Florida's Real Estate Challenges and Solutions | 1-Minute Market Update w/ Martin

Will home prices finally drop, or are we looking at a new norm? Tune in as we unpack the latest housing market trends, revealing the slight uptick in mortgage applications and the surge in online home searches. Despite these indicators, home prices remain high, and affordability is still a major challenge due to current mortgage rates. We'll take a historical perspective to see how today's rates stack up and explore the growing inventory of homes that are lingering on the market. We also debate the future of home prices, dissect the impact of large investors, and consider strategies for homeowners navigating these turbulent times.

Our discussion then shifts to the intricate world of government regulations in real estate. We contrast the urban influx into cities like Dallas with Tampa's well-kept state, delve into the benefits of the rising trend of apartment living, and dissect the ongoing clash between the National Association of Realtors and the Department of Justice over agent commissions. To wrap it up, we turn our lens to Florida's real estate crisis, particularly the financial strain on retirees due to skyrocketing HOA fees and repair costs. We ponder potential government interventions and spotlight forthcoming investment opportunities, including an exciting redevelopment fund in Tampa. Don't miss this episode for a comprehensive look at the current real estate landscape and what it means for you.

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Chapters

• 0:28 Real Estate Market Trends and Predictions
• 11:07 Government Regulations in Real Estate
• 23:59 Florida Real Estate Crisis and Opportunities

Transcript

Speaker 1: 0:29

Condo owners in Florida face the perfect storm of rising costs and regulations. But before that, let's take a look at this week's housing market data, javi welcome back to the podcast, brother and let's get right into this data. This week looks like less people are trying to buy homes right now. While there is a small increase by 3% in mortgage applications this week compared to last week, it's still way lower than it was this time last year, by 4%. Even though fewer people are applying for mortgages, more people are searching for homes online. In fact, google searches for homes for sale have gone up 6% compared to last month. Now let's talk about home prices. The average price of a home is still pretty high, javi. It's currently at a whopping $389,500, and the prices that sellers are asking for are even higher, at an average of $393,700. So if you were to buy a home now, your monthly mortgage bill would be pretty high too. That's because interest rates are at 6.35. So the average monthly mortgage is now 2534.

Speaker 1: 1:40

I want to say something about this real quick. You know, in 2007, when I bought my first investment and I was a mortgage broker, the interest rate was 7.75. 7.75. So when we look at these rates 635, bro, when I bought my first house in the year 2000, we had an FHA loan. Take a freaking guess at what my mortgage rate was. Just take a wild guess, bro. Take a guess Double digit, bro, close, very close. We're going nine and a half, you're close. $9.75, dude, $9.75. While that was only a $176,000 mortgage for a three-bedroom, one-bathroom Cape Cod. The mortgage payment back then, dude, was $21.53 a month.

Speaker 1: 2:26

Two kids right, my wife and I were kids. We're two kids, a third one on the way, and I was on a commission job. So when I look at these rates, when I hear these rates 6.35, blah, blah, blah is high. The problem is that it's high compared to the prices. So that's the problem the price and the rate is high. That's what makes it unaffordable. Continue on with the data here. This week. There are more homes available for sale now compared to last year. The number of new homes on the market has increased by 3.7% and there are almost 16.6% more homes available to buy overall. So that means inventory is up. Lastly, homes are taking longer to sell compared to last year. On average, a house is now on the market for 36 days.

Speaker 2: 3:13

I think that what we're going to continue to see, it's that supply and demand.

Speaker 2: 3:16

I think that what we're going to see is that more homes are hitting the market, so prices are going down. But you see, a lot of people right now they're holding on to that equity because we've been in that period for the last couple of years and it's sobering for a lot of people. But I think what we're seeing right now more than anything is, I think, that there becomes that point that somebody's going to say, of like, yo, I would rather take a little bit less for my house. Or, to be honest, I think that there's some creativity that's happening in the market and homeowners are starting to wake up a little bit more, so to say, I'd rather take a little bit less on my house and maybe sell it with the mortgage or something of the sort, before more homes get on the market. Because I mean, with all of these numbers, I don't see where home prices are going to go up at all, because I think when interest rates go up or go down, I think there's going to be more homes on the market. Man, what do you?

