Housing Truths They Don't Want You Asking About || Leigh Brown

Hey friends, I'm Leigh Brown and this is Real Talk with Leigh Brown, formerly known as Crazy Shit in Real Estate. And we've got a new flair and a new format going on. So just make sure that you are subscribed and hanging out with me. But today's a little different. I don't have a guest on the other side of my screen today. Today I want to share with y'all what I see when I'm reading headlines, because today I had all these headlines in my inbox and they're frankly driving me a bit Now, I'm a conservative. I don't apologize for that. I know that I see things sometimes in a really partisan way. I think we all do because politics has infiltrated literally everything. But even so, I get wildly irritated when it seems like every article I read has a color from political opinion instead of what is the actual foundational truth here and what do we have in common? I would love for us to see what we still have in common. And property rights used to be one of those issues. It used to be that in real estate we could say, man, it doesn't matter who you vote for, what you think. We believe this about private property. We believe in the Fifth Amendment that says private property shall not be taken. Of course, that's changing right now. The conversation is getting really loud from people who don't think property should even be private at all. And there's also a lot that say it's not private property when you have to pay property taxes, because basically you're paying rent to the government for your land. So there should be a very robust conversation going on, and we're never going to have an honest conversation if everything is always colored by somebody's politics. Now, when I think about private property, there was an issue that happened this morning that's absolutely just horrifying to me. One of my neighbors who lives on a parcel that she owns with her husband, they had a cat on the front porch, their family cat, peacefully sitting on the front porch like many cats have done in life. Three dogs wandered up onto this property and killed her cat right in front of her, and she couldn't get them to leave because they were not scared of humans. They weren't scared of nothing, y'all. They brutally killed the family cat and then went back off down the road. Now she called them on video, so yay for Ring doorbells, and then she called animal control. And animal control said, golly gee willikers, nothing we can do unless they catch them in the act. I guess these 3 dogs can roam willy-nilly and kill family animals, probably attack humans too because they were not scared of a human. And y'all, you should know that if an animal will kill one thing, it will likely kill something else. I know that from being a farm kid. So what is she supposed to do? She's been told by the county authorities that she's not going to have any help on her own land when a stranger comes to attack. That's how you disintegrate our society, when people feel like the only defense they have is themselves. So of course she posted on social media, hey, here's a video, here's a photo of these dogs, does anybody recognize them? And the comments, which are never good for any of us, never read the comment threads, but of course I dove right in. So when I'm reading these comments, you have of course the sweet people that say, oh, poor kitty. I'm with those people. I was a little heartsick over the family cat because we have some. But then the other comments, well, what was the cat doing outside? Um, peacefully living its life, dude, on the property that it belongs to. What, are we serious? The dogs can wander onto somebody's property and kill a cat and you think the cat shouldn't be outdoors? And then you have all the people that say, but the poor dog, somebody get them home to their owners, I'm sure they're sweet. Uh-uh. What would you say if they killed your dog or your kid or something else on your property? We have this fundamental misunderstanding that it actually isn't about the dogs and the cat and that brutality. It's about at what point we get to defend the boundaries that are ours. You start realizing too, this bleeds over when we hear about the ranchers in Arizona who have illegals coming over their property line to enter the country, and they're told they can't monitor their own property. Now, of course, it's federal law that you can't enter this country in that way, but they're told they can't defend their property. Where are the property rights? And more's the fitting, shouldn't we all have this in common, that it's not a political statement to say if Bob bought this square, that's Bob's square to do with as he chooses. That's where we're going to have to start thinking differently about property rights, because with the conversation in New York City, with this newly elected Mamdani talking about government housing, the conversation's going to get louder about what ownership actually looks like and what does it mean. Do you have the right to own anything if somebody else can intrude? If somebody else can come onto that property? The homeowner in Colorado who had a pack of teenagers break into his garage at 1:00 AM. And so of course he defends his property with a firearm. And one of the teenagers got shot. So why is the homeowner at fault when his property was invaded? I'm just, I'm just telling y'all, if you defend the invaders, you're creating an untenable situation. That being said, I want to read some headlines to y'all that also flared up the opinion meter because they really shouldn't have political jargon dumping in here. So we all know in real estate, rising home insurance premiums are eating into home values. That is absolutely true. Everybody in real estate is talking about this because we really don't know the answer. And the reason we don't know the answer is because we have no control over what the insurance companies charge. And if you're somebody who's purchasing a home, you might think, well, I'll just self-insure, Leigh Thomas Brown. Mm-hmm. Yeah, you can do that if you pay cash. But if you get a mortgage, the bank is going to require you to have insurance on the property. So they're going