Jason Hartman looks at the different trends comparing and contrasting the coasts. He talks about how Zillow is showing 2 million renters may potentially become homeowners then looks at U-Haul metrics to illustrate the migration out of high-density cities. In the interview segment of the show, Jason hosts Leslie Appleton-Young, vice-president and chief economist for the California Association of Realtors. She illustrates the movement in California’s real estate and talks about how the beginning of 2020 was posed to be a breakout year for real estate, up until the pandemic started.

Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multimillionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 0:53
Welcome to Episode 1551 1550 Do one, you know, I can’t wait until the day when I’m saying welcome to Episode 8362. Or whatever the number is. We’ve been doing this a long time, and we’re gonna keep bringing great value to you. And I just want to say thank you to everybody for all their kind words, you know, hardly a day goes by where I don’t get a note or a message from somebody that talks about how much our podcast, our YouTube channel, our content in general, the blog, etc. Or now the live streams have impacted your life in some way. And I want to just tell you, I’m honored and it’s pleasure to do it and really just glad that we can be of service on behalf of my entire team really. So, so we’ll we’ll keep the great content coming for you and keep you informed of the real world reality of what is going on. Out there in the economy, the real estate market and every 10th show life in general sociology. You know, economics is a social science or a social art. Some would argue that it’s not even a science because it’s, it’s pretty hard to predict the economy insurance, but it does use some scientific method in it. So sociology is definitely a big part of it as well. So we’ll keep that coming for you. And today we have Leslie Appleton, young, someone I have been following for many, many years, probably 25 years, and she is the chief economist for the California Association of Realtors. Now, I just want to explain something and this is important. Okay. You might be asking yourself, Jason, why do you keep talking about California? I don’t live in California. I don’t go to California. I don’t have a business in California. I don’t own property in California. Why are you talking about California so much? I’ll tell you why. Number one, there is an old concept that things start in the West, and they go east. And to some extent and for good and bad, better and worse. That is true. You know, California does set a lot of trends for the country, and the world. I mean, think about it. California has hollywood, hollywood influences the entire planet in huge, huge ways. Also, it’s a huge passion for the music industry. Music influences the entire world in so many ways. I’ve been to 87 countries, and I tell you, every country I go to, I’m hearing American music, okay, it’s it’s truly amazing. I’m seeing people dress like they do in American movies and American friends. They’ve just been germinated all over the planet. California, if it were a country, it would be well, first of all, it’s a really messed up country. They’re they’re messing it up badly. But it would be the fifth largest economy by GDP in the entire world. So it’s important. It’s something significant to talk about. Now, California is a disaster. I call it the Socialist Republic of California. I left California nine years ago. And I’m really glad that I did. But it’s still worth talking about. Because what happens in California impacts a lot of things. Think about this for a moment. You know, you’re thinking, Hey, I invest in Florida. I’m investing where Jason’s asking and we’re Jason moved to two and a half years ago, or a little less than two and a half years ago. fine and dandy. That’s great. I want you to think about this. California is losing its working class population, and its sum of its wealthy population of the real wealthy people. They, you know, they make so much money and they’re so rich, and they’ve got so many ways to avoid taxes that they don’t sometimes they don’t care that much because they’ve got tax schemes and all kinds of stuff that we don’t have access to. I’m talking about the mega wealthy, okay, the people worth, you know, hundreds of millions of dollars. Okay. So that is not that significant to them. But to the typical people, middle upper middle class people who are making $80,000 a year on up to several million dollars a year, right and income and maybe their net worth is anywhere between $500,000 and 10 or $20 million. Right? Well, 10 or 20 million. They got all kinds of tax schemes, but if they’re worth $5 million, they probably don’t, and 5 million ain’t what it used to be. If you think that’s a lot of money. with inflation. It ain’t what it used to be. As the saying goes, it ain’t what it used to be. I know that’s improper grammar, but it’s an expression. It’s slightly So, think about this for a moment, folks think what happens when 10,000 people who own the $500,000 houses, which you know, give or take is about the median in California, right? 10,000 people own $500,000 houses, and they leave the state of California. And they move to one of the other 49 states, or according to Obama, one of the other 56 states, because Obama thinks there’s 57 states still. I had to tease them a little bit because that was so stupid that comment, but then again, Trump makes all kinds of stupid comments too, so I pick on him too. So I’m, I’m an equal opportunity, critic. Anyway, think what happens when 10,000 people leave? Well, what happens when 100,000 people leave, multiply that times $500,000 house and then what happens when a million people leave million people in a state with almost 40 million. I could see that happening. Think of how significant it is when that money flows into other states and some into other countries. 