Josh Barker Real Estate Podcast #11

Joey: We're back.

Josh: We're back.

Joey: Guess who's back? So it's September, and it's been raining. Thank God.

Josh: I know.

Joey: It's been awesome, man. I slept with the window open. It was just awesome. Loved it. Got up, went for a walk in the morning, and wasn't breaking out in a sweat...

Josh: There you go.

Joey: A couple of seconds, so I'm very grateful for the change in weather.

Josh: Me too. Hopefully, it knocks down some of those fires out there for everybody.

Joey: Yeah, absolutely. So I think officially, well, not officially, but in a few days, officially, summer is over. And summer is usually a big time in real estate. We definitely had a different summer this year.

Josh: Yeah, we did.

Joey: But I think... This is a podcast about real estate.

Josh: Sure.

Joey: So we think about...

Josh: You don't want to talk about the flowers and the birds?

Joey: Yeah, and I like the effect it has on it, but usually summer is like, I think the... Spring and Summer are the biggest time for real estate as far as like the sales volume usually goes up.

Josh: Well, the sales volume, the amount of inventory going to the market picks up in the spring heavily, and then the highest spending numbers are typically in June and July.

Joey: And this year has been a little bit different, partly because we came out of arguably the hottest, white-hot market for Shasta and Tehama ever, at least in our lifetime. And then, on top of that, the big news was that interest rates just kept climbing, which...

Josh: Yep.

Joey: They just came up again. Right?

Josh: Last week, the Fed came out, and well, it wasn't necessarily just the Fed, but they came out with the Consumer Price Index and said that it was like at 8.3, they were projecting 8.1, so it kind of went the wrong way. It's probably putting some pressure on the Fed right now to raise those interest rates this week, and maybe even by the time this podcast gets out for everybody to listen to, the Fed may have already made their decision, but most of the... If you were to take the average of the 15 different experts out there, they'd probably tell you it's going to be three-quarters of a percent. 0.75 is what the Fed is likely going to raise the interest rates by.

Joey: Which means mortgage rates will probably go up a quarter?

Josh: There'll be some pressure, yeah, maybe a quarter percent, there'll be some pressure there. And it's interesting, Joey, because I had this conversation with about half a dozen different brokerages, brokers that do the stocks, stock trading. Well, I've talked to mortgage lenders, and they're challenged right now because all that refinancing is gone.

Joey: Yeah.

Josh: And I've talked to some home builders, and really, there's this sentiment, just keeping it real, where they're just down and concerned. And it's interesting because it's not like we don't see this all the time. I mean, it's not... It doesn't happen once a year, but real estate, stock market, all these markets, they always cycle, you can't stay hot forever, and so I think my only thing right now is I keep on reminding them, I'm like, "Hey if you act surprised, that's almost naive when you've been in this business for a long time." You know what I mean?

Joey: Oh, absolutely.

Josh: Because things just go through cycles and just a good dose of calming down is probably a good idea.

Joey: Well, the average person isn't like you and I, where we're plugged into real estate. So it's kind of like, we know all this, and they usually get it in quips, soundbites, clickbait, things like that, and the bottom line is that the market is still very good. The numbers are... This is still a seller's market. It's on the edge of a seller's market, right?

Josh: Yeah. I mean, statistically, you look, I think we're at 2.9, 3 months supply of homes for sale.

Joey: Which anything under three is?

Josh: Yeah, zero to three months is a seller's market, four to five is neutral, six and more is a buyer's market, and we're on the tail-end of a seller's market, but the reporters aren't going to say that because they don't report news, they sell the news.

Joey: No. Exactly.

Josh: And they try to... Sorry, let me pause my thing here.

Joey: I think that's the bat signal. I think we better go.

Josh: It's the bat signal, yeah, sorry. Sorry for your listeners hearing that, but no, it's really a situation where people just have to recognize it's part of what happens in the market, not a big deal.

Joey: And the other thing is that the market was being driven by really low-interest rates, there were a number of factors that were driving the market, and now we're kind of in a normal market, and so the idea, at least to me, and you can correct me if I'm wrong, but at least to me, the idea is that in those hot markets, a bunch of people are in real estate purely out of speculation. They're not buying their first home, they're not getting a larger home 'cause they're extending their family, they're not, "Hey, my kids are off to college, I'm downsizing." These are just people like, "Hey, I pulled my money out of my 401K. I'm going to flip a house." And they push that market and what's happened is the incentives for them to be in the market have disappeared, so those people are slowly disappearing, but the regular driving forces year in, year out are, people are still moving here, people are still buying the first home. And speaking of buying a first home, you still have, just like you've seen housing go up, you've seen rent go up, I think, at even higher rates.

