The Norris Group’s annual award-winning event, I Survived Real Estate is back! Due to Covid-19, we are virtual. HOWEVER, our 14th annual black-tie gala that benefits Make-A-Wish and St. Jude Children’s Research Hospital will continue. Since 2008, together we’ve raised over $1,000,000 for charity!
Our network will want to pay special attention to The Norris Group Radio Show and Podcast as we will be doing pre-event shows featuring local experts as well as national leaders. There’s a lot at stake in 2021 for real estate investors. Will the real estate market remain scalding hot? Is a crash coming? How will the US handle the disappearance of Covid housing- and employment-related assistance?
I Survived Real Estate was created during a year in crisis and our mission continues to bring thought leaders together for a great cause while preparing our industry for the year ahead.
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San Diego Creative Investors Association
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Inland Empire Board of Real Estate
Keller Williams Corona,
Keystone CPA Inc.
Las Brisas Escrow
Leivas Tax Wealth Management
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Realty 411c
ThinkRealty Magazine
Episode Notes:
Narrator  This is The Norris Group’s real estate investor radio show the award-winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever -changing real estate market hosted by author, investor and hard money lender, Bruce notice. On November 5, 2021, The Norris Group proudly presented our 14th annual I Survived Real Estate charity event, industry experts joined Bruce and Aaron Norris to discuss evolving industry trends, real estate bubbles, inflation, and opportunities emerging for real estate professionals, all proceeds from the event benefit Make-a-Wish and St. Jude Children’s Research Hospital. We want to thank our Platinum partners, San Diego Creative Investors Association, Wilson Investment Properties, uDirect IRA Services. See ISurvivedRealEstate.com for event details, information on all our generous sponsors, watch the video uninterrupted and to connect with our speakers.
Aaron Norris  Alright, Cornelious. Cornelious currently serves as the Director of Legislative Affairs for the North State Building Industry Association where he advocates for homebuilding industry across Sacramento, Northern California region. He’s an Adjunct Professor at USC Price School of Public Policy, and he previously served as the Senior Director for Governmental Relations at the Bay Area Council of public policy organization representing the largest employers in San Francisco Bay Area, and rumor has it you had a hand in helping write SB 1069 Best known for California Accessory Dwelling units. So thank you, Cornelius, for being, being here.
Cornelious Burke  Thank you so much, Aaron. Thank you, Bruce. Thank you for the entire Norris Group for having me for this lively discussion.
Aaron Norris  You got set up a sort of nice, let’s just jump into what are the top issues that builders are facing right now?
Cornelious Burke  Supply chain, supply chain, supply chain, our home builders can’t find garage doors. Copper is in short supply that we use for our pipes. Gypsum for our wallboard is in short supply. Everything is hard to find. Thank God, you know, the President has finally stepped up and really had a couple executive orders to really address the supply chain challenges particularly the Port of LA and Long Beach. That’s where 40% of the goods enter the country come from. So, a lot of work to do but supply chain is the biggest issue for us right now. Also lumber. The price of lumber has skyrocketed. I mean, you thought your, your junior High’s shop class he played with scrap wood that’s valuable today. Lumber has went up on average nationally 25%. Some estimates that is added about $30,000. So the price goes home, nationally. So, lumber supply chain challenges. Also, you know, it’s been an issue for a long time but exacerbated during COVID-19. Just the workforce development in terms of the trades that we need for the homebuilding industry, plumbers, carpenters and the like.
Aaron Norris You don’t always get a heads up either. I think that’s the most concerning thing. You’re working on a house and then all sudden you’re like, oh, surprised, yeah, appliances, six months to your house, hope you don’t need a microwave. That’s uncomfortable. So, and timing when you’re building is really important. So, I’ve heard that smaller builders in certain markets are having a really hard time especially as these things are increasing in price with things like you know, things getting stolen, they have things land at the wrong time. It’s sitting on site, they’re too long it gets stolen increases the cost. In Florida, there are some builders that are canceling contracts and they said you will know the price when we finished building the home when we finished building the home in a year. So, they’re not even giving the price anymore. A consumer can’t go to them and put a house in contract. They’re just not selling it anymore until they’re finished.
