aware of all the towns that we’re going to be.

Matt:
All of the booms we’re booming, all the booms. Wow.

Dave:
I hope not all of them. Some of them are no longer booming.

Matt:
Well, it’s an interesting conversation that I’m looking forward to get into you with today because there is a certain vibe you hear out there about these towns that are booming and it’s almost like, I feel like we’re back in high school sometimes, Dave, where it’s like, Hey, did you hear all the cool kids are investing in Austin? And so it’s like you and I are in high school and we’re hearing about the party that’s happening at Austin’s house, or did you hear what’s going on at Charlotte’s house this weekend? And we all should go to Charlotte, right?

Dave:
It’s so true.

Matt:
Or that new kid Phoenix that just showed up

Dave:
And you get

Matt:
Fomo, total fomo, man. I’m like, damn, I didn’t get invited to Charlotte’s house. That sucks. No, you didn’t get invited to Charlotte’s house, but did you hear that Chase Scott got invited to Charlotte’s house and I didn’t get invited to Charlotte’s house or whatever. So there’s a lot of fomo that happens around these boom towns in real estate and some of it’s warranted. Some of these kids are pretty cool actually, and some of it’s overhyped,

Dave:
But has it always been that way or is it new with social media and the prevalence of our industry now as it’s grown that these more individual or very specific markets get talked up more than other ones?

Matt:
I think so. Social media, just like anything in life is a big old bucket full of gasoline. And I think that you still need that spark of reality for social media to accentuate. And so I remember back in the condo boom to date myself, Dave, in the early two thousands, pre-run up and crash with 2008 and oh nine, that Miami was where the cool kids were and other places like Vegas was a cool kid, condo boom town, and there were people that were building out houses for sale was so much of a rental frenzy, but it was a development for sale frenzy because of how cheap money was and because pretty much if you could fog a mirror and had a heartbeat, you could go and borrow for a residential property to buy for a lovely four bedroom, two bath, you could get in seriously no money down. This is like pre Dodd Frank and all that kind of jazz. So there were people that were developing condo projects and development deals as fast as they could in those hot markets in Miami and Vegas and perhaps Phoenix too and whatnot, but it wasn’t as frenzied as it is now. I think thanks to social media.

Dave:
So you mentioned a few of the cool kids. What are the other cool kids when you think BoomTown or just a market that’s exploding right now, what do you think of?

Matt:
Well, okay, obviously what really is a foundational growth metric of a boom town is jobs. And we mentioned Austin, right? Austin, yes it is. Or maybe was boomed a little bit and the party’s starting to get the hangovers now and all that, but the Austin popped a lot the last couple of years. And it wasn’t just because all the cool kids were posting about projects they were on in Austin and social media, it was certainly backed up by what? By jobs. If Tesla goes and builds a gigafactory just outside of Austin, there is so many spillover factories that are needed to support that big gigafactory. So it’s not just them, it’s many, many other companies moved to that region for all the reasons, right? Because land’s cheap and because Texas had good rules around starting up businesses was incentivized all the stuff. So the local economy in Austin popped and that spills down and creates workforce housing jobs and it creates all kinds of things and it spurred an economic economy first, and then that created a housing boom behind it because people are moving into these markets and they need great places to live.

Matt:
And it’s not like the tech guy that wants to go work at the Gigafactory and Austin moves to town and ends up having to be homeless, no place to live, but there becomes competition for his dollar or her dollar for places for them to live when they go work at that factory or go work at whatever the tech boom is. And that pushes up rents, supply demand. If you look at a chart of Austin rents, it’s blown out the last couple of years now obviously hit a ceiling and that increase in rents is where that’s what drives people like you and me, right? Yet we see that things are increasing. We see that Austin used to rent for, I’m going to make a number up Dave, so don’t back me up. BiggerPockets listeners, put your pens down a thousand dollars a month for a one bedroom, right? I don’t invest in Austin, so I don’t know.

Dave:
That’s our baseline though. We’re using this as a straw man.

Matt:
You’re the data deli man. You should be telling me what the rents are in Austin, right? Well,

Dave:
As you know, I’ve memorized rent for every metro area back to 1915. So I could just recall that

Matt:
Encyclopedia brown of data across the United States, but let’s just say for example, that rents on a one bedroom worth a thousand dollars, they very quickly will become 1100, 1200, 1300 for a renovated or new built bedroom simply because there’s more people coming in. So there’s more demand in that. So not to one-on-one this thing, but for those that are newer to the market supply demand is what’s going to push rents up. Then the rocket fuel comes in, then the big bucket of gasoline comes in and people start doing deals and you start having fomo and you see that a cool kid is doing a deal in Austin, and so you want to get into Austin too because you think that cool kid’s smarter than you are. And so you want to go in, that’s what creates that real estate investment frenzy. And all of a sudden that kid in high school named Austin is having a party and we want to go to

Dave:
Thank you. That’s a very helpful description just for sort of the cycle of events that happens when one of these markets starts to get hot. And I want to talk about the other part of that life cycle, which is when they start to cool down in just a couple minutes. But when you think of these types of markets, or at least regions of the country that have experienced this change, Austin’s obviously one of ’em. You mentioned Raleigh. What are some other ones that come to mind?