Speaker 1: 4:04

think I agree, I agree with. I think some sellers are going to come out of hibernation and say, oh well, the house, the interest rates are lower, so it's time for me I can sell my house and maybe move on to something else. But I do disagree with something that you said is I don't think prices are going to come down. What I think will happen is, in my opinion, is that I think prices are going to flatten out on the resi side, so on the residential side, I think we're going to see flatline. We're going to see prices flatline here over in 25. I don't think in 2025 that the market is going to pick up. The real estate market is a slow moving behemoth.

Speaker 2: 4:40

But the big problem I foresee personally just being on the wholesale and investment side for so long is that we saw so many people like the invitation homes and we saw larger investors. I think for every one residential home that we've got, an investor owns five. I think that number might even be 10. So one of the things I think that we're going to end up seeing right now is I think that we're actually going to see a tremendous amount of supply start to hit the market, and those are the two things that you have. It's a supply and demand market. The demand's really slowed, but I think, when interest rates do go up, I think that we're going to start seeing neighborhoods for sale because neighborhoods have been bought up and not because the interest rate numbers still don't even work. Even in a half a point, even at a full point reduction, you still can't make these rentals on a single house by house basis work. So that's just my prediction. Maybe it's a little doom, maybe it's a little gloom. You pair that on top of people getting laid off with AI, other technological advancements there's been some overhiring in the last couple of years. I think that we're going to start to see a lot of assets come and start to hit the market. But I think a smart homeowner is going to be able to leverage, maybe, if they have a lower interest rate or something like that, being able to work out a good deal so they don't get hit so hard.

Speaker 2: 5:50

But man, I go back to that. I go to supply and demand. I think that a lot of people right now that they've been on the sideline for so long, whether being an owner or being a buyer but I think the big sleeping giant right now that we have are a lot of these companies. We've already seen a couple property managers this week. You and I we've been offering a lot of family deals in what's been the general consensus Asset managers from New York, right. So I think a lot of people are coming to wake up to realize of like, yeah, that second that they can try and make something, pencil right, they're going to be hitting the market, driving demand up tremendously, plus a lot of homeowners. For me I'm going to make a little bit of a dramatic prediction, but I think prices are going to get cut by about 50% right now that we're going to see.

Speaker 1: 6:39

Well, what are you talking about? Rezzy, rezzy 50%. Yes, whoa, that's aggressive, brother. That's aggressive. But here's what. The real root cause of the problem, javi. Here's the thing If unemployment starts to go up, we got a real problem. Do you know? The crisis of 1812 of this country was our first depression in 1812. And, bro, you know what unemployment was back then? 20, 25%, bro. You know what unemployment was during 2008? It only hit 10 percent. Right now, our unemployment is up to 4.3 percent. Now, remember they revised the numbers by about a million right, 800,000 less job created than what they reported. Anyways, I know that's the biggest threat. It doesn't matter if we have a shit ton of of inventory out there. It doesn't matter if we have a ton of demand out there. Neither matter if people don't have jobs and can't pay. None of it matters. The whole economy collapsed, everything collapsed. So we've got to make sure we keep people employed J-PAL, listen to random guys here on a podcast and on YouTube and lower the freaking interest rates. They're always freaking late to the party.

Speaker 2: 7:50

So happening in the multifamily sector we were just talking about. We've been very active the last couple of weeks in that there's good news for renters and he's Austin specific, so Austin's been a very hot market. The apartment building is back on the rise after a bit of a slowdown. The two new developments that are underway there's a big one that's a 360 unit called 7th and Pleasant Valley, and a smaller one with 44 units, 1307 and 1309 East 4th Street so both are going to require tearing down some old buildings to make way for these new apartments. But this is really interesting because even though their rent prices have been going down in Austin lately, there's still a high demand for apartments. Overall, it looks like these developments are betting that there's going to be plenty of renters looking for a place in East Austin. Maybe it's homeowners that are selling. They're going to want to downgrade capital assets and equity that they have in their house.