Cornelious Burke  Seminar marketing. The North State BIA represent Home Builders from Sacramento to the Oregon border and work closely with our State Association, the California Building Association. That same thing is impacting our market as well. It’s supply chain, supply chain, supply chain.
Aaron Norris  I, reading I’m presenting next week at the Orange County Real Estate Investors Association. I’m reading through these 30 plus bills that have just passed. I was, it was interesting to see that for the most part, our industry CAR, the CBIA. Everybody in our industry as far as associations were very supportive. The city’s we’re not, they’re not very happy that they’ve lost control. So, let’s talk a little bit about the things that just pass. So SB9 and SB 10 have gotten the most press. Can you talk a little bit about those?
Cornelious Burke  Absolutely. SB 9 is actually a bill from the president pro tempore of the State Senate Toni Atkins, it allows for duplexes and lots splits. That bill technically would have passed law year, but just do some political shenanigans at the last night of the session they didn’t take it up at the assembly. So, that builds probably pass. To your point earlier, I still unknown how the mortgage industry is going to react to that. Because a lot of lawyers trying to figure that out. SB 10, that bill has actually been around for a long time. That’s kind of the third iteration of that bill. That bill just allows for more upzoning next to transit and job rich areas by Senator Scott Wiener of San Francisco. Interesting to note, the local and state relationship is actually broken right now. The local governments have taken such a hard stance on approvals, delaying the land use approval process, Planning Commission Design, Review Commission, city council meetings at the state governments. Housing is now a statewide concern. We need to step in and author legislation to really hold cities accountable, to make sure they’re meeting their housing goals. So, actually, just this week, the Attorney General said created a housing, strike force and with the governor Reese lands, [  ] booth set up a housing enforcement Unit, an apartment housing community development. So, we’ve been all joking in Sacramento, that there’s gonna be like law and order people get badges and they go after the city. They lock up the mayor or the planning commissioner now. But yeah, they’re really holding cities, they’re the foot to the fire and say, hey, you need to produce your housing. There’s obviously a lot of cities I will remain nameless, but we just aren’t proud of them. That’s a problem.
Aaron Norris  When I was reviewing the RHNA numbers for the housing allotments for all the different cities that’s really, really changed. So, the housing that every city has to build has slightly changed a little bit. Everyone’s got to produce their fair share. Is anybody meeting those goals?
Cornelious Burke No. I always call it a RHNA suggestion. There hasn’t really been need to that. Until recently, you know, the governor now sent a letter to Huntington Beach, the AG might sue some cities, you know, technically, the stae withhold transportation and other grants some cities that don’t meet their their RHNA obligation and goals. And then actually a state can come in and take weather lanes authority that’s very rare and very seldom that would ever happen. But yeah, it’s new laws now SB 828 By Senator Scott Wiener a couple years ago, really rejiggered some of those numbers have added more teeth to the RHNA numbers. And we are so behind in housing production in our state. It’s a supply and demand issue. If you talk to most voters, most people in Santa California, what’s the biggest issue? Housing. And why are we in this issue and this problem? Because we have limited supply to meet the demand. We only achieve about 80,000 units annually. Most economists and demographer say we need to hit about 180 annually. So yeah, we have a lot of work to do and we need to reduce the regulatory barriers to producing more housing so the private sector can get in there and do what it does best.
Aaron Norris  Accessory dwelling units were very exciting for me. I guess the question about SB 9 for me right away I’m not very excited about it because it’s owner occupied, number one, it has to be on owner occupied lot. And number two, it doesn’t have the same teeth as the ADU laws had. So, if you’re building an ADU, the local jurisdiction has 60 days to return your permit. That is not the case with SB 9. Do you think like ADU laws, we’ll see some different iterations cleaning up some of that and maybe making it more investor friendly?
