The Psychology of Affordable Housing (HA 1619)
The Psychology of Affordable Housing (HA 1619)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill DeWit:
Hi.
Steven Jack Butala:
Welcome to the House Academy Show, entertaining real estate investment talk. I’m Steven Jack Butala.
Jill DeWit:
And I’m Jill DeWit, broadcasting from the Valley of the Sun.
Steven Jack Butala:
Today, Jill and I talk about the psychology of affordable housing. Every Thursday, Jill and I have a call, we call it the Thursday call. It’s a webinar, closed webinar with all Land Academy and House Academy members. And one of my jobs that I’ve assigned to myself is to kind of give everybody a… Let’s call it a 10 minute overview on what’s happening in the news with real estate, because it’s really we didn’t use to do it, but this whole COVID thing twisted this housing market all around. In the beginning of COVID, we thought it was going to crash like it did in 2010. So I was trying to prepare everybody, and help everybody with that. And by informing everybody of all these sources… I belong to all these sources of news feeds on real estate.
Steven Jack Butala:
And so that didn’t happen fortunately, in fact it went the other way and we’re all a lot more successful for it. I hope you are too.
Steven Jack Butala:
What I see now predominantly, and as a result of that what I continually go do this research for real estate for the Thursday call is this affordable housing topic.
Steven Jack Butala:
Over, and over, and over again everyone loves to report on affordable housing, except for the core data tree itself, First American title data tree. The core and ADaM data, which I have tons of respect for, they’re real estate data companies. They seem to stay out of it. They seem to know enough to just say, “You know what? The market’s going to set itself, and that’s it.”
Steven Jack Butala:
And it could end right there, but that’s not what happens. This day and age it’s just a current event, affordable housing is a cool thing to talk about.
Steven Jack Butala:
Why? Because people have this perception that they can’t afford houses, but that’s just not the case at all. They absolutely can afford a house, and in fact I’ll get into it in a minute.
Steven Jack Butala:
Before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community, it’s free. And don’t forget to subscribe on the Land Academy YouTube channel, and comment on the shows you like.
Jill DeWit:
Charlie wrote, “I have some questions about a title close versus a real estate attorney close. Number one, what does it mean when somebody says it’s an attorney closed state? Are there no title companies in those states, or is that an extra step on top of what the title company’s already doing?”
Jill DeWit:
Should we answer them in order, or just go through them all?
Steven Jack Butala:
Yeah, sure.
Steven Jack Butala:
Go ahead, Jill.
Jill DeWit:
So number one is yes, there are states, really only one that I can think of in particular.
Steven Jack Butala:
New York. [crosstalk 00:02:34]
Jill DeWit:
Yeah.
Jill DeWit:
That require an attorney basically to oversee the transaction. And, usually there’s an attorney at the title company that’s overseeing it all. And I’ve had some transactions like this, where in other states they still have an attorney overlook their transactions, even though it’s not required. It’s just kind of an extra layer of insurance for them. So that’s what that means.
Jill DeWit:
“Number two, I’ve also heard it’s faster with a real estate attorney” And I’m partially the problem myself here for this one, because I really promote this. “Can I ditch my title company in Texas and do everything with an attorney?”
Steven Jack Butala:
Hell yes.
Jill DeWit:
Yeah.
Steven Jack Butala:
And I would encourage you to do that.
Jill DeWit:
That’s it.
Jill DeWit:
So for number two, that’s my now new way of getting deals done. First I’m going to try to find attorney nearby, have a quick conversation with them, because they can do these transactions often cheaper and faster with title insurance than a title company.
Steven Jack Butala:
Some states we have lawyers that do it. Some states we’ve been ingrained in so long that we have an amazing staff set up for titles. So we use them.
Steven Jack Butala:
This is sort of a, this isn’t working anymore so I’m going to go try something new. And if you’re in a case like that, or you’re in a new state.
Jill DeWit:
Try it.
Steven Jack Butala:
Try to get a lawyer.
Jill DeWit:
Yeah.
Jill DeWit:
Oh, and then number three is going to answer the question I was going to just throw out there.
Jill DeWit:
“Number three, how do I find a good real estate attorney? I’m sure there’s some trial and error, but is there some specific experience or certification they should have that makes them better suited for our business?”
Jill DeWit:
So honestly, call the county.
Steven Jack Butala:
Call the [inaudible 00:04:14]. [crosstalk 00:04:14]
Jill DeWit:
That’s how I do it.