JoshJosh: Yeah, if you look at rentdata.org, that's a... I'm going to cite that, so everybody can go there and look at it. But link it.

Joey: I'll link it in the...

Josh: Yeah, link it. That's good. It's a three-bedroom, two-bath home with a two-car garage in the City of Redding that is averaging about 1800 bucks a month right now, and that's what that report would say. And I think most people, they have to make a decision about housing in general, it's like, "Well, do I rent or do I buy?" Well, if you're evaluating do I buy, it's like, well, the next question is, well, where is the market right now? Is it going up or going down, or sideways? And I think we've already given back. I don't know each market. So when you hear this, don't go, "Oh my gosh, it's my house." But if you were to take the average collectively in the market, we're probably down about 10% in terms of the average selling price.

Joey: From last year, from the height or...

Josh: Yeah, so since about November of last year, yeah.

Joey: Which was just about...

Josh: Nine, 10 months ago.

Joey: Yeah. And it was... It probably peaked somewhere around there. Interest rates start changing in December, so it's somewhere...

Josh: They did.

Joey: Yeah.

Josh: And that's really what the whole story is about, is that in Shasta County, there's a huge percentage of the purchases, I'll be speculating, but it's probably close to 90% of purchases right now are financed. And so with it being that high, that means that when the interest rate goes up, like it does, for every 1% it raises, it impacts the purchasing power by up to 10%. So rates went from 3 1/4 to 6 1/2. Well, that's double. I mean, it went up a full 100% higher than it was before, diminishing purchasing power. And that's where the situation in the market is right now, and we have average sellers' prices trying to adjust to the fact that the average buyer qualifies for a lower purchase price, you know what I mean? Because buyers qualify for whatever payment they qualify for. The rate is what dictates how much they can buy. And the difference between those two, there's some reconciliation that's taking place right now, and we're watching it in real-time. So when people ask, "Well, what's the tea leaf say? Where's the market going?" It's like, "Well, if rates stay high, prices will continue to soften. If rates go down, at least for Shasta County, if the rates go down, then you could expect housing prices to firm up," And so everybody kinda has the same data.

Joey: And I think about like it also... We talk about the market in this real general term, and there are people within the market. We talk about segments, but when I think about a young couple, first-time buyers, oh, should they buy? My thought is absolute. Even you go, "Well, the average rent's 1,800, and you're telling me now with interest rates that same home, my payment would now be 2,100 versus a year ago. So it would have been a lot less, right?" So those numbers are going to fluctuate back and forth.

Josh: Yep.

Joey: And so you... We've said this term before. The first time I heard it was months ago, but you marry the home, you date the interest rate.

Josh: Yep.

Joey: So you lock the home in now, and then when interest rates come down, you've built some equity, you've extended your credit, you know, hey, they're making their payment, and you refinance, but waiting until that interest rate comes down, it's like, well, the... You're really... You're trying to time it. It's like... To me, it's very similar to the stock market, where they show the people who constantly try to time the stock market do very poorly.

Josh: Right.

Joey: Very poorly. And so this idea of, "Oh, I'll jump into the market when housing is the lowest and interest rates are little." Like that doesn't happen.

Josh: No.

Joey: Those things are crossing over each other. They're affecting each other.

Josh: They are. And maybe for somebody listening to this right now, think about the buyers that were purchased last year from July until, let's say, October, for example, just to take a segment on the market, they were pretty optimistic behind, right? The reality is that it's a better opportunity to buy today than it was then.

Joey: From a price of the home standpoint.

Josh: Exactly. From the price standpoint, right? And so, to your point you just said a minute ago, if you marry the home, but you date the interest rate, would you rather buy while prices are a little softer and then know that you can refinance when the rate drops, or would you rather purchase when the prices are super high, and now there's no opportunity to refinance because the rate probably was already pretty low in the first place?

Joey: I think if you purchased last year and you extended yourself, you might be in trouble, but if you purchased last year, you should have had a fantastic rate.

Josh: Right.

Joey: And you love the fact that those rents are going up because you've locked in that 3%, 3 1/4%.

Josh: That living expense is locked in.

Joey: Exactly.

Josh: Yeah.

Joey: And so it's just one of those things where the people time it the wrong way, you know what I mean? Or they extend themselves.

Josh: Yeah.

Joey: And that was one of the things that we didn't see in the last market, that we saw in the market that hit hard in the early 2000s, was that... I think it was. You said 10% of the market were investors. So the vast majority of people should have been people buying a home for themselves.