Cornelious Burke Absolutely, absolutely. I think you’ll probably see another another bunch of bills next year to really hit at this. One thing to know, that I love about the ADU, though, that I helped draft and lobby in 2016 is that now it lets the homeowner become a mini home builder. So, now they can really understand what it means to pay impact fees, what it means to build something. so now, you know folks are now becoming more NIMBY, more pro housing, because Wait a second, I bought an ADU in my backyard. It took me X number of days to go to the city process. I had to get sign off from all these other departments. So, it’s, it’s creating a mentality and a, and an ethos of pro housing and, and becoming a mini builder, which I think is a good thing for our state. And so folks can understand what we go through in our industry as home builders.
Aaron Norris One last question before we move on to Casey, Casey, I have not forgot about you. The National Association of Homebuilders just came out and said that the average cost of government costs to new construction on average is $97,000, per house.
Cornelious Burke  Yes.
Aaron Norris Â
That’s crazy town. So I don’t want to say that’s it’s sort of stunning. And how do we fix that?
Cornelious Burke  Absolutely.
Bruce Norris Do what Sean does.
Aaron Norris  Build crappy houses.
Cornelious Burke I think the vast majority of folks don’t understand that a lot of the costs are in local government impact fees. When you bought a house, you pay for roads, sewers, schools, library, parks, trails, transportation, all these impact fees. Unfortunately, our state and Prop13 local governments are looking for other sources of revenue and they, it’s on the back of Home Builders. Now. I’m in the Sacramento market. The BIA just did a study. The average cost for fees is $95,000. In Riverside is going to $55,000. In the Central Valley, it is $55,000 as well, our friends to the east in Phoenix and Las Vegas, they pay 20 to $30,000 in fees, significantly less. Our business, the homebuilding industry. When you say hey, I’m a homebuilder, local governments that do all these things, pay all these fees. If you say I’ll open a lemonade stand, people jump up and down. We have all these societal problems of transportation, housing, school construction, etc. But it shouldn’t be on the back of new homes. That should be societal problems you spread out through a whole society should help address these concerns, not to homebuilders. We need to build new housing. That’s a win-win for the community. Not do anything to reduce that.
Aaron Norris  Okay. Thank you, Cornelious. And we’ll come back. I have other questions. But Kacie just been waiting so patiently and I’m so sorry, Kacie, how do you say your last name? I’m sorry.
Kacie Ricker  Ricker.
Aaron Norris Â
It is Ricker. I wasn’t sure if it’s [Rai-cker] or [Ri-ker] but Kacie serves as Senior Vice President of Realogy product, a position aimed at setting the strategy and direction of Realogy’s portfolio of agent broker and consumer products across all its brands. Prior to this position. She spent more than 20 years as part of Coldwell Banker. She has more than 20 years of marketing communications experience. So, welcome to the party. Talk a little bit about what product really, well, let’s start with Realogy. What are some of the brands that are under Realogy that people might not understand?
Kacie Ricker  We have a total of six brands. We have Coldwell Banker, we have Sotheby’s, Better Homes and Gardens, ERA. Oh my goodness, CENTURY 21. And Corcoran. Don’t worry, I remember all my friends, yes, all six of them.
Aaron Norris What are the benefits of having multiple brands under a parent brand like that in the same market?
Kacie Ricker  For us, it’s been really important because we’re really starting to use the impact of what we call one REALOGY. So, we’re actually able to get some economies of scale by actually leveraging some of the talent like my organization previously was within just Coldwell Banker. And we’ve actually been able to merge our groups and now be able to support all the brands on a larger scale. So, it’s, it’s really been helpful, where we, what we like to say is really have brand where it matters most in the brands, but then where we have opportunities to really create innovation, like within our organization, we can actually do that and put more resources to move faster.
Aaron Norris  So, if you were to hop from brand to brand, would the operational experience start to, is it starting to look very similar as far as technology and products is concerned?
Kacie Ricker  No, I always, whenever I’m sharing with our, within our group, I really like to liken this to the layers of a cake, were really focused on kind of the foundational elements or some of the commodities that you, that are just the cost of running a business. When you think about transaction experience, you think about the marketing experience, but then when you start to really get into what matters most for a brand that’s really the icing on the cake. And within each of our brands, they have their own unique differentiators. And we support that as well. But those are very unique to those brands and important to them and, and competing within the marketplace.
