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Squatters’ rights are quickly being stripped away as more states move to end this widespread illegal occupation of private property. Blackstone predicts real estate prices to “bottom” as they gear up to go on their next homebuying shopping spree. Rent increases get capped for affordable housing, and why doesn’t the American public know about the BILLIONS of dollars in government housing subsidies? It’s another wild week in the housing market, so let’s get you up to speed.

In this Headlines Rumble show, we’re pitting the top housing market headlines against each other as we dive deep into the stories that affect real estate investors the most. First, we talk about DeSantis’ war against the squatters, as Florida becomes one of the first states to take action against squatters illegally occupying private property. Next, we discuss the $7.3 billion in housing subsidies that banks receive but AREN’T flowing into homebuyers’ pockets. So, where is all that money going?

Blackstone predicts real estate will “bottom” soon as they prepare to buy over $1 billion in single-family homes this year. If one of the most data-backed hedge funds in existence is saying now is the time to buy, should you begin searching for your next property? Finally, we’ll discuss the recent rent caps for affordable housing that are stopping landlords from increasing their rents even during times of quickly rising costs.

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Listen to the Podcast Here

Read the Transcript Here

Dave:

Hey everyone. Welcome to On The Market. You Got me Dave James Dainard and Kathy Fettke here today to do our headlines Rumble show, which means that we’re going to be diving into some of the most important news as we normally do, but we like to make it into a game. And basically the way it works is we start with a couple of headlines, vote which one’s best, talk about it for a couple minutes, and then just like Royal Rumble, if you used to watch WE or WWE F, we’ll have a new headline, enter the Ring and we can decide if we want to switch to talking about that one or keep talking about the headline that we were previously discussing. So I do have an announcement to make before we get into the headlines and we have a winner of our Market Madness bracket. If you didn’t listen a couple of weeks ago, we wanted to get in on the college Basketball Madness and we each picked two markets that had representation in the actual NCA tournament and ranked them in terms of their investability. And then we posed the question to our Instagram audience to vote and the voters have spoken and they are speaking for Tampa, Florida. James, was that you?

James:

That was me.

Dave:

Oh man.

Kathy:

Good pick.

Dave:

I tried to pick some underdogs. The tournament always has these underdogs and I just picked two markets, no one’s ever heard of, and I lost quickly.

James:

I just picked where I wanted to go to college. Who doesn’t want to go to college in Florida? That’s a good time.

Dave:

That does sound fun. Probably too much fun for certain members of the cast who were not mature enough yet to make responsible decisions during their college years.

Kathy:

Yeah, that’d be probably all of us.

Dave:

What were your two markets again? Kathy

Kathy:

Greenville, South Carolina and Oklahoma City. No, I can’t remember what my city

Dave:

Was. Yes. No, that was it. That was it. Those were good. No, you did Cincinnati.

Kathy:

Cincinnati.

Dave:

Yeah. No, we were giving you crap about Cincinnati. Yeah, yeah,

Kathy:

Yeah, that’s right.

Dave:

Alright, well James, congratulations on winning the tournament. We have absolutely no prize for you, but you do get some bragging rights and you can rub it in all of our faces to the next tournament next year.

James:

You know what? NCAA March Madness and the flip off, this is going to be a good six months. Yeah,

Dave:

The flip off if you haven’t heard, we’re also doing a flip off where James and I are flipping a house against Kathy and Henry and let’s just say we’re off to a good start. So we’re feeling pretty confident.

Kathy:

Yeah, I might be a loser on that one too. In second place. I mean I got second place on March Madness with Greenville, South Carolina, so I don’t know. Second place. That’s what I used to get in my ice skating tournaments too. It’s still a trophy. It’s so good.

Dave:

And also second place at a flip. You could still make a great return.

Kathy:

Yeah, it’s true. Just

Dave:

Hopefully slightly. I hope you guys just have one less than what James and I meant.

James:

Second place is First Loser. Kathy,

Kathy:

Thank you. Is that what you teach your kids?

Dave:

Alright, well good that we’re going into a competitive game now because now we all have our competitive juices going. So let’s just jump into our headline Royal Rumble. So Kathy, why don’t you tell us what your first headline is? I will tell what my first headline is and since there’s only three of us here today, James, you’re going to basically get to pick between the two of ours, what you want to talk about. So go ahead Kathy.

Kathy:

Okay. Mine is DeSantis signs bill to increase penalties for squatters and protect homeowners in Florida.

Dave:

Okay, so just so everyone knows, DeSantis is Governor Ron DeSantis of Florida and sounds like he signed a bill to increase penalties for squatters. Mine is delinquency rates on mortgages. So basically foreclosures remain unchanged year over year. James, what do you want to talk about?