Matt:
I have fomo too, Dave.

Dave:
Oh, totally. I think about this all the time

Matt:
And I see my cool kid friends investing in Atlanta. I do hear a little bit about Orlando, but I think that was a bit, you made a Covid reference. I think Orlando personally, Dave was a bit of a covid market as is a lot of these warm places like let’s say Jacksonville, Florida, not as much Miami, even the Tampa area.

Dave:
Yeah, Tampa for sure.

Matt:
Yeah, those are covid poppers I think. But Atlanta is a market that really, really increased for real fundamental job increases and things like that.

Dave:
Raleigh.

Matt:
Raleigh, yeah. Research triangle growth in Charlotte, Nashville, let’s say. That is a market that I’ve seen become a cool kid market. I read some data that this was a couple of years ago. There was a five year Dave waiting list for a crane in the city of Nashville because Nashville at the time, again, don’t be yelling at me, BiggerPockets listeners, if this is no longer the case. This is a couple of years ago. I feel like this’s a disclaimer, the views and opinions of Matt Faircloth, they’re not necessarily, anyway, at the time, there was a limit on how many permits you could pull for a crane in the city of Nashville. And so the waiting list for that permit to build anything to build a large multifamily housing project and office building anything was five years, Dave.

Dave:
Wow.

Matt:
So that’s a good sign and that’s actually a government imposed constraint that will cause the supply demand curve to artificially push in a direction. So let’s see, Nashville, Phoenix.

Dave:
Yeah, Phoenix was on the top of my list. I have one more that I’m thinking of that you haven’t mentioned. I’m

Matt:
See if I can guess it.

Dave:
Okay,

Matt:
I’m going to speed around. I’m going to throw three more out, see if I can get it. Okay. Either Salt Lake City or Boise.

Dave:
Oh, you got it. Boise. Boise was one. Yes. If people to the show, I always pick up Boise, this

Matt:
Is a game show. This is so great.

Dave:
I’ll send you a trophy or a prize.

Matt:
So yeah, those are some of the ones that you see a lot of energy and a lot of vibe going into. I’d say at least 50% of it is founded and the other 50% of it is a bucket of gasoline from social media and from cool kid fomo.

Dave:
Okay, so that’s really what I wanted to talk about. So in this episode is how do you split that out? What is a market that is for real and what is something that is perhaps either social media or the product of very unique and perhaps short term circumstances? Because Covid obviously created boom towns in places like Cheyenne, Wyoming, like places that you would’ve never

Matt:
Honolulu,

Dave:
Right? Yeah. Places. I don’t know nothing against these markets, but they’re not on any top of the list for job growth or population growth. So they sort of defy a little bit of the conventional logic about where makes a good place to invest. So how do you decide what party you want to go to? Matt, all these kids are having a party on a weekend and you, you’re popular guy, you get invited to all of them. Which parties do you choose?

Matt:
I love this party analogy dates. You can’t go to a party based on who’s going to the party. So I can’t look on social media and see, and I’m not going to name real names, but those syndicators that we all know of and we see on social that they’re either buying or building or investing in an apartment building in a cool kid town that like, oh, I should do that too. They must know something. I don’t know. The idea of you doing something that someone else is doing because you think that they’re smarter than you is absolutely the most flawed tactic for anything maybe day in life, right?

Speaker 3:
Yeah.

Matt:
You should never do something that other, I mean, I should tell this to my 10-year-old. You should never do something that someone else is doing just because you think it’s a good idea that they’re doing it. So they must know better than I do. The fact of the matter is that’s almost like a reason why you should not go to that party is because maybe when you get to the party, all the Doritos are eaten and all the soda’s gone, right?

Dave:
Yeah, exactly.

Matt:
Yeah.

Dave:
They already called the cops,

Matt:
Shut this party down. The reason why you should go, I mean obviously you could use it as an indicator. So maybe I see on social that somebody that I think is a cool kid is investing in Phoenix or whatever. Stop picking on Austin, right? They’re investing in Phoenix. Okay, why are they doing that? Maybe you should allow what you see on social to spark curiosity, perhaps not action, and that curiosity could lead you total shameless plug to somebody like Dave Meyer to the data deli to go and see some data that he might put out there or to go collect your own data. How about that? How about don’t let Dave do it for you. How about go get your own data and learn how Dave does it and go get your own data yourself on markets? And so find out why those cool kids went to the party to begin with. What are they serving at that party?