1617 years ago, I was teaching something I call the water theory of investing. So here’s a water bottle. It’s got the cap on it. But what if I and by the way, if you’re not watching this on video, and you’re listening to only audio, that’s fine and dandy. I’m going to just demonstrate this idea for you. So you take a water bottle, and you pour the water out. Where does the water go? The water goes to the lowest point. That’s a cliche. What is the cliche, water seeks its own level, it goes to the lowest point. You know, money does the same thing. Money looks for the best value. Money seeks its own level, money flows to the best deal. It flows to where it’s treated best money goes where it’s treated best. And it goes where it can get the most for its exchange value. So it’s going to go to these other states that you can find, by the way, at Jason hartman.com. Slash properties, that’s where money is going. And as this money flows out of California, but not just California and New York, think how significant that is. There’s a lot of money in these places, flowing out into other markets into Tennessee, Florida, Georgia, Texas, Indiana, all of these places where we have properties and recommend properties. Okay. So just think about how significant that is, when you’re thinking, well, this California stuff doesn’t relate to me, Jason. It does relate to it’s really important. And interestingly, interestingly, the chief economist for the California Association of Realtors Our guest today in two parts By the way, this episode moved to guess where? Sarasota, Florida. Yes. The chief economist for the California Association of Realtors lives in Florida. Oh, the irony of that, you know, she’s on her way to retirement. So that’s all fine. A lot of people retire in Florida. But isn’t it sad that California can’t keep people there? That is a hugely significant thing. We’ll get into that in a few minutes. But before we do, let’s take a look at this. So this is one of the great benefits, the great benefits of the surveys the sickness covid 1984. And it is this is Zillow survey for you watching on video. You see it on the screen. If not, I’ll tell you about it if you’re listening to audio on Zillow says that nearly 2 million renters can now become homeowners. Thanks to telecommuting, Isn’t that wonderful? That is wonderful news. And guess what that’s going to do? That’s going to push up the price of your properties that you’re buying through our network and have purchased through our network to million additional people moving out of expensive markets like New York and California, or others. There’s others, of course, you know, Boston, they’re leaving the cities. They’re leaving these expensive environments and moving to affordable environments. Because what’s the difference? All I need is an internet connection. And I can work from anywhere. That’s the digital lifestyle. It’s a great thing. So all these people can buy all these people that were renting in New York City, or LA or downtown San Diego or San Francisco, and they were paying $4,000 a month for a one bedroom or a studio apartment or studio condo. Now They can move to a nice suburban market. Many of them you’ll see at Jason hartman.com slash properties. And they can get a 1500 square foot house, maybe larger with a two car attached garage in a nice neighborhood. They can live better in so many ways for a lot less money. So what happens with all that newly disposable income? Guess what? It stimulates investment and it stimulates the economy in terms of consumer spending. So there’s a lot of good opportunities coming out of the COVID crisis. Okay. So, let’s go to the next thing. Just one moment. I need to make an adjustment on my screen here. Oh, I want to thank all of you who reached out about my dog, Coco, my dog, who’s many times he was in advertising and always attends our conferences. And hundreds if not thousands of you have met her over the years and she was very sick. rushed to the emergency room last week and she stayed there for night. But she’s home recovering now making platelets and platelets were very low. And we’re not exactly sure why yet, but hopefully she’s recovering. She checked into the emergency room with 3000. Her platelet count was 3000 and checked out after making 133,000. platelets there for a count of 136,000 total Upon release, and hopefully she’s made a lot more sense then something to think about this. We talked a lot on the show about currency. It’s not money, it’s currency. Money has real use right money is something that has intrinsic value, but dollars are only currency. Yen euros. Brazilian real pesos from many countries use pay a variation of a peso they’re all just currency. They have no intrinsic value. They’re fixed. currency, right? But when you think about it, when I was really concerned about cocoa, I was thinking, the most valuable currency to me and obviously to her, you know, she’s conscious of that. It’s certainly not dollars. At that time, it was platelets, that was a currency that in this dog’s body was scarce and had very high utility. You know, you can compare this to economics. It’s all about that, right? Because remember, for something to have value, as I’ve told you over the years, it’s got to have two primary value driving components, scarcity, and utility, scarcity and utility. If it has scarcity and utility, it has value. So this was a very high value platelets because they were scarce, and they obviously have utility. So the little platelet factor dog has been busy making platelets. So thanks to all of you who reached out and expressed concern about about cocoa. Okay, last thing, and then we’ll get to the guests because this relates to the California migration. This one is about New York, same idea. Doesn’t matter, same idea. Okay, so I went to u haul.com. Just a couple days ago, I shared this on the live stream. By the way, if you watch the live stream, it’s a little bit of a repeat for you. But you can do this yourself. And it’s pretty fascinating. You go to u haul.com. The moving truck rental company. And here I looked at a 26 foot truck. And I said the first time I said okay, I want to leave where I live. I’m going to leave Palm Beach, Florida, and drive that truck one way to New York City. And I’m going to drop it off in New York City. If I want to do that. I can rent that truck as you see on the screen for 20 $113. One way rental, Palm Beach to New York City. Okay, what if I want to go the other direction? What if I’m doing what most people are doing right now I’m leaving New York and I’m going to Florida. That’s the big trend, right? It would be very unusual to go the other direction. So if I want to leave New York with that truck, and I want to bring it to Palm Beach, the rental gets much more expensive. 