James:

You know what, I have squatter problems in all different zip codes of Washington, so I really want to hear what Governor DeSantis is doing and I’m hoping maybe some other states adapt similar policies.

Dave:

I’m not going to lie. I want to talk about the squatter one too. I’m voting for yours, Kathy.

Kathy:

Well, it is interesting that you said that because Georgia just did a similar thing that Squatters Reform Act aims to give property owners more rights to evict those who have illegally taken possession of a home. This has been a big problem in Atlanta as well. I dunno if you guys know, but you probably do that. There’s a talker and undocumented immigrant who’s been kind of encouraging, I believe millions of people on how to squat and how to do it where the owners can’t get out. Unfortunately, New York and California aren’t on board yet. So a New York City couple just got sued by a squatter who took over their $930,000 property and they just can’t believe that the New York laws are supporting the squatters to be able to stay there and that the owners have to actually go to the point of suing. Now in California, the really famous one, I think you guys probably saw a LeBron James neighborhood, had a squatter move into a multimillion dollar mansion and they’ve just been throwing parties and having a good old time. Those people have been removed just recently, but it took a long time. So for some reason the law has really been on the site of squatters and it actually takes the states to come in and change that.

Dave:

So I just want to provide some context here because I was reading these articles last weekend and I was just sort of flabbergasted by the state of these laws and I just wanted to learn where squatters’ rights even came from in the first place. Why does this exist? And it actually goes back to the 18 hundreds and where the government was encouraging people to go west and to go settle the west, but it was super unclear who owned what back then. We might just settle down on this random spot and then 10 years later someone would be like, oh, actually I bought that land. And so squatter’s rights actually existed to protect those people who were going and settling the frontier and so that they couldn’t get displaced after they had created a home or they had created an entire town. But unfortunately, it seems like the laws have not really been updated now and instead of protecting people who it seemed genuinely had a claim on that property, instead we’re now seeing people who are intentionally trying to gain the system and get access to something that’s not theirs.

James:

I had no idea that that came from there. I just thought it was laws being passed rapidly. Being a Pacific Northwest investor, I have dealt with this for years and this has been very expensive on investors. It’s either you have to go through in Evictor or squatters out, which takes anywhere between four and 12 months or even longer in Washington or we write checks.

Dave:

Okay, Dan, that was our buzzer and I, to be honest, forgot that this was three minutes. I was just going giving a history lesson about the 18 hundreds. So we have hit our first headline in the headlines rumble show, but we do have to take a quick break, but stick around because we have more headlines going head to head after this. Welcome back to On the Market. Now we need to decide if we’re going to continue talking about this or move on to our second headline. James, you’re up for the second headline. So what is yours that you’re going to use to challenge the squatter conversation?

James:

Well, squatters are causing issues, but so our construction costs second headline is number one reason homeowners are dropping a bundle on renovations right now is because they really can’t afford to move with the interest rate. So they got to spend some money on their house to make ’em feel good. All

Dave:

Right, Kathy, you want to switch or stick with squatters?

Kathy:

I think we said what needs to be said, and I loved the history lesson. It makes a lot of sense. I could not understand why there were these squatter rights and I could probably talk about it for a long time, but I think we said what’s been said, which is states are starting to realize this and shift it mainly because it’s really become a thing. So yeah, I’m going to go with James.

Dave:

I’ll go with squatters. I got to hear what James has to say about squatters in Seattle. So James, now you’re the dying vote. You want to keep talking about squatters or go with your own headline?

James:

As competitive as I am, typically I want to win, but I want to talk about squatters.

Dave:

Okay, let’s do it. Let’s keep

James:

Going. It’s been a long five of squatter problems.

Kathy:

Oh my gosh. Okay. Yeah, let’s hear it.

James:

With these squatters, what we’ve dealt with is we have to cut checks many, many times during the pandemic, I cut over $75,000 in checks to tenants just to move them out. They refuse to pay and it kind of blows my mind that people can just move into properties just because they’re vacant and then make a claim. Because what happens to the Pacific Northwest is if they show any copy of a lease, doesn’t matter if it’s real or fake, they have rights and we have to go through and prove that they’re not tenants. And it’s very, very damaging to a lot of, not just big investors, but also small mom and pops investors. These are people that bought properties, have saved all their money, they put it into real estate to grow and they’re getting taken advantage of and it’s not fair. So I’m excited to see these laws changing. I think the common sense and the fact that they’re pulling back the 18 hundreds to try to make this stick, it’s just absolutely ludicrous to me. Yeah,