Aaron Norris  Okay. What are some of the things that agents are demanding the most from your team right now? What are you working on?
Kacie Ricker  Oh, goodness. So, we’ve actually just introduced our full strategy. So, I, I joined this part of the organization within the last six months, and we’ve been building out our one year, three year, and five year product strategy, and talked with a lot of agents, a lot of brokers. And in that time, really the key areas that they’re looking for is improving the full journey of the real estate experience. What we’ve found in, when you and I spoke and what I was sharing with you, what we found is that the real estate industry has really historically focused on moments in time, they see a problem they go after they try to solve that problem. And what we’ve learned in our research is that, that’s created a very disparate set of solutions, a lack of integrations I think Jim, Jim shared earlier his the, the point about the lack of integrations that’s very much plaguing our industry. And so what we’ve, what we’re setting out to do with work that’s been going on for a while, but I think we’re really bringing it full circle now is really looking at the full journey from purchase through ownership, through sale and just really keeping both the agent and the consumer at the center of that in a continuous loop. And too often right now, what’s happening is that we lose the consumer, we see them at the purchase, we see them at the sale. But the reality is, is 95% of our whole, our homeownership life cycle is really in that, is in that homeownership period. And we intend to lose them until we get them back into that loop. So, we’re going to keep them. That’s our focus.
Aaron Norris  So, we have to do a better job with those email newsletters. Is that what you’re saying?
Kacie Ricker  Well, I think it’s, I think it’s really about it, I left with a point that I think it was Jim, who made it earlier about AI and machine learning, because that’s really where we’re heavily investing is, is in the data enablement. And really leveraging the data to understand where consumers are, where agents are in delivering relevant content to them. I’m a perfect example, you said that you shared I’ve been in the industry 22 years, I literally just sold my house in the last couple of weeks. And I, here I am in, in the industry, and I needed an agent. And I bought my house 20 years ago, and I thought to myself, you know, I don’t have an agent. How scary is that? I’ve been in this industry that long, and I don’t have an agent. And I thought, you know, I’m a classic example of I use my agent, and then we lost touch. And it’s been years and years and years. And what if, what if we were actually tripling these homeowners with information, staying connected, letting them know when a good, when it’s a good time to refi when it’s a good time for them to invest additional dollars into their home how to do so all of those different ways, we can actually use machine learning to stay connected to them. So, not necessarily just newsletters, newsletters our way that we actually want to be able to deliver relevant, important content to them at the moments that matter most.
Aaron Norris  Interesting. One of the things that I loved about joining PropertyRadar is understanding some of the demographic interfacial information and the the moments in time that you’re talking about when somebody has a kid, or when somebody dies or gets divorced. And you know, how creepy do you get like, ‘oh, so sorry you got divorce want to sell your house?’ Maybe? And are ,are realtors ready for that journey with you? Are they willing to learn how to get more tech savvy and to micromarket like that? I mean, it can get pretty specific?
Kacie Ricker  Absolutely. I think I think more than anything, consumers are ready, and that means agents need to be ready. And then I think, as we were talking about agents and brokers, particularly over the six month, last six months, there’s a real drive and a desire to do better. So, I mentioned earlier that, you know, innovation is really designed to save money, but I think I would argue that it was, it’s also really to improve service. And that’s really what we’re trying to do is is yeah, of course there’s an opportunity to leverage innovation to improve to save money, but it’s also for us to actually improve service to our customers. And that for us, that’s agents, that’s brokers, but it’s also consumers.
Aaron Norris Â
Zillow has made all the headlines this…
Kacie Ricker  I knew this one was coming.
Aaron Norris  You guys have your own product Realsure. We tell, tell the audience what Realsure is in case they haven’t run across it.
Kacie Ricker  Sure, ah, Realsure for us is, a relationship between Realogy and Home Partners of America. And it is our ibuying program.
Aaron Norris  Okay, how has that been received by your agents?