30 $380. So almost 1300 dollars more to go the opposite direction, same truck. Same one way trip just in the opposite direction. This tells you listeners and viewers, this tells you what’s going on. This is a barometer for what is going on in the real estate market and the economy in general. People are leaving these trials with California. Do you all truck from San Francisco to Phoenix or San Francisco to Las Vegas for San Francisco to Dallas? Or, you know, Florida now that’s pretty long move to do is to do it yourself move, you’re gonna drive that truck all across the country, but people certainly do it. Anyway, the point is do it in both directions. And you will know this is a capitalist barometer that is extremely accurate. That tells you what’s going on. Try it with Portland, OR Seattle, because people are leaving those places to just like they’re leaving California, Boston, even Miami, to a lesser degree, but you know, all these high density, expensive places. They’re leaving places with civil unrest they’re leaving, and places that are not business friendly and not landlord friendly. These are the places people are abandoning. And guess what? I got one more slide here. I need to show you. Okay, I’m going to skip a couple of these, because this is what I want to show you. This slide talks about the COVID-19 impact on global airport revenue. Not many people are talking about this, but I am. And you probably heard it here first. So the dominoes that are about to cascade onto these big cities, these trophy cities are absolutely staggering. Because remember, as they lose businesses, and they lose population, they lose workers. And people migrate out of these places. They also lose their tax base. And most of these places were already mismanaged. Because there are these leftist disasters. They’ve been mismanaged. For decades. They’ve been riding on a reputation that they earned decades ago. And they’ve been mismanaged for so long. They’ve been spending money, like it’s going out of style. And it’s a disaster. But when you look around the world, airports have huge problems. And guess what? The staple feature is of many of these cities, it’s their airports, LA, it’s LA x, San Francisco. It’s SFO in New York, you got three major airports that serve New York City. So this is a big deal. Boston, you’ve got Logan Airport, hugely significant. These airports are one of the next dominoes to fall they are they are dying on the vine right now. And so will the cities in general, the municipalities if you’re investing, by the way in municipal bonds, be extremely careful, because a lot of these municipal bonds, my prediction, they will default, if they’re in the cities that people and businesses are leaving, and many are just not coming back. This is a massive sea change that’s going on right now. So that’s pretty interesting. And you look at the original estimate for 2020 revenue by region of these airports for the pre covid 1984 and the Post covid 1984. That’s on purpose the 1984 George Orwell, I’m being snarky. If you think I’m missing it. I know it’s COVID-19. Okay again, but look at this. Look at Europe, they the projection was basically almost $60 billion in revenue. Now 20 billion, cut by two thirds. Asia Pacific, essentially same story. North America, same story Middle East, Latin America, Africa, less significant because not as much tourism, huge and not as much business travel either. So this is huge. And as these airports go broke, they might become privatized. If there were bonds issued to build that or Puerto to sustain it. Those bonds are going to default. That’s going to have a cascading effect for many investors. So be careful More on this later. All right, let’s get to Part One of Leslie Appleton know if you need us reach out Jason hartman.com or one 800 Hartman and by the way I want to just remind you, you can get Your FREE Mini book on pandemic investing at pandemic investing.com. Yes, I did get that domain name. I know a lot of people think that’s a big score, I was able to get that one, pandemic investing.com for your FREE Mini book on how to invest during the pandemic and during these crazy times we find ourselves in and without further ado, let’s go to Leslie Appleton young chief economist for the California Association of Realtors. It’s my pleasure to welcome Leslie Appleton young. I have been following her work for a long, long time. I’m talking decades. She is the chief economist with the California Association of Realtors, and a senior vice president with him as well. And I have been to so many of her speeches over the years when I lived in California, and she just does some great work talking about the housing market. The economy. And I know I mentioned the chief economist for the California Association of Realtors. But as I’ve mentioned before, California is the largest state in the country. It is probably the sixth largest economy in the entire world if it were a country. So it’s a big deal. And as it goes, California, so goes the rest of the nation, sometimes, not always, but not always. We’ll talk about that. But that used to be the saying at least. So it’s my pleasure to welcome Leslie Appleton, young, welcome. How are you,