Dave:

I think it’s really important that squatters’ rights are not even meant to be tenant protection. That’s not the same thing. It’s not tenant’s rights. This is people who are illegally occupying a property. And I’m sure there are still some fringe cases where there are legitimate claims or someone’s lived there. There’s some confusion about it, I don’t know. But what we’re talking about here and what’s made the news a lot is people deliberately trying to basically steal a property temporarily, not titled they’re just trying to live in it for free against the landlord’s wishes. And to me, it just seems like what’s happening is a lot of these municipalities that haven’t changed their laws yet are trying to enforce or create affordable housing or tenant protections out of squatters rights when to me, they’re just totally different things. If you want to create tenant protections, that’s a different conversation that should be in place for people who have actually signed a lease, not someone who’s just basically trespassing on your property.

James:

I’ve had people move into my properties and paint the inside of the walls and redecorate a whole house, and we still had to go through that formal eviction process. I remember opening the fridge after we got inside and these squatters are eating better than I do. They have all whole foods, all organic. They had nice chopping knives out and I’m like, you know what? They have redefined what financial freedom is and we’re all chasing the wrong thing.

Kathy:

Oh my gosh. We had a squatter living across from us in Malibu, but it was a house that had been sitting vacant for a long time and we kind of all just became friends. They were just the squatters and we all joked about it. But then of course when the owners came and wanted their property back then they left. They probably didn’t know their rights as a squatter.

Dave:

All right, that’s our timer. And now Kathy, you to enter a new headline, what do you got?

Kathy:

Okay, mine is from housing wire and it’s what is the public actually getting for this 7 billion in housing subsidies.

Dave:

Let’s talk about that. That’s my vote. What do you say, James?

James:

Yeah, I think we’ve beaten the squatters. We got to see how it plays out. I want to know what’s in this funding package.

Dave:

Alright. And just for reference, we are are sourcing some experts to come on the show as a guest to talk about squatters so we can get some more details about these stories. So I think we’re going to hear more about that in the future. Kathy, we just gave Kathy the win. James, she won two headlines already all no second place for Kathy today

Kathy:

Makes up for this steak. I’m going to be buying you guys for losing the flip off. Alright, so this is a housing wire article and I definitely think that we should have bring an expert on this too because this is really interesting. Basically it is again, what is the public getting for the 7.3 billion in housing subsidies? The article goes on to say that a lot of people don’t even know about this, they’re not applying, it’s not being spread out the way it’s supposed to. So anybody listening, please go check out what kind of subsidies there are for homeowners. But what was really frustrating in reading this article and obviously for the author, is that because people aren’t using it or for some reason it’s not being marketed in the way that people even know about it. Are you ready for this? It’s flowing into profits. So it’s basically the money’s going into the private sector, not the public. And that’s frustrating. So I am not an expert on this. I think we should bring one on, but just want to talk about that kind of shocking. Right.

Dave:

Is this for one bank or is this for all subsidies or specific subsidies

Kathy:

Particularly? So this is the congressional budget office published a new report which for the first time in two decades put a dollar amount on the public subsidies that FHL banks receive. Okay. So it’s a federal home loan bank system. It’s made up of 11 regional banks that pass on discounted loans to their membership of banks, credit unions and insurance companies. Got it. So these are basically supposed to go to people who are trying to buy homes and it’s not going there. It’s going mostly to profits.

Dave:

Well that’s infuriating. Yeah.

Kathy:

So let’s get an expert on,

James:

We should get an expert on and break these bills down because I feel like the intent’s always good. We’re trying to make more affordable housing, which I do believe in school teachers, nurses, they can’t live in a lot of areas now on their income. I do feel like that needs to be solved, but the problem is they keep printing money and throwing money at it in the wrong ways. There’s so many different things that they could be doing to help subsidize example like building costs where they could bring down the cost of building, which is going to give you a lower basis and allow people to offer more affordable housing and they keep just kind of funding it and then not really showing the public on how to use it. And we know when money sits, it goes back in the pockets of the capitalists. A lot of times they know how to take advantage of it and the problem is the government’s not properly explaining or allocating, in my opinion, in the right spots.

Kathy:

Yeah, it’s extremely frustrating and it comes back to just really understanding the laws of economics, which really come down to supply and demand. So you can hand people money all day and all that does is kind of aggravate the problem because if you’re not building the supply,

Dave:

Oh my god, it’s so quick. You

Kathy:

Got to build the supply.