to require you to purchase something at a price you can't control with numbers that may increase so much in year 2, 3, 4, 5, or 10 that you can no longer afford that property. We're going to have to have a conversation here about how much power the banks have to force people to buy insurance. And by the way, these are insurance policies that don't always pay out. I think anybody who's ever fought with insurance knows that They essentially exist to raise your premiums and deny your claims, and that's happening all the time. But when I read this article, which came out of the New York Times— natch— so you already know which political side they're on. And isn't that sad that the old gray lady has only one side of the aisle? Mm-mm. So in this article, it says that there is a climate shock eroding home values. Okay, we're gonna have to talk about this, y'all. You know that climate change is merely the way a certain group of elites want to remake the economy, right? You're, you're smart enough to see that by now, right? You're watching the data and realizing that all of the threats that we've been hearing for years were just threats that were designed to bleed your pocketbook. Look, I'm a child of the '80s. I had my big mall claw like everybody else did. Love me some Aquanet. I had every perm you could get over at Nancy Lynn Hair Fashion, and I looked exactly as bad as you can imagine. So yes, that's why I spend money on my hair now, because I have to make up for the '80s. And every time I used my AquaNet, I was a little bit guilty because what had we been told in the '80s, y'all? We were told that our hairspray had put a hole in the ozone layer and the whole earth was going to burn up because of hairspray. Remember that? Well, you remember, as it turns out, our hairspray didn't actually destroy the ozone layer and the ozone did have a hole in it that healed itself. Oh, because nature does that. And we as humans have only lived here this teeny tiny spot of time over all the millennia that we're educated on, except that the education has been leaned in one direction. And that's just one example. If you go back into the '60s and '70s, it was all about global cooling and the next ice age. That went away to tell us about the ozone layer. And then just a few years ago, we were told it was only 12 years left before Earth was going to burn up, and then That hasn't happened. And so now the language is changing again from climate change to climate shock, and it's talking about natural disaster areas being the reason premiums are going up. So let me tell you something about natural disaster areas, and I feel like I'm somewhat of an expert on this now after doing so much work in Western North Carolina after Hurricane Helene. That was not a natural disaster kind of an area, y'all. Hurricanes don't land in the North Carolina mountains. That's a thousand-year occurrence. You can't blame that on whatever version of climate change you want to call it. That was a nasty storm that landed in the wrong area. Now, was it weather manipulation? Was it done by chemtrails in the government? I don't have the foggiest idea. All I know is that it was a disaster of biblical proportions that happened one time. But when you look at what happened post-storm, you have new FEMA zones, you have new floodplains, you have new EPA regulations, you have all of these layers that have been added that are driving insurance up because of a past event that is highly unlikely to happen again. And if it does, that's when, of course, all the weather manipulation people will have been proven right. But I digress. So when you start looking at that, you realize the insurance companies saw that event as a cha-ching moment. And why do I call it a cha-ching moment? Because y'all, I have worked with a lot of homeowners from the mountains who had insurance policies that did not pay out because they didn't have the right kind of coverage for a gigantic biblical flood that was outside of their control. We had people who were denied FEMA coverage in their flood zones where they had flood insurance because around the river areas, some people did actually already have flood insurance. You know why their flood insurance didn't pay out? My favorite was this one fella I was helping, and he showed me the email on his telephone, and it said that his claim was denied because the water was moving. Now y'all tell me, what kind of flood has water that does not move? That would be— well, that'd be revelations. But anyway, when you start realizing that the insurance that he had should have been enforced and covered him was still denied because of reasons, but yet the insurance costs still go up. Why would he want to carry it? But again, he can't not carry it because he had a mortgage. We've got to address this, and it's not about climate fears and climate hoaxes and climate drama. It's about numbers. It is about big corporations and how they are receiving all these subsidies and how consumers are forced to purchase it, and nobody seems to want to look at the underlying structure. And in fact, when we talk about the underlying structure, I'd be remiss if I did not make sure that y'all know that this article was very honest about one thing. It did talk about the fact that the insurance companies do have a product called reinsurance, which protects the insurance companies. This was an interesting fact here, the reinsurance companies have roughly doubled the rates they charge home insurance providers. Oh, you know what I noticed about those reinsurance companies? They're global. Now you're going to have to start asking yourself some questions here, and this is not a red versus blue thing. This is a wait a minute, I am a human being with cognitive function and something doesn't make sense here. When the insurance companies can receive coverage for claims they're not going to pay out for consumers who were forced to purchase it from a bank who made them purchase it, and now they're told they can't rebuild there. And you want to know why housing is getting more expensive? Come on, y'all, it's not necessarily just interest rates or baby boomers not selling their houses, which would be the two things you