Speaker 1: 8:39

So what do you think about this? So I've been to Austin. I was in Austin, I did a workshop in 2022 and it is a beautiful city. They got hit really hard up with inventory on the single family side. One of our investors lives in Austin and she's an investor there and she's a player and boy did they get hit. They overbuilt there. There's a lot of the new single family stuff that is dropping. I think they're stabilized now, but my thought process on this particular article is that it's a good bet, man, I believe 6 to 11 million new immigrants in our country, whether illegal or not.

Speaker 1: 9:21

There's still people we have to figure out. I mean, they're already here. What are we going to do? We got to figure it out, so there's going to be a demand for that. A lot of those people are going to go to these big cities, austin. Here's one thing, though, I noticed in Austin I'll share this with you is I noticed that if they're not careful, it's a great city, great Texas, it's a great state for investing In Austin. Though, what I noticed and this could have changed when I was there in 22, walking around, because I was in downtown Austin was I started to see some issues with homelessness, like in some of these big cities and homelessness. You, as a developer, know that if you're developing a beautiful building or you're redeveloping a beautiful building and you have a lot of homelessness around your property, that can create some challenges.

Speaker 2: 10:05

I think it goes into what we were talking about before. I think the need for more rentals is going to continue to climb. As a developer us being able to have multiple units we're always going to have that ability to be able to withstand a little bit longer than, say, a homeowner. And I think the more times that we see these homeowners that maybe are sitting in $100,000, $150,000, $200,000 worth of equity that are in their home, I think it makes a really compelling story for you to sell your property and move as a rental. And also Austin you're right. I mean it's one of the top job markets in the entire United States. You have California pushing down, you have Mexico pushing a lot of people who are going into Texas right now. You also have a bunch of other states that are pouring into the city, whether it be for business or whether it just be for lifestyle. I know I just had a buddy of mine move from Colorado into Texas, right, for the exact same reasons. So I think also one of the things on here as well is that Austin probably has a little bit lower cost of living where you can get into, where it's just. I think we're going to continue to see a pouring of people into these major metropolitan cities.

Speaker 2: 11:13

I was just in Dallas. I saw the homeless thing as well. I've been forced and go yeah, it's all, it's all over these places. But I think one of the things that you get, not, brother?

Speaker 1: 11:23

I'm a disagree with you on that one because bro, not for nothing. Not on that one because bro not for nothing. Not because I live in Tampa, but, dude, the census and the mayor of Tampa. They're doing an amazing job, like they really are. The city is clean, it's beautiful. I was down there last weekend with my wife in downtown Tampa and it's not that there's no homelessness. I saw maybe one or two, but man, one or two compared to what I've seen in the other big cities. This guy in Florida is doing an amazing job. With that Doing an amazing job, you got to give it back.

Speaker 2: 11:54

No, he really is. No, I didn't say anything and nothing about Florida. I'm saying of Texas. We're going to continue to see these cities start to the more people that they get. I think that there's a percentage of that. I think in Tampa it's got a little bit better. I'm from DC. It's pretty bad up there too. But I think the thing that we're going to continue to see is, I think that these apartment buildings are going to continue to thrive versus maybe that, instead of seeing these like a massive buying of these single family residences because I think that you get this quality control with these apartment buildings, so not only are you just paying for housing, but you get the amenities, you get the protection. Maybe you get some security guards where you can get your mail protected and stuff like that. So I think we're going to continue to see, as rates go down, where these apartment buildings go up and, I think, cities like Austin we're going to see, maybe the early stages over the next couple of years, what the best investment strategies are going to be across the market. I don't have my crystal ball right now it's a little low on battery, but just kind of looking at Austin, austin's been leading the curve for the last couple of years. So it's going to be pretty interesting. Maybe we could take something from there over here. Yeah, we'll see. We'll see how that goes, cool man. So we got another residential story.

Speaker 2: 13:01

Our good old buddies at the NAR, the National Association of Realtors, are fighting back against the Department of Justice, attempt to reopen an investigation. So the NAR, the National Association of Realtors, is taking a stand against the Department of Justice, the DOJ, after a recent court ruling allowing the DOJ to reopen a closed investigation. The DOJ previously agreed to end its investigation into the NAR's policies in exchange for certain changes. So, however, the DOJ later decided that after closing it, they wanted to revisit the investigation, arguing that it could also do so unilaterally, even after they closed it, which doesn't really make too much sense.