Leslie Appleton-Young 21:33
Jason? I’m great. Really great to see you. Thanks for asking me.

Jason Hartman 21:36
It’s good to have you. I’ve wanted to have you on the show for a long time. So really a pleasure to have you here. Maybe we’ll start off I usually ask people where they’re located. And you have now moved to Sarasota, Florida. Is that correct?

Leslie Appleton-Young 21:49
Right. I’m living in Sarasota. I flew from Los Angeles on March 12th. And got here. Just in time, I was actually planning to be by Coastal this year. Because I’m retiring from car at the end of this year, but with COVID, it just made a lot of sense to just do it and everyone in the company at the association is remote. So we are just all zoom all the time. And it’s we haven’t missed a beat really.

Jason Hartman 22:17
I’m curious, you know, when it wasn’t remote. Where was your office? Was it in Los Angeles?

Leslie Appleton-Young 22:21
Yeah, absolutely. Downtown LA, we were in downtown LA and then our lobbying offices in Sacramento. Good stuff.

Jason Hartman 22:27
So Leslie, we are definitely living in interesting times, you know, counterintuitively, you know, so many people in new February, March, we’re predicting the end of the world. There’s going to be a giant crash. That may still come, I guess we’ll talk about that. But the Fed and the government have come to the rescue is I think is the new way. It’s just going to always go that’s what everybody expects now.

Leslie Appleton-Young 22:53
Well, we learned to fight the last for Right.

