Where to Find Real Estate Market Data That You Can Trust – Video
Video Transcript
Kathy Fettke: Where do you get your information from, and why do people keep getting it wrong: buying at the peak, selling at the trough, losing all their investment? We’re seeing people do it again and again, as there are some markets bubbling all across the country.
Who do you trust? Well, back in 2005, the cover of Time Magazine showed people in love with housing. Everyone was buying investment properties with no money down expecting to become crazy rich [00:24]. Except, 2006 happened and everything changed. Then the same magazine, came out in September of 2010 with a very different cover. The title, Rethinking Homeownership; Why owning a home may no longer make economic sense. Really? In 2010, when housing and interest rates have never been so low. Since then, most home prices have gone up significantly. Time Magazine got it completely backwards, telling people it was a good time to buy in 2005 and a terrible time to buy in 2010.
We can’t necessarily trust journalists, who maybe don’t know very much about real estate. How about people who do? For example, the chief economist of the National Association of Realtors. He might know a thing or two about real estate and market cycles, we hope so, he’s an economist. But, in February 2006, he came out with a book titled Why the real estate boom will not bust.
I’ve done a lot of stupid things in my life but I didn’t write this book and that makes me feel a lot better about myself. The chief economist of the National Association of Realtors was wrong. Unfortunately, I’m sure many people read this book and followed his advice and did not time the market well at all.
We were not those people, we were not listening to Time Magazine or National Association of Realtors. We were looking at the market and we were listening to real investors who we interviewed on my show, The Real Wealth Show, because I knew something was wrong. I was a mortgage broker at the time. I knew that I could give anybody a loan with no income and no assets needed to verify any ability to repay.
That didn’t make sense to me and I didn’t need to be a chief economist for anything. I was just a mom doing loans and using my common sense. What I did also have was a radio show where I could interview people like Robert Kiyosaki, Dennis Kaminski and others who were out there in the field and really understood what was going on, or at least knew that something was wrong.
They advised us to really look at affordability. California was way out of whack, Texas was in a completely different part of the cycle. This is something I really want to emphasize, there is no such thing as a US housing market. There’s just thousands of different markets all in the different parts of their market cycles. You can be in a bubble market and have this incredible opportunity to sell like in 2005, 2006 in California, sell at the peak, and exchange in Texas where they had the opposite happening. They were undervalued, so there was an opportunity to sell high with profit and buy low and ride that market up. We had a lot of investors do that.
We had one woman who had three properties in Stockton, California, appraised for about $420,000 each. They rented for $1,200 a month, and so she was just not making enough income. She wanted to quit her job but couldn’t, and I said, “Honey, sell those homes, they’re not worth that. Go buy 10 brand new homes in this booming part of Texas where all these jobs are going. It’s like headquarter row all along this freeway. Nothing but headquarters and jobs and brand new homes.”
She listened and she did it. She sold those three homes in Stockton. She bought 10 homes in Dallas. Each of those 10 homes brought in $1,200 rent. She didn’t have to do repairs because they were new. She tripled her income because she was able to time the markets. Look at those properties today in Texas. They’ve at least doubled since then, so it was a great play and we did a lot of that advising.
Then we saw the market crash, of course, in 2008 when Lehman Brothers collapsed. Again, I interviewed experts to say what we do now, and nobody really knew because nothing like that had ever happened quite to that extent. They just said sit on your cash and wait. We did until 2009 when we saw that there was an abundance of foreclosures. Properties were so cheap. We learned how to help investors in our network acquire as many of those foreclosures as they could in emerging markets. Again, in markets we knew would come back, because there was job growth, population growth and affordability. We’re going to talk about it in a minute, but we helped a lot of investors do that.
In 2010, we started to see an incredible opportunity to buy land for almost nothing. We were able to buy, 4,200 lots in Tampa that were on the market for $116 million, in escrow in 2006. Soon after they went into bankruptcy foreclosure when the market tanked. We picked up that land for $16 million as a network in a syndication. Again, land valued at $116 million, we bought for $16 million. We just recently got an offer for $88 million, but we didn’t take it because we really think it’s going to be worth more.
We took advantage of lots of land deals like that. We are still looking for them, but they are harder to get. We did just find one actually in Mountain View and in Park City, Utah. We’ve got some really great land development deals coming from it from developers who were able to tie up land for super cheap in 2010 and 2011, and now just need the capital to build.
Now what? Where are we today and where are the opportunities if foreclosures are starting to sell off, for the most part? That’s what we’re going to talk about. Like I said, partnering with builders, notes, seller financing, and still buying foreclosures in the judicial states.
I just want to share a little bit about me very quickly so you know why I have the credentials to talk to you about this. Back three years ago now, I was on vacation in Phoenix. Actually, I was at a conference, but I made it a vacation. I got a call from my publicist who said Robert Shiller, of the Case-Shiller Index, wanted to debate. I was a little shocked. I was on vacation, completely unprepared, but I said, “Of course.” He had never debated anyone. He didn’t like to do it, but Fox News wanted him to. He agreed to debate me because he didn’t know who I was and didn’t see me as a threat. That was great because I took him by surprise. His theory at the time, and this was three years ago, was that it was not a good time to buy real estate. He even said it was a dangerous time.
I had an easy time arguing against that theory. I said, interest rates are at all-time lows, and home prices are all-time lows, and people can lock in these fixed rates on homes for 30 years, no other country offers that. We know rents are going up, and we know home prices are going up because they’re at the bottom and there’s this thing called market cycles. They’re going to go up. I said, “Dr. Schiller, you’re getting terrible advice.” At the end, he came around and agreed with me. I guess you could say that put me on the map. I’ve been a regular on the news helping the media understand market cycles. They start giving people accurate information from investors in the real world who are out there and understand it.