Matt:
Find out the economic factors that are driving the market. And as I said before, the primary factor that drives a market is jobs. We’re no longer in a covid economy. The majority of Americans are no longer working from home, or some companies at least require some sort of hybrid presence in an office. So economic drivers in a market are what’s going to keep a market sustained. So if you see good things happening in that market, continued, sustained, good things happening in that market and the propensity for those things to continue, then that makes it a good market to consider. But certainly not because of all the cool kids are going, Dave,

Dave:
That’s well said. And it calls your attention to places, but obviously don’t do it. Most of the people who talk up as individual market repeatedly have a vested interest in that market. I am not calling out anyone in specific, but

Dave:
If you follow a realtor in Atlanta, they’re going to talk about how great Atlanta is. These people are either just talking about the one market that they know about or they have a financial interest in it, but it doesn’t necessarily mean they’re wrong either. So there are probably tons of great things going on in Atlanta, and it’s very important to look at many of the variables that Matt just highlighted. It’s time for a break, but we’ll be back with more from Matt Faircloth on the other side. Welcome back to bigger news. Let’s jump back in with Matt. I actually think, Matt, the hardest thing to know in these types of scenarios is when is it too late? I went to Austin and then down to San Antonio in 2022. I’ve just been bombarded with information about those two markets.

Matt:
That is a peak of cool kid tomboy. That was midnight. That was midnight. And they turned the radio up a little bit louder, and the party was jamming about 2 20, 22 in those markets.

Dave:
Yeah, exactly. It was wild. And I chose not to because it just seemed like people went crazy. You talk to a realtor and they’re like, well, the average appreciation in this area is 8%. I was like, yeah, for the last two, three years, why? That’s not going to

Dave:
Happen.

Dave:
But people were talking about it, it was matter of fact. And I was like, this place has gone insane and I walked away. But not everyone has the ability to go to these places. And I’m in a fortunate position where I know a lot of people in most of these markets, I could talk to a lot of them. So how would someone who’s just maybe getting started or considering a new market know even if there’s great job growth, Austin has great job growth, but it had just gotten to this point where it was so overheated that it didn’t make sense. How do you measure that?

Matt:
New construction tends be the driver of rent growth in a market, right? New construction and major renovations. What’s going to push rents up 10, 15, 20%, and then if you own the building right next door to that new construction, they might be able to push rents up 20% and you’ll get the spillover side effect of 7% rent growth. And if there’s enough new construction happening, is that realtor you talk to, you’re going to see rent growth across the board in that. So new construction and new development tends to be what drives up growth. And so if you’re seeing in the market lots of permits pulled for new builds and things like that, then that’s going to be, oh wow, there’s a lot of economic frenzy, there’s a lot of development, there’s a lot being invested in this market. Maybe that’s a good thing. Maybe that’s an overheat,

Dave:
Right? Yeah.

Matt:
If you looked at Austin in 2022, you probably would’ve looked at that, and that’s maybe why you didn’t get in because you saw it. Man, this isn’t sustainable. This crane’s all over this town, man. And at some point when they’re done building all this stuff that they’re building, they’re going to have to lease all this stuff up and that’s going to cause pressure, economic pressure on the market, right?

Dave:
Yeah. I mean, there’s a reason rents are down 6% year for year in Austin. It’s leading the country and rent decline.

Matt:
It’s not because the jobs are going away. It’s not because employment’s faltering. It’s because there was a major, major spike in development. And listen guys, it’s going to be okay if you’re an Austin, let property owner right now, you’ll be just fine. Those jobs are not going to go anywhere. And eventually, eventually all that housing that got developed will be absorbed and rents will start to creep back up. Maybe not at 10, 15% per year, and maybe they shouldn’t. Maybe rents shouldn’t grow that much.

Dave:
I totally agree. Well, that’s a whole other question I’m going to ask you in a few minutes, but I want to continue on this theme looking at inventory numbers, because what Matt was talking about with construction permits, a hundred percent true. That’s total housing supply. How many physical housing units are in that area? Super important, but also when you start to see inventory tick up or when you start to see days on market tick up both for rents and for properties, when you see things sitting on the market that shows a shift that maybe the frenzy is starting to cool off a little

Dave:
Bit. Absolutely.

Dave:
And it’s starting to shift more to a buyer’s market. And frankly, that’s what we’ve seen over the last, let’s say two years, two and a half years in some of these boom markets like Austin has been one of the biggest markets in decline over the last couple of years. So has Florida. Most of the markets that are declining are in Florida.

Dave:
And so if you’re sort of a keen analyst of this data, those things were becoming obvious a year and a half or two ago. Because if you look at these inventory numbers, you can start to tell that something is shifting that creates a really interesting dynamic. Matt, I’m very curious your opinion on right now we’re seeing Phoenix. We see Boise, some of these markets that have really good fundamentals, seeing the biggest declines. So what do you do? How do you navigate a market where some of the long-term best looking places have some of the worst short-term potential?

Matt:
There is a bit of a gangster move that you can make. There is someone who thought that they were walking into the casino of real estate investing and that they were going to go put all their money on red or whatever it was, and they took a bet that the market was that Boise was going to keep rising at 10% per year, or that rates were going to stay down, or that cap rates were going to stay down or whatever it is. And the gangster move is to go and find that person that took bets that the market was going to zig and it zagged. Okay. That developer or investor will be very clear as someone who’s in distress, right? Like, okay, I’m halfway done this thing and I have some friends that are buying a halfway done, a halfway done 50 unit apartment building.