Jason Hartman 22:55
Right. You mean the Great Recession? Right? Absolutely. Yeah. Yeah. With stimulus

Leslie Appleton-Young 23:00
So a lot faster and a lot bigger this time around,

Jason Hartman 23:03
no question about it. I mean, gvp, down one to 30 ish percent or so this is truly a remarkable time. And it’s, it’s pretty crazy and scary time to. But in the midst of that there are definitely a lot of opportunities. You know, I predicted very early that there would be this mass migration to suburban markets back in early February, if you can believe that. I think I might have been the first person that to make that prediction. And it’s certainly happening now. People are leaving high density urban areas. And that trend was already underway, because most of those areas are business unfriendly, and, you know, so there was a migration, but I think COVID accelerated it. You know, give us your take on things. I know you’ve got some great slides, charts and graphs to share. For those of you listening via audio only and not seeing the visual Of course, it will be available on the YouTube channel, but we’ll try and elaborate on the visuals so that you can relate to them even though you’re not seeing them. Leslie, what do you think?

Leslie Appleton-Young 24:00
Okay, well, why don’t I just start with the with the sharing my screen? I mean, that’s a very big question that you’re, you’re asking. And I guess I’ll just say there’s a tremendous amount of uncertainty out there. And the housing market has been incredibly strong, given the constraints of very limited inventory and new new construction, right. So we’ve seen a very hot market, and certainly once the initial first round of the lockdown was lifted. So that’s really been the been the story and looking forward. You know, we can talk about a couple scenarios and I’m sure we will, but let me start with sharing my screen sharing my

Jason Hartman 24:42
screen. You always have such fantastic charts and graphs. So

Leslie Appleton-Young 24:46
you know, I have a great a great team behind me with Jordan Levine and Oscar way and Samantha Oles and George I mean they are just so I look good because they are the ultimate kind of professional, incredible People. So listen, one of the things that we we’ve started to do like everybody is pivot towards more high frequency data. And we’re doing weekly reads of the MLS actually daily reads and calculating weekly averages of key metrics. And we’re also serving our members every week and I use this slide when I start speaking just to make a point about giving each other some grace about this pandemic. There is no consensus view on what it is and how it ought to be handled. I think our membership and the realtors are no different than anyone else. So way back in April, and may we asked Is it too long? Are we taking too long to loosen up? Not long enough, or we don’t know and it’s about a third, a third, a third. And then I also start out with just the summary of where the major forecasting financial, academic and governmental entities Are with respect to what 2020 is, is going to look like to make a point of, nobody’s got the same numbers, but everybody’s got the big drop in the second quarter, which you just noted was at an annualized rate, a drop of over 30%

Jason Hartman 26:16
on a quarter. And so just to elaborate a little bit, q2 being the second quarter being the really bad one, right. And, and the predictions go from the worst being UCLA predicting a 40. I’m going to round off here, a 42% reduction in GDP for the US economy in an annualized

Leslie Appleton-Young 26:39
rate, right. So that just say, right,

Jason Hartman 26:43
yeah, and Bank of America, maybe being the most optimist or no, sorry, JP Morgan Chase, being the most optimistic at a 25% decline. So it’s kind of all over the board. Goldman Sachs has been a really, you know, a lot of people quoted that when they’re saying 39% so this is pretty incredible. I mean, these numbers are staggering.