hear about on the TikTok. Now let's also talk about another headline that was in my inbox today. Okay, I love this so much. JP Morgan Chase unveils $40 million in philanthropic funding for housing. Oh, we're gonna have to check this one out, y'all. This should be good. So let me scroll. I got a lot of scrolling to do. I guess if I'm going to do a headline style episode, I should have my headlines prepared for y'all. But as you may or may not know, sometimes I am very prepared and sometimes I fly by the seat of my pants. Okay. JP Morgan Chase on Wednesday of last week announced $40 million in philanthropic funding. All right, here is what they're going to do. $20 million in grants and $20 million in flexible loans. Do I need to be the one to tell y'all that when banks give out flexible loans, that should set off a little red alarm bell? Because if you haven't watched The Big Short, go back and watch it. So now I'm looking at this and it says they're working to keep residents in their homes. Okay, I'm a fan of that, especially for our elderly on fixed income. If they don't have the money to fix their house up, that's one of the places Habitat has really done amazing work. And this says they will help a group called the Historic District Development Corporation, which will accelerate the construction and sale of affordable homes. And low and moderate income Atlanta residents. I haven't done the deep dive on usaspending.gov on the Historic District Development Corporation in Atlanta, and I should have, because every time I look up one of these corporations, I find out they're receiving millions and millions of dollars in grants, and the millions and millions of dollars sometimes find their way into pockets of consultants. And maybe Atlanta's different, but if one of you intrepid followers figures that out, feel free to drop it into the comments. But I'm just going to tell you, in a country of 330 million people-ish, where maybe 20 million are in the shadows illegally, so maybe there's 310 million Americans, then $40 million in philanthropic funding, that ain't a drop in the bucket. It's just not. And we're going to have to address the fact that when you look at almost every opinion article about housing, It talks about affordability and then it talks about availability. And almost every time— and I have said this so many times, I could go blue in the face— it talks about how we have to build more housing. Everything. Take over public lands, build more housing, come into suburban neighborhoods and build more housing. Build, build, build, build. When are we going to address the demand side? If you do have 20 million illegals in the country, I don't care if they're in the shadows or not. They're taking up housing. They're renting a room in a house. They're sharing an apartment. They're buying houses. They're here. So if they're here, they're taking up space. And until we are willing to be honest about that and say, all right, so maybe you're on the progressive side that says let everybody stay. Okay, great. Then you're going to have to figure out what we do to make sure there's a place for them to stay that doesn't devastate our communities by shoving houses where they don't belong. If you're the person who says they've all got to go because we have to be America first, then you're realizing you're asking the prices in the housing market to crater. Now, some people are okay with prices cratering. That creates opportunity. So now a first-time buyer can get in. Now an investor can purchase another property. For other people, they're counting on the equity in that house. And so if prices crater, we're going to have a whole different amount of wailing and gnashing of teeth. The question is, which pain are you okay with? You're going to have to be okay with some pain to fix our housing crisis. You're either going to be pained by the amount of new houses that have to be built, or you're going to be pained by prices falling. It's going to be one or the other. And I know where I stand on it, but I'm not here to give you my opinion on that. I'm here to tell you what this article— actually, this is Real Talk with Leigh Thomas Brown. I should, but I'll just tell you that right now I'm looking at headlines and we are just not being honest about this conversation. And if we were honest about this conversation and if the National Association of Realtors were honest about the conversation when it comes to political policy work and talking to elected officials, we would see movement in at least one area banning the ownership of single-family properties by hedge funds. Haven't seen it yet. I'd love to see it. And I know it's hard to track because each one of those hedge funds likes to buy each house in its own LLC. So they're very hard to track, but I feel like in a world of AI and the government spying on everything that we do and say, hey, what's up government? When they're knowing more than they've ever known, it shouldn't be that hard to figure out where are the properties owned by hedge funds. And if our legislative bodies would listen to the people, they would realize that they should force those companies to sell so that housing stock could be in the hands of individuals. Now here's where I would draw a line, and not just because I'm an investor, but I know that there will always be people who need to rent, and you need to make sure that you have landlords so that people can rent. So I would say that if you are looking at how investment properties go, If somebody has, say, less than 20 doors or less than 50 doors, that's how we reference rental property. So duplex would be 2 doors. There's your math. So if you have, say, less than 50 doors, you can keep buying rental properties. Once you're over that, then you're going to be subject to another layer of taxation. I don't really know exactly what the answer looks like, but I know that in the city of Charlotte, a huge amount of our housing stock is owned by hedge funds and nobody seems willing to address it. There's a lot of chatter about it, but no policy answers. So if we're going to see our elected officials do something with their jobs and not just get elected so they can go run for