Speaker 2: 13:45

But I guess the Department of Justice does what the department wants to do. So the NAR is pushing back on this. They disagree with the DOJ's interpretation of this agreement, believing that the government should also hold to its own word, which would be fantastic. But the association's concerned that the ruling could have a broader implication for other businesses that enter into agreements with the government. So now the NAR is actually seeking a hearing of the court's decision determining to defend its members' interests. I mean, man, this is going to be something that having affects a lot of businesses here. What do you think about this? You know, the government going back on what they agreed to.

Speaker 1: 14:22

This is what happens when you have big government right I tend to be more center right and when you tend to lean center right, like me, you want less government. Right, we need government in certain areas, but I want less government. This is the government throwing its weight around and bullying the private enterprises Like in my opinion. This is how I'm modeling. This is how my model of the world is seeing. This is through my filter, how I'm seeing it.

Speaker 2: 14:49

So specifically, I wanted to what they are opening up. So I looked it up here. It's reopening the case regarding agent commissions, so the investigation focuses on potentially anti-competitive practices, particularly the participation rule and the clear cooperation policy which dictates how agents and brokers list properties and share commission information.

Speaker 1: 16:42

Javi, but wasn't this settled already? So I'm a bit confused here. Right, this was already settled. Didn't NAR pay like $6 billion or some crazy number? I know that the rules have already changed. The realtorsAR pay like $6 billion or some crazy number. I know that the rules have already changed the realtors are already operating in a different way.

Speaker 2: 16:56

You know what I mean. That. What you're talking about, my friend, that is not this. That is actually a surface of that. So, specifically to what they have settled already, that was the $418 million class action lawsuit. Yeah, so that has nothing to do with the $418, half a billion dollars no, it's half a billion dollars. That had nothing to do with the Department of Justice. The Department of Justice actually stepped back from there and it's reopening after and now this is actually basically it's the same thing that had gone on before. Right, it was the same issue, but instead of the government suing the nar, it was actually the people suing the nar.

Speaker 2: 17:39

Now that the people have finished that, now, oh, I got it, I got you. Okay, right, so this is yeah, so this is it's reopening the investigation related to the change in broker commission specific I. It's been scrutinizing NAR's policy, including the participation rule, which is the seller's offer to a commission buyer broker through the MLS right. So the NAR recently settled the class action lawsuit, like we just said, for 418 million, and it's centered around those practices leading to the changes that we've seen in regards to broker commission, what's disclosed and negotiated. So they've made those changes, that DOJ is continuing to investigate whether these or other practices might still violate antitrust law.

Speaker 2: 18:26

I got it, I got it. This is the crazy part, because the NAR lawsuit, the class action lawsuit that just happened with realtors. So now by the DOJ stepping in, it could go to mortgage brokerage, it can go into insurance, it can go into all of these other competitive environments and landscapes that people have for competing for brokerage, compensation and stuff like that. The first one, man that looks like that, was just the cupcake at the birthday party right Dude, half a billion dollars is not a cupcake in a birthday party my brother.

Speaker 2: 19:03

I could become 418 billion once you get a couple industry-wide. This is just realtors. Yeah, this is a big deal. We've already seen how much it's shaken up. Rm.

Speaker 1: 19:13

Yeah it's a big deal. So we'll see how that shakes out. I mean, look, government has to step in for fair practices. I mean, there are some times again, this is where me being a center guy there needs to be regulation, because you've got greedy capitalists that just don't follow rules and do whatever it takes, and we need to protect consumers. But when government starts to overreach too much into then over-regulating industries, then it cramps entrepreneurs from innovating and doing, because now you got all of these extra rules that you're not letting us innovate, you're not letting us be creative, and that often creates a lot of time. Like, look, man, I just came from a conference, as you know, and one of the biggest thing is right, like man, I've been to hundreds of business conferences and one of the biggest thing and read hundreds of books on business. What's one of the biggest things that entrepreneurs do? Right? We innovate, right, we innovate right, we innovate, we're creative.