Dave:
Oh my God.

Matt:
In Seattle, our company just bought a 20 unit just outside of Raleigh. Okay, cool. Kid town,

Dave:
Right? Half done,

Matt:
Yeah, was they were planning on building it out and keeping it, and they couldn’t get their refi.

Dave:
Wow.

Matt:
And so they decided to just take their chips off the table because the refi wasn’t going to get ’em whole. And so they, it’s like, okay, what? Forget it, we’ll just sell. And so we got it for less than what they likely would’ve gotten appraised for when they had started the construction. So there are moves that we as real estate investors can make to find someone, and this sounds counterintuitive day, but it actually is working, and I’ve got some friends that are doing this and finding things that were just built and either approaching the owner direct or getting a realtor to find you something that was built recently because something that was built recently was built under economic assumptions from two years ago, and they might’ve thought the party was going to keep going. They didn’t realize that rates were going to spike and that rents were going to have an 8% decline, as you said, right?

Matt:
So if they didn’t bake all those things into their pie and they were not conservative enough, they are in distress and they might need to liquidate at a way more reasonable off the market number than we might be thinking. And that’s a gangster move is to go and find somebody like that and work out a deal to say, Hey, looks to me like you either can’t finish this thing or on the numbers that I can tell, it looks like maybe you projected rents to be X, and now they’re Y. Another thing that you could look for, Dave, that is an indicator of distress is major concessions on rents. So if you see an apartment complex that was recently built and call them guys, and it could be a four unit, it doesn’t have to be a 300 unit call up the listing. If you see a vacancy and say, are you offering any concessions right now, that means that I’m asking $2,000 a month in rent, but if you sign a lease right now, I’ll give you two months for free. That’s called a rent concession, and it’s a backdoor way of dropping your rents without really dropping your rents. Meaning I can still tell the market I’m asking $2,000 a month, but really I’m going to go and give away two, maybe even three months worth of rent for someone that signs a lease at my apartment complex,

Dave:
Which is basically a 25%

Matt:
Cut,

Dave:
Right?

Matt:
Backdoor, backdoor way to drop rent without having to tell the market, well, no, I’m still charging $2,000 a month, but we’re having a sale.

Dave:
Yeah, exactly. Does this work for a single family or a small multifamily as well as a large multifamily?

Matt:
I’m not a single family guy, but I would try it. Yeah. Another example, Dave, is builders realized that, geez, we didn’t expect that the interest rates to go to 7%, six and a half, and I know the fed just dropped rates. I get that, but they didn’t drop them to the degree that they rose, that they increased them. So rates are still pretty high. So you’re seeing developers selling houses to end buyers, and they’re buying rates down three and a half, 4%. You can get the fruit, the developer baking in rate buy down, Dave, I guarantee you, when they broke ground in the development in 2021 or whatever it is, they had not planned on doing that,

Dave:
Right? Of course,

Matt:
That was not in the equation. So I would start making offers and maybe that’s just being the shrewd buyer and the last, say five, six years, Dave, we’ve all been used to, well, the seller is asking $300,000 for this single family home or for this duplex, whatever it is. So that’s the starting conversation. People don’t realize the buyers are in way more control than the market’s letting on that they are. And so just because the seller is asking a number, that should be of no consequence to you make a offer that makes sense

Dave:
Because values have fundamentally changed. It’s just that sellers are always going to ask for the maximum price. But when you look at the fundamentals of the market, and I’m not talking about the other fundamentals of demographics of the market, the value of assets has declined in a lot, especially multifamily. But in some small multifamily residential markets, especially in some of these boom towns that we were talking about, they just have declined. And so going to a seller and saying, Hey, your number that you asked for is based off two years ago value, and they’ve changed, and here’s what I think the real value is. They’re probably going to say no. But if you do it 20 times, they might say yes. There’s no harm, no foul in trying it.

Matt:
Yeah. And the asset classes that I would be going after if I were perhaps listening to this podcast and want to go find a deal, right? The asset class that the cool kids were going after for the last five years, Dave, have been value add properties, and this is small assets too. Something built in the seventies, eighties, nineties, early two thousands or whatever, and I’m going to get in here and put a coat of paint. I’m going to drop in a new kitchen, I’m going to spruce it up and spit, shine it up real nice and increase the rents and push things up to market that works that equation. The value add equation works in a rising economy. It works when rents are going up 10% because the market rising will carry you a bit forward. We’re no longer in that space. I don’t recommend, nor in my company the DeRosa group, are we going after the older vintage stuff, the 1970s, eighties, we buy apartment buildings. But it’s still that this conversation still applies to people buying smaller assets too, because the value add play doesn’t work anymore. But what works is to find, I think something newer built that somebody might be looking to offer a real concession on. So you can probably get better assets at a way better price right now if you’re willing to sniff around, do some detective work and make some offers.