office again and get reelected, how about take some action on the corporate ownership of real estate? That would make a huge change in our housing market. And by the way, a lot of those corporate-owned rentals, that's where a lot of the illegal aliens are living because they can rent out each room, get a check from the government on each room, and they make a really of profit more than I make as an individual landlord renting to another family. By the way, if we're going to see good legislative action on the corporate ownership of housing stock, I think we should also stop any of these adversarial foreign governments owning land in the US. And if y'all are too chicken to do that, at least say they can't buy land near military bases or buy our farmland Why? Why is Bill Gates the number one owner of farmland in North Carolina? He ain't from North Carolina. He has never worked a farm or loaded a hay bale onto a truck or gotten his hands black with tobacco. I, I say we just go ahead and make a bill right now and ban Bill Gates from owning anything in North Carolina. And that's my motion. Somebody in the comments Make my second. Okay, now let's go on to our next headline here, which talks about— doo doo doo— you can't just talk about gas and groceries. The GOP is grappling with the affordability crisis. All right, so I will say something right here, and this is why if you're going to talk intelligently about issues, you have to take one step back from your partisan affiliation, because Nobody has all the answers. I mean, except me, but I'm not in elected office, so I can say whatever I want on my podcast. I will just tell you that this idea of a 50-year mortgage is a disaster, a disaster. And in fact, I had a phone call this morning from a prospective buyer. He's got a VA loan. He's ready to go purchase something. And he said that he's excited about the 50-year mortgage. And I said, why is that? He said, oh, it's going to bring the cost of housing down. And I said, oh no, baby. No, it's not. Here's what's gonna happen. The first few to use that 50-year, they're probably gonna have a lower cost environment upfront because they'll be able to get in with a lower payment. However, more and more buyers are not gonna just use it as one of the options in their toolkit. I love that that's the argument coming from so many people in my profession who say, it's just one option. People might still choose a 15 or a 30. No, they won't. They're gonna pick the cheapest possible payment. And so when more people pick that plan, that does open up the marketplace and it does bring buyers in. And yes, that's good to have buyers in the marketplace. But when you add more demand, what happens to prices? Can I hear it, economics majors? Prices go up. And this fella with whom I was speaking, he had not taken that into account. It had not occurred to him that when more buyers are qualified to buy, they're going to compete for houses and drive housing prices up. So the 50-year mortgage is going to look good on the surface, but that's just the, the opening issue I have is that it will drive home prices up further. The other issue that I have is that we are locking people into a situation where they have to have the house prices go up to ever have a chance of selling it without taking all their expenses out in the future. You realize that, y'all? I mean, we're banking on a housing market going up goes up forever. And I know some of y'all are young, and so the cyclical nature of real estate hasn't really reared its ugly head. Again, go watch The Big Short. When the Great Recession happened, you had a lot of realtors and a lot of mortgage lenders who said nothing could ever go down, houses would always go up, and they didn't. They came crashing down. And by the way, this is also why you don't want the government in charge of all the solutions to the housing crisis. What'd the government come up with to solve the Great Recession? Okay, they lowered interest rates and we had very cheap interest rates for a long time. Artificially low rates kept savings down. It kept so much down, not just the payment on your housing. That was artificial. So we have an artificially propped up housing market. And then every time money has gotten printed into the economy, for example, during Cash for Clunkers, y'all remember that? That wonderful Obama-era plan in 2008 to juice the Big Three, to juice the auto market. They did Cash for Clunkers. You turn in your old car, you get cash, and you could go buy a car. And a lot of the dealers had 0% interest. And then the catch was, when you sold your car in for cash, it was going to be turned into scrap metal. It would not be returned to the market. So the cheap car market was wiped out, and people had been given dollars to go into the market. And what did that do? That put more dollars into circulation, and that's where inflation comes from. Inflation is not just prices going up. Inflation is more dollars in the marketplace. That's what inflates things. And so prices got inflated because dollars entered. More dollars entered with the too big to fail era. More dollars entered during COVID in so many big ways. And so when you start paying attention, you realize that the price of housing has gone up primarily because of the inflationary effect on the dollar. Then you add in the situation with illegals that were flooded into this country, and you start realizing the housing issue is more than sticks and bricks. But again, it's going to take honesty to address these issues, and honesty is not what I find in headlines. And 50-year mortgage, bad idea. Would y'all please stop with it? Pulte, I respect you, President Trump, you've done a bunch of good things. Stop it. Just stop it right now. That's a terrible idea. So if you would like to see more episodes of me just talking to y'all through what I see in the telephone, then let me know in the comments. Make sure that you click the subscribe and share this episode because I'm all about us having honest conversations, because at the core of everything, we have to have truth. Because if we have truth, we can learn, we can grow, we can heal, and we can do great things. I'll see you on the other side.