Jill DeWit:
I called the county and said, “Hey, what’s an attorney that you like, that works with you guys, that can help me get transactions done?” And they’ll give you a couple names, and there you go.
Jill DeWit:
And you just go look them up, and you’re off and running.
Steven Jack Butala:
The good recorders will say something like this, “Oh, Sally Smith. She’s been doing real estate deals in this county for 40 years.”
Jill DeWit:
“And her office is right around the corner.” [crosstalk 00:04:41]
Steven Jack Butala:
“Her office is in the same building as the county building. We have lunch sometimes.” That’s the response you want, you want Sally Smith to do your deals.
Jill DeWit:
Exactly.
Jill DeWit:
Good questions.
Steven Jack Butala:
Today’s topic, the psychology of affordable housing. This is the meat of the show.
Jill DeWit:
FYI that applies to houses too, since we’re talking about the house show.
Steven Jack Butala:
Yeah, totally. No difference in a transaction there.
Jill DeWit:
Doesn’t matter if it’s land or a house. All that applies.
Steven Jack Butala:
In fact the business just to close that topic, the business, how we do it, where we don’t have inspections on houses or land, and there’s no lenders.
Steven Jack Butala:
Lawyers love that stuff.
Jill DeWit:
That’s true. [crosstalk 00:05:17]
Steven Jack Butala:
All they have to do is process paperwork and act like a mediary or an escrow agent, and get a title plant. And for some reason lawyers can get title plants done in days, inside of a week.
Steven Jack Butala:
And the escrow part is simple.
Jill DeWit:
And it’s cheaper.
Steven Jack Butala:
There’s not a lot of oversight with lawyers. They usually own their own practice. So in a First American title situation, or any of the larger companies there’s middle managers, and ways you got to do stuff.
Steven Jack Butala:
It just all adds time and frustration to everything.
Jill DeWit:
Oh and the doc prep fees, and the notary things. The lawyers don’t usually do that.
Jill DeWit:
Let me just back up real quick. So the lawyer’s really going to… You’re going to have this kind of a conversation. You’re going to call them. They’re going to call you back. If you do it all right you have a 10 minute conversation. Tell them, “Here’s the deal. I’m the buyer. This is the seller. It’s all spelled out. If this works, it’s ready to go. There’s no financing.” Like you just said, “There’s no inspection, anything like that. So what’s your email and I’ll send you all the information.”
Jill DeWit:
And the attorney says “Yippie-ki-yay. Here’s my email, I’ll watch for it.” Now you email one email with everything in there and the signed purchase agreement, everything. The attorney’s going to look at this, he’s going to reply, and say, “That’s going to take me and my staff about three hours of our time. This is what it costs. $800 should do the whole thing. And I can have it done in 10 days.”
Jill DeWit:
“Yes.”
Steven Jack Butala:
Wouldn’t it be great if everything was done like that.
Jill DeWit:
Mm-hmm (affirmative).
Jill DeWit:
Totally.
Steven Jack Butala:
And then you could have more time to horse around with the people you like. That’s my whole goal.
Jill DeWit:
Don’t even get me started.
Steven Jack Butala:
I mean you. Horse around with you.
Jill DeWit:
No, I know that. No, I just mean that’s the way life should be. That’s part of the things that I am pushing for, as far as just the way we do business. And I’m trying to teach other people how to do this too.
Jill DeWit:
We’re so trained to follow a checklist of 10 steps. I don’t care what it is you’re doing right now today. I’m supposed to do this, then send this, and do this, and sign this. And why don’t you pick up the phone, call the person and just say, “Hey, I owe you X amount of money.”
Jill DeWit:
I don’t know. Everybody makes things so hard, when it shouldn’t be like that.
Steven Jack Butala:
First of all, start questioning checklist.
Jill DeWit:
Yeah.
Steven Jack Butala:
Did you make the checklist? You don’t know.
Steven Jack Butala:
And if half of it doesn’t make sense to you, then don’t do half of it.
Jill DeWit:
Exactly.
Steven Jack Butala:
This is a whole different show.
Jill DeWit:
I know.
Steven Jack Butala:
Common sense seems to be missing.
Jill DeWit:
There’s a lot of that.
Steven Jack Butala:
In the world we live in right now.
Jill DeWit:
I know. [crosstalk 00:07:47]
Steven Jack Butala:
And this is one of my arguments.
Steven Jack Butala:
It gets to the point where you’re having emails with somebody. I don’t care what it is you’re doing, your emails get out of… You’re getting confused. Pick up the dumb phone, and call them, and just say, “Okay, we’re going off on a tangent now. Let’s get back to what’s important.”