Dave:
I love this idea. It makes so much sense to me. Actually. I want to do the gangster move. So you should in a market, I invested in the Midwest, there’s this brand new fourplex, it’s super nice, it’s at a great condition and it’s just been sitting and this is not a market where things are sitting right now. It’s like, make an offer. I’ll do it today. Maybe I’ll go do it right after this thing. Let’s do it. That’s great. I’ve honestly just been waiting because as people might know, I live in Europe, but I’m in the United States right now for BP Con and I’m going to this market in a few weeks to go look at my properties. And so I was kind of like, if it’s still around, then I’ll make maybe make an offer, but you’re inspiring. Maybe I’ll just do it today because why not? It doesn’t cost me anything.

Matt:
Distress is hiding right now, guys.

Dave:
That’s a good way to put it.

Matt:
I don’t think it’s going to be in the open market. I don’t think that you’re going to see blood in the streets and maybe just because open and praying that we don’t, because I don’t think that real estate is going to see a drastic crash, but I do think that there is distress out there. It’s just not going to be as in your face as you think that it might. And there are people out there that had expectations of saying it again, the market zigging and it went and zagged on ’em, and maybe they want to take their chips off the table, take a modest profit, or maybe just get their money back, whatever it may be. And that’s something you guys, BiggerPockets listeners should maybe consider doing in a market.

Dave:
Alright, we have to take a break for some ads back with more in a minute. We’re back with that faircloth on the BiggerPockets Real Estate podcast. What about for people who already bought in these markets and who are maybe seeing what I would call a paper loss. They’re seeing the value of their asset go down, but as long as you sell, it hasn’t actually gone down, it’s just in theory. But how would you recommend people sort of manage that piece of their portfolio in this sort of strange time for these types of markets?

Matt:
It sure is strange, right? And if I were, unless you’re in major financial distress, I recommend holding what you got. I think that those that are able to hold out for the next year-ish or so, if we have a recession where sessions don’t last years and years and years, they tend to last. It probably should be asking you, but what, nine months to nine months to a year? That kind of thing. So I think that if you’re holding an asset that’s either not penciling out very well, not going well, if you can find a way to hold it and to weather the storm and to just air quote get by, I think that that’s the right play. Things are going to be better a year-ish for now. There was a mantra that a lot of folks in my world were using survive till 2025 kind of thing, which I’m sure you’ve heard that one,

Dave:
Right? I have, yes. But it’s true though, because I’ve talked about this a lot, and it’s not just true of multifamily real estate is very, very forgiving asset over the long run. And so what you really need to do is, hold on. I think the worst thing that you can do in real estate, and the only way you really lose money in real estate is what’s known as forced selling. So if you find yourself in a situation where you just can’t hold onto the asset anymore because it’s not cash flowing, you don’t have the money to front your rate cap expires. So whatever, it’s things happen. And that is sort of the defensive positioning. I think some people need to be in these markets that are experiencing corrections. It’s just like, how do I make sure to hold on? Not because for pride, but because normally these things come back around. Even if you bought, I did this analysis, even if you bought in the height of 2007, the worst possible time in nominal terms, not inflation adjusted terms, you would’ve been fine after seven years. Now you’re probably not earning the best return you ever did in your life, but if you had cashflow during that time, you’d still be getting cashflow, you’d still be getting tax benefits, you’d still be getting amortization. And then seven years from now, your property values recovered.

Matt:
I did that, Dave. I bought assets in 2007, right?

Dave:
Did you hold on.

Matt:
Yeah, I held them right. And they were like breakeven rentals. These were single family homes, man. These were not super enormous apartment complexes. These were very accessible to most investors. Three bedroom, two bath, single family homes. And we bought them as fix and flips. The market went Cali Wonka and squirrely and all that. So we said, okay, this is probably not the best time to go flipping, so let’s make ’em good ironclad rental. So we shifted our business plan and we leased them out and they made meager cashflow or breakeven cashflow for a period of time, amortized the debt over years, and we just kind of held them until it made sense to sell. And when we sold Dave, we did very well on them. So you end up averaging out over long-term, as you said, through patience. And I think that’s the mantra that those that already own real estate, if you can be as patient as you can if you’re looking to get in and expand your portfolio, the word’s probably not patience. The word is courage to get in there and just say, Hey, let’s just give it a shot and make that offer on an asset that’s a little bit of a stretch quality wise than what we’re used to going after. And you might be surprised,

Matt:
But I highly recommend just be a little patient right now as things continue to shake. The Fed actually indicated they indicate a lot of things and then don’t do them. They change their mind a lot. But they’ve said that they’re going to drop rates two more times potentially by the end of the year. They said a lot of things at the beginning of 2024 that they were going to do and didn’t do.

Dave:
Certainly not.

Matt:
But they’re certainly going to do something over the next 12 months, and I think that they will long-term benefit real estate. So if you can hold on.