Dave:

So we do have some more headlines to enter the ring right after this quick break. Welcome back to the show. Let’s get back into it. Alright, well we can keep talking about it or we could talk about Blackstone because Blackstone says real estate prices are bottoming soon and that could be interesting information for all of us, small to medium size investors. So James, what do you want to talk about?

James:

You know what I love talking about money and Blackstone’s got a lot of it. So I think I want to switch over to Blackstone. I want to see what they’re doing because they’re smarter than I am and I like to follow their trends.

Kathy:

Yeah, me too. Let’s go with Blackstone. All

Dave:

Right, well the headline again is Blackstone’s Gray who is president of Blackstone. John Gray says real estate prices are bottoming. And to me reading between the lines here, it seems like what they’re saying is that they might be stepping into buying a lot more multi or single family assets, excuse me, or actually providing some financing for other companies to also be buying new single family assets. So I’m curious to see how this plays out and honestly, I’m just curious that they haven’t been buying this whole time. It says bottoming out. Most markets in the US are growing right now, so I’m not really sure what they’re waiting for.

Kathy:

Yeah, I mean when I read this article, I was really trying to understand what real estate they were talking about, and so oftentimes the word real estate is used, but oh my goodness, it’s such a massive asset class. Are they talking about office? Well, we know that’s bottomed out. It would be a great time to buy office if that was your thing and if there was demand, which may or may not be, but are they talking about single family? Are they talking about storage multifamily? What is it? And I don’t know about you guys. I couldn’t find that in here.

Dave:

That’s a great question. I probably assumed it was single family because they’ve been sort of vilified in the public sphere for buying single family home. But I think you’re right, it does actually just say generalized pricing, which would be interesting because if they’re calling a bottom to the commercial market, that would be the first major institution I would hear calling the bottom for commercial. Yeah.

James:

Well I think Blackstone is so huge and they have so much money and they invest in so many different types of asset classes. I think where I took away from this article was they feel like real estate’s going to do better across the board. And so no matter what, I think they’re going to be investing in all different types of asset classes if they believe it’s bottoming out. I know Invitation Homes is looking at, which is a section of Blackstone is going to spend over a 1 billion buying houses this year, single family. I also know that they’ve been taking back larger commercial projects as well. And so I think they’re just expanding across the board and as an investor, what that tells me is if the people with the big money they can make big waves are believing in real estate, it’s a good time to buy and lock down property because you don’t want to be jumping in with the rates high as pricing keeps elevating. I don’t want to compete against Blackstone with rates at 7.5% on a single family rental, not good. So if you can buy ’em now and it’s a good overall long-term investment, you could get a massive reward as this funding keeps coming into the single family space.

Kathy:

I was going to say, I can’t help but think that they’re also anticipating these rate cuts coming up by the end of the year and when you see rate cuts, it sort of fuels the economy and money flows into stocks in real estate generally. In that case

Dave:

That’s true. But now I’m curious if they’re even going to cut rates. That was one of the headlines I was going to put in here because PCE was high, but we won’t get into that. That’s a whole nother conversation. Doesn’t

James:

Look likely.

Dave:

All right, well we wrap that one up real nice. So maybe we’ll be moving on to James’s last headline. James, what is it?

James:

Last headline is White House HUD to announce rent increase cap for L-I-H-T-C units, which is affordable housing units.

Dave:

So that stands for the low income housing tax credit just for everyone as a heads up.

James:

Thank you for thoroughly explaining that, Dave.

Dave:

No worries. All right. I want to talk about that. I feel like we talked about Blackstone. Yeah, what about you, Kathy? Let’s do it. All right, James, enlighten us.

James:

So what has recently happened is the Biden administration has set to announce a new cap on how rents can go up in affordable housing units that are subsidized by the federal government. They did not go too much in depth on how much they’re going to be capping it at, but the big thing that I kind of took away from this is we know there’s a housing crisis going on. We know the government’s trying to figure it out, and now they’re kind of attacking the developers and going, well, now you can’t do this. And they want to keep their thumb on it. And what I really think is actually going to happen is it’s going to create a lot less units because as building costs are spiking, they’re doing nothing for the developers to create more supply. And if you’re capping your income potential, that means there’s no purpose in really buying these properties and developing ’em out as an investor would go buy these all day long if I can make a pencil, but if I’m capped out and my costs are rising and not only costs on the building side, but insurance taxes, there’s too many expenses hitting the developer and the property owners for us to be capped on our rent increases.

And so I believe this is a bad move. And again, they need to look at doing it, not just capping, but also how do you incentivize these developers to continue to build because the tax credits aren’t worth it. The math doesn’t work.