Leslie Appleton-Young 27:03
They all have the same trajectory though, right? They all have the q2 being the big hit, and then a gradual recovery after that with the decline for the year as a whole, between five and 11%. So there is a lot of leeway. But there’s a general story that at the time, and these this is, as of the end of June, all of these forecasts was the assumption that there wouldn’t be a second wave, and there wouldn’t be a second lockdown. And that is not clear at this point, right, as you know, say site Texas or are backing back down and the whole confusion over schools and all that. So it could be worse, and hopefully it will be better. But I just again, want to make that point that a forecasting is always dangerous, but it’s particularly fraught, right now. One other thing as I mentioned, we’re doing weekly surveys, we’re doing polling. This is a monthly poll that we started in the fall of 2018. Just a Google poll once a month California consumers, is it a good time to buy? Is it a good time to sell and the buy side is really strong. It’s currently above what the norm was until the pandemic And to that I think you can attribute a couple of things but certainly record low rates right with the 30 year fixed rate conventional mortgage under 3% is an incredible stimulus coupled with the coronavirus fear and as you mentioned earlier, a flight to the suburbs and a desire for homes with more space around them. And then the work from home work from anywhere world where you don’t have to live within a horrible commuting distance from where you work anywhere for some jobs right for white collar jobs. So I would say the buy side is definitely out of the COVID coma. I mean the buyers are ready to go, I described it as let’s pretend it’s January, again where the buyers are ready to go. And on sell side, you’ve had not only more hesitancy, but you had a huge drop between March and April in the perception of the desirability of selling. And I think that was, I don’t want people that might be sick in my home. I’ve heard prices are going to soften. I don’t think this is a good time for me to go put my home on the market. But you can see over the last couple of months that started to heal, and come back, I think and reflective of that hot market that I described in the introduction. So Leslie, let’s parse this and I don’t know if you have data on this. So you know, if you don’t just you say you don’t, but can we parse this up at all? When people talk about the housing market? It drives me crazy. I’m sure it does. You too, because it’s more than one market obviously. Right. So it’s, you know, geographically it’s by price segment, housing style. But you know, price segment might be a good one to really look at the market is booming. It’s

Jason Hartman 30:06
I mean, these interest rates are so low, it’s just literally negative interest rates are all segments of the market doing this. You know, what about the extreme high end the middle market? You know, the low end certainly necessity, housing is booming. We all know that. Can you drill down on this at all?

Leslie Appleton-Young 30:25
Yeah, I think it’s really important to talk not just about the demand side, but the supply side. And the low end has been constrained because there’s literally almost no inventory. I mean, if you look in California, you know, under 400, under 300,000, there’s just very, very little there. And the upper end has been interesting because the last two months of data have shown a resurgence of activity, at what I’ll call the high end in California, maybe the ultra high end in other parts of the country, but in the over 2 million and it’s one of the reasons why in the gym. data, which is unfortunately the last monthly data that I had, we had an all time high in our median home price of 625,000 highest monthly highest annual median home price in California. And again, it was two parts. It was more homes sold at the upper end, and it was price appreciation in every single category. So I would never disagree with what your point about real estate being local. But I will tell you that my my experience over the 30 plus years I’ve been doing this is that there are common themes than tell that tell a story. Right, that it’s hard to evade. And certainly one of the really interesting things that we’re seeing in California is just really hot activity in the Central Valley, you know, the people from Los Angeles looking at, at homes in Bakersfield, right and it used to be Just an affordable housing driven migration story. And now it’s also a quality of life cogeneration story,

Jason Hartman 32:09
social distancing story,

Leslie Appleton-Young 32:11
right? Yeah. Let’s move on. So just at a at a glance, here’s what we saw in June. And I’ll, I won’t go in any detail. But we’re running a year to date in California down about 12% from 2009 and meaning down sales while your sales, your sales, you know, number of transactions.

Leslie Appleton-Young 32:35
Yes, sales volume. Okay.

Jason Hartman 32:36
So the important thing I just want you to make sure and you alluded to it a moment ago, it’s inventory. So you know, what people commonly I think are misled by some of these stats because they think oh, well, sales volume is down. That must be the market is bad, but the especially in the housing world, when you don’t have inventory. You can’t have any sales, okay? It’s not that people don’t want to buy, you know, sales volume being down might be a sign that it’s a seller’s market and everybody wants to buy but there’s just nothing to buy.

Leslie Appleton-Young 33:14
Absolutely, it’s a it’s a, it’s not even a nuance. That’s a huge point. You’ve got to look at at both sides. So we’ve 2.7 months of inventory in June. Okay.