Steven Jack Butala:
I’m going to start this topic off with a short, anecdotal story.
Jill DeWit:
Okay.
Steven Jack Butala:
Several years ago in Redondo Beach, Jill and I attended a photo shoot. The photo shoot was for us, for all the Land Academy pictures and stuff like that. And the photographer had a makeup person with her, to do both of our makeups actually, I’m little bit ashamed to say.
Steven Jack Butala:
I actually have makeup on right now. That’s a whole different [inaudible 00:08:28].
Jill DeWit:
Just have a little powder on your nose. You don’t have makeup on. Don’t worry.
Steven Jack Butala:
And we got all got to talking. This is by leaps and bounds the best photographer I’ve ever dealt with, ever. She was just a blast. She made us look great.
Jill DeWit:
Joanna. [crosstalk 00:08:41]
Steven Jack Butala:
She solved all of my physical problems.
Steven Jack Butala:
At the click of a shutter.
Jill DeWit:
That’s right.
Jill DeWit:
“Don’t worry, I can shave 20 pounds off you. Don’t worry.”
Steven Jack Butala:
So we’re going through this photo shoot and having a blast. She’s making us feel great. Dressing us up in different stuff, and it’s all going great. And it’s in her house, she’s got a little makeshift studio. And the makeup person’s there.
Steven Jack Butala:
And they’re asking us questions about real estate. I said, “Are you kidding? Were sitting in one of the greatest real estate markets in the world that I’ve ever experienced.” In those little beach communities in Los Angeles County, the ones that are on the ocean, double in price every 10 years. And you can go back… Somebody said that to me when I first moved there, and I said, “Yeah right. That’s no way. I only know about real estate. No one else knows about real.” And I was totally wrong, they do double every 10 years.
Steven Jack Butala:
And so to which I said, “We should all be celebrating.” To which the makeup person said, “I know, but what are our kids going to do?” Well, that sent me down. And I said, “They’re not going to be able to live here.” And she said, “Where are you from?” I said, “I’m from Detroit.” And she just looked at me like, go back there. Listen, here’s the thing about affordable housing. If you can’t afford it, you can’t live there.
Steven Jack Butala:
So let’s go back to the data. Every time questions come up, “What do you mean you can’t afford it, you can’t live there? What is all this about affordable housing? We just can’t afford it.” Yeah you can’t afford it. You can’t afford to live there. There’s a lot of places you can afford to live. There’s a National Association of Realtors, and it’s a lender association that produce weekly data on markets, produces statistic called the housing affordability index. And it can get down as far as zip codes, it certainly can get to an MSA, the statistical market.
Steven Jack Butala:
And so 100 is the baseline. And so they look at all the money, the money that households make. And they look at the average SFR, the house price, and they gauge it against a hundred. So if a lender looks at all your stuff, and says, “You are at 100 for this house that you want to buy.” That means you’re scraping along the bottom of affording it. And they’ll probably lend you money on a hundred. Well, the national market, if you just look at the nation as a whole, it’s between 120 and 140, which means everybody can afford where they live. So the people that are barking about affordable housing, and make it such a prevalent topic, are people who don’t make enough money to live where they want to live. Well, guess what? I want to live on a house in the ocean in Palo Verde, California. I can’t afford it.
Jill DeWit:
We can.
Steven Jack Butala:
I don’t think so.
Jill DeWit:
We can.
Steven Jack Butala:
Not in the house that I really want.
Jill DeWit:
We could.
Steven Jack Butala:
So hold on a second. Let me go ahead, and then I want you to obviously jump in.
Steven Jack Butala:
The problem with affordable housing is this, this generation that is not used to losing anything, they’re not used to failing in any way, want to live in the cool places that are really, really expensive and they don’t make enough money.
Steven Jack Butala:
So my entire life, I’ve not made enough money until very recently, not made enough money to live I want to live.
Jill DeWit:
You have.
Steven Jack Butala:
And so what have I done? Gone and lived where places that I didn’t necessarily want to live in, or houses that are maybe in borderline disrepair.
Steven Jack Butala:
Because I go to where I can afford it, and I don’t whine about it.
Jill DeWit:
Okay.
Jill DeWit:
I don’t want to get political, because you can get political on this.
Steven Jack Butala:
I didn’t get political at all.
Jill DeWit:
No, I’m being careful not to get political here.