Dave:

Yeah, just to clarify, the proposal is to cap rent in these specific buildings. This isn’t like at nationwide rent control or anything, but the specific government subsidized the low income housing tax credit to cap it at 10% per year. So I think in normal years that’s very reasonable. A 10% increase in rent is really high, but obviously in recent years we’ve seen the years where it’s gone up 15% or 20%. And so for me, I feel like if you’re trying to accomplish something here by capping rent increases because these are government dollars going to low income people, why wouldn’t you just tie it to some barometer of inflation so that if insurance doubled in Florida like it did last year, then the people could adjust rents accordingly because their income was severely impacted. Coming up with an arbitrary number like 10% seems a little silly to me and not maybe the best way to achieve the desired outcome.

Kathy:

We have that in California. There’s caps on how much you can raise your rent. I am actually surprisingly for this because 10% is a pretty good amount. I see your point, Dave, that what if inflation was at 15% and if that were the case, we’d have bigger issues. Right, true. But generally we’ve had inflation around 2% and yet your rent could go up 10% and if that wasn’t there, you might have landlords raising it 20%. So I’m, I’m a fan of our law here in California that caps it because the landlord’s still going to do just fine with 10% rent increase.

Dave:

Yeah, that’s a good point.

James:

What they were saying was the amount of homes, this is really going to affect us around 2 million, which is not that much in the grand scheme of things, but for me it’s more the signs of there’s more government control across state and federal. It just keeps creeping its way into real estate and we have to pay attention.

Kathy:

Yeah, regulation is such a sticky thing. I’ve been to countries where there isn’t any regulation or even states like Texas, you can kind of build anything anywhere. So you could build a whole residential housing community next to a dump where there’s not the strict zoning that we have in California and then obviously in California where we’ve got a lot of beauty in nature, there’s regulations to protect that. And if that wasn’t in place, it wouldn’t be there. Developers would build. And so it’s always that fine line of how much is too much regulation and how much is what’s needed. It’s a fine line and that’s why there’s always arguments about it. But I try to say that’s what creates balance. You’ve got the opposing sides and somewhere we end up hopefully where the regulations are supposed to be. Like right now with squatters rights coming back, looping it back, this really wasn’t, it was probably an issue, but thanks to TikTok and a lot of ways that people can get information and education, there’s been a lot of education on how to squat, so this has become an issue and now regulations coming in that’s needed.

So I do believe in the balance that all the opposing sides end up in a balanced place, hopefully.

Dave:

Yeah, that’s a great point. I generally think sometimes they just come up with regulations, they come up with these arbitrary numbers and as long as it’s researched and make sense, I think there is a place for these types of regulations. Alright, well that’s it. We rumbled. Kathy, I’m going to just declare you the winner today. Thank you. Based on, I think I have that authority. Do

Kathy:

I get a steak dinner? Is that how this works? We’ll

Dave:

Get you a side, a side. Potatoes, asparagus,

Kathy:

Something. Yeah.

Dave:

Well, I assume we’re going to one of those fancy steak places where when you order, you just get the steak and then you got to get the stuff,

Kathy:

Then you got to get all the other stuff and dessert. Don’t forget that you

James:

Assumed correctly, Dave. We will definitely be going to that place.

Kathy:

I think we decided on Nobu,

Dave:

Not really steak, but they have Wagyu there so we can eat steak. They

Kathy:

Do. It is

Dave:

Good. Well, I don’t want to assume we’ve won yet. I am feeling good. I feel confident, but I don’t want to start gloating.

James:

I am not assuming we are winning, but I am assuming that I’m going to have the meat sweats in about six months

Dave:

One way or another, whether you’re peg or not, you’re going to have the meat sweats and, sorry. Yeah, we’re just riffing about the flip off. Although Kathy has one today. We actually have a formalized bet on this flip off, so we’re all getting very competitive about it. But in all reality, Kathy and James, thank you for bringing your insights and these headlines to the show. And thank you all for listening. We’ll see you next time On the Market. On The Market was created by me, Dave Meyer and Calin Bennett. The show is produced by Calin Bennett, with editing by Exodus Media. Copywriting is by Calico content and we want to extend a big thank you to everyone at BiggerPockets for making this show possible.

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In This Episode We Cover:

  • Squatters’ rights explained and why states are finally saying no to squatting
  • The massive homebuying subsidies that no one knows about (but should!)
  • Blackstone’s bet on a “bottoming” housing market and whether or not this means you should buy NOW
  • Affordable housing rent increase caps and why this may lead to even less affordable housing
  • The winning real estate market in our “Market Madness” bracket! 
  • And So Much More!

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

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