Dave:
I agree, and I want to just make sure that everyone knows that what Matt and I are talking about are specifically for markets that have these good long-term fundamentals. If you’re in these good markets where things are going to turn around, I went to Austin, it was too crazy for me, but of course unless something crazy happens, but by all accounts, Austin’s going to keep growing over the long run. I’m not concerned about Austin as a city. The same thing with Raleigh, same thing with Charlotte, same thing with Tampa. I think the strategies that we’re talking about, just to be clear, where you’re holding on or for places that you have a strong indication they’re going to cover. If you’re in a market that’s just kind of the town is unfortunately dying economically, I wouldn’t, hold on. I’d probably cut bait and try and just move on and go somewhere else. So that’s a good point. It’s really mostly about what you think the long-term prospects are.

Matt:
Yeah, no, and it does depend on your analysis and predictions for the market if things are going to continue to grow, although long-term, things like interest rates and just long-term national increases of cost of living do eventually push markets up. But certainly not. That’s true with plenty of headwinds. Whereas if you’re a market that’s already showing economic growth, you’re going to recover much faster than other markets may. So you might have to wait a lot longer.

Dave:
Yes, that’s right. Alright, Matt, last question before we get out of here. What are some secret boom towns that you think might be coming in the future? The ones that aren’t booming yet, and we won’t hold them to you, but do you have any hunches or hypotheses about future boom markets?

Matt:
I sure do. Yeah. Columbus, Ohio is one. We’re not there. I’ll give you a few that were not in.

Dave:
Columbus is booming, man. I went there too and didn’t invest. It was too crazy for me.

Matt:
But it’s not a cool kid market yet, right? So there are real economic fundamentals there. They’re building a chip factory there.

Dave:
Real fundamentals there. Yeah.

Matt:
So yes, it is booming. Yes, there are real estate investment ventures happening there, but I still think there’s deals to be had. I like just down the road, Cincinnati, believe it or not. Yeah, I said it. That’s right. Cincinnati old steel town. That’s right. But I think Cincy is going to show some longer term growth in certain neighborhoods if you want to stick to Ohio. Now, I will say this is not a DeRosa commercial for my company. This is a market we are invested in, but this is a market that is growing that has real fundamentals. And that is Winston-Salem, North Carolina.

Dave:
Oh, I’ve heard a lot about Winston-Salem being a good market.

Matt:
Correct. But that triangle where it is, the Winston-Salem, Greensboro, and to give you a bit of OSA inside baseball and what our company invest, we tend to not go where the cool kids are. And if you look at the map, and that’s my advice to the BiggerPockets listeners here, is that if you look at a map, look at where Rally is, and we already talked rally’s having a big old house party at their house, and so is their little sister Charlotte down the road, but there’s Greensboro and Winston that are in between those two towns. And there is spillover that happens in these secondary and tertiary markets, maybe cities that don’t have major league teams that have minor league teams, right, Dave and so maybe not Austin, maybe San Antonio,

Dave:
Right? Yeah.

Matt:
Maybe markets that are going to get the economic spillover and job growth or whatever for where people either can’t afford or choose not to afford to live there. Or even companies open up in those secondary cities that want to get some of the job growth and economic support. They want to support companies like Tesla that are building out in Austin, but don’t want to pay the rent in Austin. They want to be in San Antonio. So I would look at even Tempe. Okay, another example. Tempe, Arizona, not Phoenix, Tempe, that’s what Boise was. Boise, Idaho and Salt Lake City or whatnot. They were kind of secondaries and they were spillovers from California, but they kind of became their own thing eventually. But find secondaries that are growing. You’re the data dude, man. What predictions do you have for markets that are beneath the sheath that haven’t popped yet?

Dave:
I like the first one. So people who listen to on the market probably know that I am generally long on the Midwest. I don’t think they’re going to be the hottest market in the next year or two years or three years, but I think 10, 15 years from now, people who invested the Midwest right now are going to be very happy about it. My whole hypothesis is about affordability. Housing is unaffordable and unfortunately for a lot of people, I don’t think it’s better anytime soon. We’re going to try and build more, but I don’t think prices are going down. There’s just too many demographic tailwinds. I think the Fed learns its lesson. We’re not getting 0% interest rates. Again, I generally think it will get a little bit better, but I think people are going to be attracted to markets where their dollar goes

Speaker 3:
Further.

Dave:
And I think the Midwest offers great value. I know people, let’s just say Chicago, people hate on Chicago a lot of crime there. First and foremost, look at murder stats. Chicago is not number one in the city. It’s actually, there’s a lot worse places in terms of crime than Chicago. Chicago’s a wonderful city. I spent a lot of time there. There’s great food, there’s great culture. It’s a huge city. There’s huge companies that work there. I think cities like that, maybe not in five years, but 10 or 20 years are going to growing again. And because they’re extremely affordable for the quality of life that they offer. And so I personally look for stuff like that. And I totally agree with your idea of the economic spillover idea.