Speaker 1: 20:17

I believe in capitalism, I believe in America, I believe that we is the entrepreneur that fixes the big problems in the world of the world. We're traveling to space like Elon Musk electric cars. Look at all of the things that entrepreneurs do. Entrepreneurs are the ones that are going to cure cancer. It's entrepreneurs the ones that build roads. It's entrepreneurs the ones that build houses. It's entrepreneurs that fix the big problems in our society.

Speaker 1: 20:41

When government um wants to get and stifle that and get too involved in that, it creates a problem and it um it can, it could not saying it is it could hurt innovation and other news. New safety laws send Florida condo market spiraling. So you've been in Florida for a minute, so I really love to get your input on this. Florida's condo market is in trouble. Costs are going way up thanks to the new law that requires safety checks on older buildings. Condo owners now face big repair bills and rising HOA fees, making it expensive to own a condo. This is scaring away buyers and costing some homeowners to sell at huge discounts. Experts worry this could lead to a domino effect, condo associations going bankrupt, property values dropping and a mass exodus of residents. So if you're thinking about buying a condo in Florida, you might want to wait and see how this shakes out.

Speaker 2: 21:42

Man, I don't think anyone saw this one coming. It's tough. It's really tough to be able to wrap your head around the actual numbers with this, because we're talking about one of the states that has the most coastline, so we have so many condos on the beach that are high risk areas and you have a lot of people who've been in retirement so, like hey, I don't know how a lot of people are going to afford this. I'm excited because I think this is a great buying opportunity for us. We would have some properties on the beach. But, man, I know a bunch of my buddies who are in construction and they've been telling me about this and the amount of repairs that needed to get done and just a lot of delay in it.

Speaker 2: 22:19

But I think that this is a deeper problem that we've had, that the associations that you have, whether it be an HOA, whether it be a condo association I'm from Washington DC and that was one of the biggest laws that we ever had to write within it that are a condo association's responsibilities. I mean, we're basically looking at neglect and it's surprising to me because I know as of recent right so if something that's been built after 1985, florida had a law that normally the actual development would fall on the developer's responsibility. So that's actually something when you develop a building in Florida, you're actually supposed to carry that. So I think for newer condo buildings, right, you're going to be able to see this not be as much of an impact, but something that is pre-1985, that doesn't have that level of protection, right, doesn't have any bond, doesn't have any insurance, doesn't have that backing. I mean, this could be catastrophic, could be a great opportunity, right, you could buy these buildings at pennies on the dollar because it could technically get foreclosed on in a couple of different situations here.

Speaker 2: 23:26

But, man, to be honest, I don't know how somebody is going to recover out of this. This is something that you can't just look the other way. Buildings need to be repaired. Hurricanes are just getting stronger here. They're structural, there's mechanical involved, there's so many things like windows that are involved, and these are cheap fixes and especially, you know, and especially with insurance going up. I think that this is something you know. Desantis has done a great job, but we haven't heard anything about this. We haven't heard anything in regards to the state help with this, and I see that homeowners are getting beat up. Man, but what's your take on this man? You know you're a new resident here in Florida. You bought a house. You know I'm glad you didn't buy a condo here in Florida, you bought a house.

Speaker 1: 24:08

I'm glad you didn't buy a condo, man. What do you think? I don't play in the condo space, but this is a little bit heartbreaking for me, not a little bit. This is heartbreaking for those retirees, a lot of retirees in the state that have come here and moved here to retire. So you think about it.

Speaker 1: 24:22

Let's say you're on a fixed income $60,000 a year or something and you've been living in your condo. You don't have to worry about grass and all of these things, all of the good things that come with living in a condo. Right, as you get older and you age in, you age up, you don't want to be dealing with all those things. All those things are taken care of for you and all of a sudden, just like that, your HOAs go up and then your fees go up. I've seen some videos and some data where these things are going up by $1,500 a month, $2,000 a month because of all of the repairs and everything that has to get done now and it's like, dude, that's heartbreaking for a couple, a senior couple, a grandma and grandpa that retired in Florida. Where are they going to get the $2,000 a month from?

Speaker 1: 25:06

That's where my heart goes out to right, those families that are out there that are living in these condos and they have maybe two or three kids you know, young kids such as yourself and two incomes, working and voila, they get hit with this, bro, not everyone can handle that. So my heart goes out to those folks. And again, do you think the government is going to come in and fix? Again? Do you think the government is going to come in and fix this? Do you think the government has the capacity to come in and fix this?