Jason Hartman 33:27
What would be considered like a normal month supply of inventory for you,

Leslie Appleton-Young 33:33
up until 2013. Looking back a couple decades, I would have told you six to seven months supply as normal

Jason Hartman 33:41
is like an even keel market,

Leslie Appleton-Young 33:44
right since 2013. I will tell you, it’s three to four months of supply. In fact, in other words we hadn’t had in California and this is a national phenol, not just California. We have been at unusually low levels of of inventory. So 2.7 months is a very rapid market. So I think that’s really all and then look in June how low rates were and they were headed, headed even lower. And then we also look at price per square foot as just I’m very I’m very agnostic. When it comes to data, I just want to understand the methodology. So people talk about median price, they talk about average price, they talk about price per square foot. And typically things track right typically you don’t see a different measure and go oh, my God, the story is totally different. It’s, it’s typically not and, and we were seeing that with the price per square foot data, as well. So this is a history lesson in 15 years of looking at sales in in California, and what’s a little bit sad is to look at the first two months of 2020 and just the anticipation that this was going to be just a band breakout breakout year in real estate because we were above sales from 2019. And really looking forward to a great year. I also want you to see the V shaped recovery during the Great Recession. And then eyeballing this starting in 2011, we have essentially had a flat trend in home sales at a time when we have had job growth, income growth, household formation, growth and very low rates. So this market has been held 20 to 25%. below what you would expect inventory expect sales volume to be because of two reasons. Inventory and affordability. Right. And so there’s just a lot we can talk about about those two things, but I just want you know everybody to understand that we have not had a breakout market over the last year. Eight or nine years because of those two constraints,

Jason Hartman 36:03
right? So what Leslie’s showing here, if you’re not seeing the video is a graph showing sales volume. You can see that the volume went down precipitously from 2005, bottoming out in late 2007, I guess. And then it started going up. And so that’s the V shaped recovery, you know, until 2009. And then it sort of stays relatively flat along the way. until maybe this is I’m gonna guess that is about February. Were really or

Leslie Appleton-Young 36:36
when it drop it, yeah.

Jason Hartman 36:38
Okay. Yeah. And now it’s going way back up. But, you know, it can only go up as much as there is inventory to supply the demand.

Leslie Appleton-Young 36:48
Right. And I think that the hesitancy in the market today is, is on the sale, the sell side. And that’s kind of where we are. So we have as I mentioned pivoted to What I’ll call high frequency data. So we are looking at the MLS data for the state of California on a daily basis and calculating a couple of averages. So this is a look at what’s happened to average daily close sales in the major regions of California and for the state, state as a whole. And you can see they, they can be a little noisy, right, these are like week to week changes. But in a market like we have today, set in the economy that we have today, we don’t have the luxury of waiting till the middle of August to know what happened in July, right, we need to kind of track things and what you can see and I’ll just focus here on the the set of bars that describe the state as a whole that when we were in the first week of March, we were looking at 631 average daily close sales in the state. the week ending the first week in August, we are looking at 774 average daily close sales, which is down pretty sharply from from the week before. And I’m going to move ahead here to show you the drop in close sales was almost 26% on a week to week basis. So that’s something we’re watching very carefully in terms of its relationship to the resurgence of cases and the you know, tighter lockdown regulations that can vary from county to county, right. And there’s a one, one situation so we came back this market is ready to go. It’s being fueled by by low rates and a change in how people want to live. And yet it’s really the virus that is setting and it’s the virus and the reaction to it by by the government itself. Determining, I think the path of the overall recovery. So you asked me before about price points, if you will. And I made the point that the low end of the market is constrained by really tight supply, and the high end of the market in June was up almost 7% on a year over year basis. All properties under 300,000 were constrained dropped on a year over year basis by 21 and a half percent

Jason Hartman 39:34
amazing. This will be continued on the next episode. Thank you for listening and happy investing.

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