Dave:
Living in Denver for 10 years while it was booming. You see this towns like Longmont or Fort Collins, the cities were never anything. They were nice places, but I mean, housing market wise, they were not booming. And then you just see it gradually when there’s an economic powerhouse like Denver is, you just see it spill over. And right now, I think the perfect example is that is the fastest appreciating market right now. You’re a northeast guy, Matt, I grew up in the Northeast is New Haven, Connecticut would have never guessed, but when you think about it, it’s right in the middle of New York and Boston. It’s between two of the biggest economies in the entire

Matt:
World. It’s affordable. You can commute to Manhattan from New Haven. Exactly. North Jersey, believe it or not, as much as Jersey gets hated on Dave, right? As much as Jersey gets hated on North Jersey is a way affordable alternative. And there’s plenty of trains that’ll take you right into downtown Manhattan fairly quickly. So I would not be afraid of those secondary areas that actually get hated on in the Northeast or whatever. Our company’s investing in Minneapolis, Minnesota to talk about a market that nobody’s talking about.

Dave:
Right? Yeah, exactly.

Matt:
I agree with you. The Midwest, I think is maybe in five years going to become the new Sunbelt and that because people are not going to have the luxury of only moving to a place because the weather’s nice, because we’re beyond that lifestyle. I think that people are going to, for all the other things, for jobs and for culture and for food and for everything else.

Dave:
Well, those are our guesses. We’ll have to have you back on in five years and we’ll see if we’re right. Well, you’ll be back before, but we’ll revisit this topic in five years.

Matt:
Yeah, hopefully sooner than

Dave:
That. Absolutely. Well, Matt, thank you so much for joining us. I really appreciate it. This was a fun conversation.

Matt:
I loved our one-on-one banter, man. We’ll have to do this again soon.

Dave:
Yeah, this is great. We will have to do it again soon. And of course, for anyone who wants to connect with Matt, hear more about what he’s doing, hear about what parties he’s going to this weekend, we’ll put his contact information in the show notes. Thank you all so much for listening. We’ll see you soon for another episode of the BiggerPockets podcast.

Help Us Out!

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In This Episode We Cover:

  • The future “boomtowns” that most investors have no clue about (get in early)
  • How boomtowns form and what to look at to tell if one is worth investing in
  • When is it too late to invest in a growing city (metrics to check before buying)
  • The secondary markets with “economic spillover” boasting huge opportunity
  • The sneaky move Matt is using to buy boomtown properties at a discount
  • What to do if you bought in a boomtown that is already declining
  • And So Much More!

Links from the Show

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Josh Sitzer, plaintiff in commission case, launches à la carte platform

by | Aug 30, 2024 | Industry, News Feed

Landian, a flat-fee and à la carte brokerage, offers $49 tours and $199 for written offers to sellers, but the real bombshell may be Sitzer’s involvement so soon after the $5B Sitzer | Burnett verdict.

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Josh Sitzer, whose last name became famous in the real estate industry thanks to his role as a plaintiff in the high-profile Sitzer | Burnett commission lawsuit, has followed up his legal victory by co-launching an à la carte real estate platform.

The project is called Landian, and according to its website it’s “a platform that schedules and coordinates service contracts between homebuyers and licensed real estate agents.” The company lets would-be homebuyers schedule tours and make offers, and includes multiple different pricing tiers.

For consumers paying entirely à la carte, for example, Landian charges $49 per home tour. An offer written by an agent costs $199, but “AI-Powered Offers” are only $99. The company also has an “exclusive agent package” that costs $1,799, paid at closing. The package gives buyers up to five tours and two offers.

Customers using the exclusive package who want more tours or to make more offers are charged the à la carte price for those additional services.

A la carte and flat-fee services are not new to the industry, and indeed have been among the buzziest concepts in real estate over the past few years.

But what may surprise many in the industry is Sitzer’s involvement. Though it’s unclear what specific role he has in Landian, TechCrunch reported on Thursday — the day the company came out of stealth mode — that Sitzer had “teamed up with Bryce Galen and Neal Batra.” According to the TechCrunch profile of Landian, the company is designed to “take advantage of the new landscape.”

That new landscape stems from the National Association of Realtors’ landmark settlement that changed rules regarding agent pay. The settlement resolved several different antitrust lawsuits, one of which was known as Sitzer | Burnett — a name that comes from its lead plaintiffs, including Josh Sitzer.

Inman reached out to Landian Thursday with a request for comment. A company spokesperson offered to send emailed questions to Galen, the CEO. Inman responded with a request for a phone interview and had not heard back by the time of publication. This story will be updated with any comments the company provides.

In any case, though, the company’s website includes an exhortation for consumers to “join the real estate revolution,” followed by a quote from Sitzer.

“After our hard-won settlement paved the way for a new era of fairness and transparency, I’m thrilled to help launch Landian’s revolutionary flat-fee model for home tours and offer submissions, liberating homebuyers from the excessive commissions they were previously forced to pay,” Sitzer says on the website.

The company’s website additionally argues that it can save consumers the “equivalent to a year of mortgage payments.” It also states that “sellers are increasingly declining to pay buyer agent commissions,” but that when sellers do offer buy-side commissions, buyers ultimately still “pay agent commissions through the purchase price, which is higher than what a seller would otherwise accept for the property to receive the same net proceeds after commissions are paid.”