Steven Jack Butala:
Yeah, I didn’t do that. [crosstalk 00:12:36]
Jill DeWit:
I know that.
Steven Jack Butala:
I just kept it together for my little part of this.
Steven Jack Butala:
So can you do it, or not?
Jill DeWit:
I will, I’m just making a statement. Which is a healthy reminder to myself.
Steven Jack Butala:
Well, you’re talking to yourself.
Jill DeWit:
Yes I am, obviously out loud. Don’t get political.
Jill DeWit:
So that wasn’t for you.
Steven Jack Butala:
I thought it was for me.
Jill DeWit:
No, it wasn’t for you, because I could get there.
Jill DeWit:
No, because I would argue that… You know why? Here’s why. You and I have successfully I think lived anywhere we wanted to live comfortably, anywhere that I wanted to lived. Literally anywhere I wanted to live comfortably, I’ve done. And I’ve also laid in bed and watched House Hunters International.
Jill DeWit:
I have laid in bed, seriously watched this show at night, falling asleep, going, “So that’s how much it costs to rent a loft in Paris. Okay, I can do that.” And that’s all I needed to know. I just need to know how much costs, I can afford it. I don’t want it, but it’s nice to know that I could if I wanted to. So this is the psychology of affordable living. So I’m trying to get into everybody’s heads. You have two choices, and this is what we have have done. We have done both of these in the past.
Jill DeWit:
The first thing we’ve done, you just described. You can move somewhere where you can afford to live, period.
Steven Jack Butala:
Story of my life, go ahead.
Jill DeWit:
Right, you could.
Jill DeWit:
What if your job changes, life changes, you have more kids. Whatever it is, cut backs, things around you inflate and you are having trouble making ends meet.
Jill DeWit:
So you can, and we’ve done this in the past, successfully move to where it is more affordable, to have a better quality of life. Rather than suck it up, and try to make ends meet, and be miserable.
Steven Jack Butala:
House poor.
Jill DeWit:
Yeah, and that exactly.
Jill DeWit:
So I watched my parents do that. They rented a house for years. They rented until I was 18 years old, and then they bought their first house to save up and get what they wanted to get in the right area. And did it all right, and bought it from a bank in Laguna Hills, and it worked out great from there. And then that set them on that next path.
Jill DeWit:
But then also another thing happened at that time, which is what you and I have done. You can also make more money. I know it sounds silly, but you know what? Do something.
Jill DeWit:
I don’t know, go get a degree, go get an education, learn something, take on another job, just make a change. What if you’re in a job that you hate anyway, and you’re not making enough money, go do something else. And I think people just get comfortable and complacent.
Steven Jack Butala:
It’s an opportunity to move.
Jill DeWit:
Yeah.
Steven Jack Butala:
It’s a privilege to go move and try to improve your life.
Jill DeWit:
Totally.
Steven Jack Butala:
That a lot of people in this world don’t have any option. They have no possibility of ever hoping to move from the stuck situation that they’re in.
Jill DeWit:
They can do it, they choose not to.
Steven Jack Butala:
Around the world? No, there’s a lot of people around the world that just have no option.
Jill DeWit:
Maybe around the world. [crosstalk 00:15:47].
Steven Jack Butala:
There’s a lot of people in this country. I’m going to give the raw numbers here in this second.
Jill DeWit:
Okay.
Jill DeWit:
Well, how about this? I think for the majority of us listening, we can pick up and leave if we need to. And find another place with good schools that we can, A afford, and B has more job opportunity.
Steven Jack Butala:
I agree with that.
Jill DeWit:
Thank you.
Steven Jack Butala:
Here’s the raw numbers. The federal minimum wage is $7 and 25 cents right now.
Jill DeWit:
That’s ridiculous.
Steven Jack Butala:
Which personally, yeah. I absolutely agree with that.
Jill DeWit:
That’s true.
Steven Jack Butala:
I don’t want to be political on this at all, I think it’s an outrage how low it is. I think there are political powers that keep it that low.
Jill DeWit:
That’s sad. [crosstalk 00:16:23]
Steven Jack Butala:
Huge groups, massive big box retailers, and fast food restaurant chains that have political power in Washington to keep it that low.
Steven Jack Butala:
Thankfully the states have the right to supersede that. So in certain states, specifically California where it’s a lot more expensive to live. The minimum wage is a lot higher than that. But let’s just talk about the states that have chosen to keep the $7.25 I think it is.
Steven Jack Butala:
Two people making 7.25 an hour, who work full time can afford about $120,000 house, $125,000 house.