Speaker 2: 25:34

I think that we're going to see after the election year, and this is. I've met with a couple of state senators. I know that this has been something that has been part of the conversation. I think in January I think it's going to get very hot right, but I think probably sometime next year I think they're going to come to step in to say, hey, this is something that's affecting a lot of our residents. So I think that they're probably going to start to maybe write some legislation that is a condo relief program and I really don't doubt, especially for some associations that either can't afford it or homeowners. I think that there's going to be a certain threshold that we're going to see post-election this year.

Speaker 2: 26:16

I think we're going to start to see a lot of relief that's going to be coming in from the state side and, thankfully enough, our state government has done a pretty good job from at least from what I've heard from DeSantis and everybody being able to have a reserve for these.

Speaker 2: 26:29

I know something that they wanted to do is be able to have a lot of civil programs or roads and stuff.

Speaker 2: 26:36

I think they're probably going to end up diverting a lot of that because there are residents right, these are people who've been here for a very long time who can't afford it.

Speaker 2: 26:45

So I wouldn't be surprised if either we see some lawyers be able to start to step up on this and start getting some representation for people, or if there's going to be a state fund program that starts to come and bail out some people who are in really dire situations, because we have a lot of these apartments, man, they're 40, 50 years old and they do need some work and really people look the other way. But the last couple of years we've noticed the flood insurance and a lot of these flood programs and building programs start to get a lot more restrictive because they want things to be built right for the long term. But, man, I do have faith that our system is going to come to the rescue in this, but I don't think that we'll see something, probably for the next year or so. I think it's going to get a lot worse before it gets better, yeah, and I hope so, man.

Speaker 1: 27:28

I hope so. So this is an exciting time. The future looks bright, man. I'm excited about the future in the real estate market. Despite the many doomsayers out there. I believe that real estate is this is a great time in real estate. Here's my advice, guys for those of you real estate guys listening right, this that we're living right now is the 2009,. The last recession in real estate. This, right now, this moment, guys, and I'll tell you this, javi, in 2016, I looked back and I said to myself man, I screwed that up. I wish I would have known then what I know now, because I would have taken advantage of all the opportunities. Guys, if you're listening, don't be that person. You know, I have an online course. You guys could check, check out martinreimasterycom and you could start getting your education right now. This opportunity right now that we're seeing in real estate is a tremendous opportunity. I'm going to just put a shameless plug for myself there martinreimasterycom.

Speaker 1: 28:34

The other thing is, I really would love to get some feedback from you guys here, as I am going to be starting a fund so we can take advantage of this opportunities that here in the Tampa Florida market and some other markets in the area. We're going to be starting a fund really soon. We're preparing, we're talking to the attorneys. What I would like to get is I'd love for you guys to drop me in the comments, let me know, if we start a fund, if you'd be interested in partnering up with us in some redevelopment apartment multifamily redevelopment, value add type of things and be our partners.

Speaker 1: 29:08

This is not a solicitation or an invitation. This is when we have the documentation ready and the legal documents ready. I'd like to know if you would be interested in partnering up with us and investing in our fund when it is ready. That's all it is. We're going to make sure it's legal, it's done the right way. This is not a solicitation. We are not taking people's money. When it is ready, just let me know and say yes, and I'd love to just get on a quick call with you and get your thoughts and see what your goals are so that, when we are ready, we can make the offer to you. Any final thoughts before we wrap it up, javi.

Speaker 2: 29:47

I think one person's distress is another person's opportunity, right Like Warren said, it's the best time to be buying right now. And we're not going to be able to see this because by the time that you realize time's good, the prices are going to go back up. So I think now, if you don't know what to buy, if you don't know how to buy, reach out. Warren's been in this game for so long. We're here for you. We're here to add value to you and your businesses. So the biggest mistake that you can do is sit on your hands and watch everybody make money while you're not. Reach out. Participate. Let's get wealthy together.

Speaker 1: 30:19

Appreciate you guys. This has been your weekly real estate market update, no longer under one minute. This is way longer than a minute, but your weekly real estate market update. We'll see you guys next week. Peace out.