Consumers can schedule a tour or make an offer on a home by pasting a link to a listing from another site, such as Zillow, into Landian’s homepage.

Credit: Landian

In addition to working directly with consumers, Landian also includes an agent signup option. Landian is not a brokerage, and agents who work with the company still have to hang their shingle somewhere else. But the website does promise that agents can “unlock a new era of success” by working with Landian.

Registration for agents is free, but Landian’s website does not say how much money agents will make if they do home tours or write contracts with the company. The website also does not say how many agents have signed up so far, or what kind of lag time consumers might face when connecting with an agent for a tour or to make an offer.

Agents who write Landian offers will conduct “offer prep” sessions with consumers, according to the company’s website, during which they’ll discuss issues such as prices, terms and contingencies.

“After the session, the agent will draft the offer and submit it to the seller (via a listing agent, if applicable) on your behalf,” Landian’s website further explains. The agent will also manage any counteroffers, providing guidance and support until the offer is accepted, rejected, or expires. This service is provided for a flat fee, covering all aspects of the offer process.”

Among the industry changes that resulted from the settlement in Sitzer’s and other cases is a rule that seller’s agents can no longer make offers of compensation to buyers’ agents within their NAR-affiliated multiple listing service. The rule has raised questions about how exactly buyers agents might get paid going forward. One school of thought posits that they will get paid much as they have in the past, with the caveat that agents will simply have to communicate privately to hash out commissions.

However, another school posits that sellers will — like Sitzer himself and other lawsuit plaintiffs — balk at paying buyers agent commissions and refuse to make offers of compensation. That would place the burden of paying for those agents on the buyers themselves. Landian appears to be betting on this outcome, and that buyers will consequently gravitate to lower-cost offerings.

Update: This story was updated after publication with additional details about Landian. 

Email Jim Dalrymple II

Zillow releases 24 state-compliant short-term touring agreements

by | Aug 1, 2024 | Industry, News Feed

Four months after releasing a first-of-its-kind short-term touring agreement, Zillow has released 24 state-compliant versions of the agreement exclusively for Premier Agent partners.

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Four months after rolling out an industry-first short-term non-exclusive touring agreement, portal behemoth Zillow has released 24 state-specific versions of the agreement as the industry nears the Aug. 17 deadline for several landmark procedural changes, including a requirement that buyers’ brokers sign representation agreements with buyers before taking them on a home tour.

The state-specific agreements cover 80 percent of Premier Agent Real-Time Touring connections; however, Premier Agent partners can opt out of using them. For those who opt-in, the agreement becomes an automated part of the touring flow. When a homebuyer requests a tour with a Premier Agent, they’ll get a notification about reviewing and signing the seven-day tour agreement online or in person before the tour begins.

Alongside the touring agreement, homebuyers will receive a primer on what the agreement entails, why it’s required and their choices after the tour concludes. If a homebuyer decides to work with an agent after the short-term contract expires, they’ll be prompted to sign a longer-term agreement that outlines the services they’ll provide and how the agent will be compensated.

“We believe for most buyers, working with an agent in all stages of the process, is valuable,” a Zillow spokesperson told Inman in an emailed statement. “We’ve designed [the touring agreement] to be an easy, transparent experience for both agents and consumers to comply with new regulations, while also ensuring shoppers go into a home tour understanding exactly what the agent will do, but without being locked into working with an agent exclusively prior to even meeting them in person.”

They added, “This is an opportunity for the agent to educate buyers about this new standard and the need for another agreement, as well as showcase their own services and value in navigating a home buying process.”

The state-specific versions of the touring agreement will only be available to Premier Agent partners; however, the original version of the touring agreement is still available for all agents to download and use.

Since debuting the tour agreement in April, Zillow said the tour agreement has yielded positive results. Homebuyers who signed a tour agreement went on more tours than homebuyers who didn’t and were more likely to sign a long-term agreement with a Premier Agent.

Zillow Industry Development Officer Errol Samuelson said the rollout of state-specific touring agreements aligns with the portal’s dedication to facilitating transparent transaction for homebuyers and buyers’ agents as commission policies change.

“Buying a home is complex and often comes with a lot of stress: Half of buyers tell us they cried at some point during the process,” he said in a blog post. “Without an expert prioritizing their individual needs, buyers can miss out on making a competitive offer, leave money on the table in the negotiation, ignore potential pitfalls or waive important aspects such as inspections – which can end up costing them later. Most buyers want and need an expert on their side – we don’t see that changing.”

“The requirement to have an agreement in place prior to touring a home will be new for most consumers and agents. As we move forward, it’s important to remain focused on who the real estate industry serves: buyers and sellers,” he added. “We’ve long championed a more fair and transparent marketplace. In this moment of evolution, we’re extending an invitation: Join us in putting consumers first.”

The updated agreements are available in these states: Arizona, California, Florida, Georgia, Illinois, Massachusetts, Maryland, Minnesota, Missouri, North Carolina, New Jersey, New York, Nevada, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin.

Email Marian McPherson