Jill DeWit:
Sounds like barely.
Steven Jack Butala:
And that puts them at a hundred housing affordability index marker.
Steven Jack Butala:
So you can afford all kinds of houses. And believe me, there’s $7 and 25 cent jobs in just about every rural market in this country, because of Walmart and all kinds of other places. So if that’s your personal requirement, is to make minimum wage, and you have some type of partner, or a roommate, or housemate, that’s what you can afford.
Steven Jack Butala:
I will tell you on a personal note, our dingdong number three kid, just got a job for $27 an hour because there’s no place to work. They can’t find workers.
Steven Jack Butala:
Two people making $27 an hour, is amazing.
Jill DeWit:
There’s lots of places to work, yeah. [crosstalk 00:17:47]
Steven Jack Butala:
Four, or $500,000 affordability market.
Jill DeWit:
People don’t want to work.
Steven Jack Butala:
Well, let’s not talk about that.
Jill DeWit:
Oh, I’m sorry.
Steven Jack Butala:
So my point is the so called housing affordability crisis that we are going through right now. We’ve always gone through it. It’s always really expensive to live in New York.
Jill DeWit:
That’s true.
Steven Jack Butala:
Incredibly expensive to live in California in the big cities. Always has been, always.
Steven Jack Butala:
You need… If you’re one of these people that are complaining about this and you’re probably not, because you’d turn this show off a long time ago. Find a place where you can live and build a life like the rest of us. And then like Jills parents, move up through the ranks that way.
Steven Jack Butala:
I bet you’re not happy that you could join us today.
Jill DeWit:
Oh.
Steven Jack Butala:
And if it’s sad enough for you to listen to this five days a week. We’re here on the Land Academy Show.
Jill DeWit:
Oh my gosh.
Jill DeWit:
Tomorrow we’ll save you. Hopefully this didn’t piss you off, and please comment. Feel free to comment. It’s all good, all right.
Steven Jack Butala:
Tomorrow on the episode on the Land Academy Show is… Well it’s Jack Thursday and we’re going to talk about money management.
Jill DeWit:
Oh great. As if we didn’t get lectured enough.
Steven Jack Butala:
It’s all positive I promise.
Jill DeWit:
You’re going to lecture me some more tomorrow? No thank you.
Steven Jack Butala:
You are not alone in your real estate ambition.
Jill DeWit:
Okay, here’s my point.
Jill DeWit:
Because we’ve had employees… Remember this one employee years ago, and he came from another country, he lived in England for a while, and he said that being here in California forced him to really up his game.
Steven Jack Butala:
He was born in Caracas of all places.
Jill DeWit:
Yeah.
Jill DeWit:
And to really push himself to make… Because he wanted to be here so bad, to work hard, to learn, and to get a good paying job and keep that job job.
Steven Jack Butala:
And he did. [crosstalk 00:19:45]
Jill DeWit:
He did. So he could afford it, and then he was able to buy himself a BMW, and all kinds of things.
Jill DeWit:
So that’s where I go to, I’m like, there’s a little bit of it, it’s in our heads, it’s in us like that… Not like, I guess you’re right for, it’s not everyone has that. But a lot of us have the opportunity and we don’t take it, and we don’t push ourselves.
Steven Jack Butala:
He’s was renting a house when he came to us, started working for us, with his brother and two other guys, and they’re all packed into a one bedroom apartment or something like that. Not a good part of town.
Steven Jack Butala:
And he got himself out of that inside of a year working with us.
Jill DeWit:
You know what? When I was in my twenties and I first moved to Redondo Beach, I was one of five roommates in a three bedroom.
Steven Jack Butala:
Me too.
Jill DeWit:
There you go.
Steven Jack Butala:
So it’s just that’s how it should be.
Steven Jack Butala:
So I mean all kidding aside, you have control over your life. I’m going to talk about that tomorrow.
Jill DeWit:
Thank you.
Steven Jack Butala:
It comes down to money management, and managing things.
Jill DeWit:
That’s good.
Jill DeWit:
Thank you for tuning in. We would love to connect with you every other Thursday on Clubhouse.
Jill DeWit:
So go to Clubhouse, find the Land Investing Club, check out our schedule, and join us.
Steven Jack Butala:
We are Steve and Jill. [crosstalk 00:20:54]
Jill DeWit:
We are Steve and Jill. [crosstalk 00:20:54]
Steven Jack Butala:
Information.
Jill DeWit:
And inspiration.
Steven Jack Butala:
To buy undervalued property.
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