Kacie Ricker  I’m huge in a huge way. In fact, I’m not sure how close you are to the Realigy. But Ryan Schneider announced our Q3 earnings last week was sharing with investors and certainly announced the details that we would continue to invest in Realsure in a rather large way. In fact, he’s accelerating our, our focus on real, Realsure through the end of this year, as a way for us to really differentiate ourselves. So, interesting news from obviously Zillow this week, I’m really clear that, that doesn’t change our strategy. We’re going to continue to go after this market.
Aaron Norris  Sean set up a really cool interview for the podcast that we do for PropertyRadar. In July, we interviewed the former CEO of Zillow who of course, launched their iBuyer program and he thought that was so much fun that he decided to bring Offerpad public a couple weeks after we did that interview with him in July. So, I, my mind is still blown. I’m not understanding exactly what’s going on. I think there’s a place for ibuying I’m, there’s just some things I’m just not understanding about the, what’s going on. But anyway, so your your agents like having this tool as as part of their toolbox and consumers are liking it. Are they leaning more towards success current market going for a standard listing? Do you have any data on that?
Kacie Ricker  I don’t have the data on hand. But I will say is working seeing growth in this area, I think I shared with the story with you with Simon Chen, who’s who’s been on the show before, I think he’s actually been part of this panel. And he actually was selling his home and went through the process of looking at it from an iBuyer perspective, and then also traditionally selling. And, and it was interesting, because he got so many different offers. But he said all of them were running about 15% under market, and what he ultimately got it and they were all very competitive in that place. And so for him, it wasn’t a place for Realsure was, wasn’t a market that we were yet in Realsure, but he’s sure that it’s in the markets that he’s been in, it’s been a struggle. From the, from that perspective. At the same time, we’re seeing a lot of growth, there’s, there’s certain key markets where we see Realsure growing for us, Realsure is more, is not just about the ibuying process, but we also have a program called RealVitalize. And so, and RealVitalize was really designed to improve the, the, the sellers home before they sell. So, for us this is really looking at the as a shared the full consumer and the full transaction, not just looking at one point in time, I think maybe that could be a place where they fell down. It’s looking at just one point in time, we’re looking at this across the entire transaction. And really what services can we help sellers and buyers at those moments.
Aaron Norris Last question for you, Gen Z, are they forcing any changes in the realtor industry that we should know about?
Kacie Ricker  Absolutely, I mean, no question. In fact, I was on a panel earlier this week with a group of agents in New York City and they were in their, they were in their upper years. But they were saying that all of their, their clients were in the Gen Z arena, and how are they going to adjust their, their marketing strategies? What’s worked for them for sometimes 30 There was one agent who had 45 years in the industry very, very top agent, but she’s said you know what, my, my strategy isn’t working anymore. And I need help and how am I going to reach them in this, in this more digital arena. And it’s not enough just to send the emails anymore. Email marketing is a piece of the puzzle. But as we know, we’re all hitting Delete the moment, the moment we wake up, we’re all hitting Delete from those marketing emails. So, how are they going to just stand out online and that’s a combination for us and of that, that machine learning and how we’re going to use that data to deliver that relevant content, keep our agents at the center of the transaction and hitting the consumers at those moments. Obviously social medias might play a huge piece of that puzzle. But that’s that’s a really big part of our strategy right now is to help bridge that gap.
Aaron Norris  Awesome.
Narrator  We’d also like to thank our gold sponsors, Inland Empire Board of Real Estate, Keller Williams Corona, Keystone CPA, Inc. Los precice escrow latest tax Wealth Management NorCal RIA NSD Rei Pasadena Phoebe Realty for one one and think Realty magazine. See, I survived realestate.com for Event Details information on all our generous sponsors, watch the video uninterrupted and to connect with our speakers. For more information on hard money, loans and upcoming events with the Norris group, check out the Norris group.com. For information on passive investing with trust deeds, visit tng trust deeds.com.
Aaron Norris The Norris group originates and services loans in California and Florida under California D R E license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to the Norris group comm and click the hard money tab.