Josh: Well, right now, in the last... It's probably very low, below 10% now, but...

Joey: Yeah, the interest rates...

Josh: Over the last 24 months, it's probably averaged about 10% was investor-related. Not including home builders and stuff. That's a different category. That's more of a speculation, buying a piece of property, building the house, and then selling it for a profit, so. But for speculation, like I bought a house with the anticipation of it appreciating than me selling it or renting it or what have you is only about 10% of the market here in the last couple of years. But going back to 2005, in that era, almost 40% or more of it was speculation, and...

Joey: Was it leveraged?

Josh: Everyone was leveraged. And...

Joey: When it came down, it came down hard?

Josh: That's right. But you know what, there is something to talk about right now: I'm beginning to see those variable interest rates coming out.

Joey: Oh no.

Josh: Yeah. And now they're coming out. They're saying, "But, but, the Dodd-Frank Bill says that we have to make sure we verify their employment, we have to make sure we verify their income and expenses. There's a ratio that's still very solid." And I think all of that is probably true, but variable interest rates are coming back again, and they were not here two years ago. And so when you... Or at least in any kind of a way that's recognizable. So now I'm starting to see these loosening of... Not so much loosening of the lending guidelines, because I think they're probably more heavily scrutinized because I think you have to have larger down payments, more reserves, probably even more of a stable P&L, profit and loss, to qualify for those variable rates, but it does give you an idea that mortgage lenders are going, or companies and banks are saying, "Hey, wait a minute, these rates are pretty high. They're probably not gonna be here for very long before they start to go back the other way, so let's offer a variable interest rate," knowing that these folks are probably going to refinance out of this loan in the next two or three years.

Joey: Oh wow. Yeah.

Josh: Yeah.

Joey: Man, that starts to get... So there are so many variables and so many different... This stuff is... I always think about, like, when somebody goes, "Well, you know, it's not rocket science," right? They'll say that term, and usually, it has to do with something... And I remember one time I was doing this show, and there was a few of us, and we were talking about social issues, and one of them goes, "You know, it's not rocket science," and I said, "Yeah, 'cause rocket science is easy compared to this."

Josh: Yeah.

Joey: I mean, rocket science is not hard. Social science is hard. Trying to figure out why these...

Josh: What are people going to do, and why they're doing it? Yeah.

Joey: Because one of the biggest variables is emotion.

Josh: Yeah.

Joey: Like, yeah, there was no logic to that. Everyone just ran right off that cliff. They got so scared. So there are a lot of variables here. I think the market's normalizing. I think like, hey, it's... You've talked about how it's not good in the long run. Everyone loves it. "Yeah, man, my equity is going up." That's not good in the long run for your community because your children aren't able to purchase a home if this continues. You need the market to kinda ebb and flow just a little bit with... What was the number you gave that you said like a good yearly appreciation is?

Josh: You know, 2 to 4%, right in that range. So yeah.

Joey: Yeah, something like that. And so... And... Where we're at like 20% plus or something?

Josh: Oh, well, yeah, and that's the point I was making at the beginning of this podcast, is like, look, if you have periods of massive expansion in terms of valuation, there is a process of correction that's going to take place, that's just normal. And again, if somebody didn't know what would happen, there could be true naivety. That's totally normal. If you haven't been in the market before, you didn't understand that it did that. But for those who've been around a while, that's probably not a smart thing to be thinking. You should know better if market cycle. So I'm constantly just reminding people, I do this as much as I can with people, it's like, look, the markets are going to... If you have periods of expansion, you have periods of contraction, and be ready for the wild card. The wild card is... Like the last one, we have COVID. Nobody knew in December or January that COVID was going to hit March of 2020.

Joey: Yeah.

Josh: Nobody knew that was going to happen. Now it just came out of nowhere. And then you kind of look at what happens with the Ukraine War or something that had an impact on the cost of fuel and everything else. Well, nobody knew that was going to happen three months before it happened, or maybe the CIA did, but nobody on Main Street knows that stuff. And so I guess my point is, is that things are going to happen, and it's okay, just calm down, recognize that if you need a place to live, you've got a couple of choices, live with someone, a family member, what have you, or rent, or purchase, and any one of those things is fine. But if you choose to purchase, I would say recognize you're probably going to be in that home for a period of time.

Joey: Yeah.

Josh: We'll probably see a market that's going to fluctuate up and down a little bit over the next year or two because we're going through an adjustment period where interest rates are high. They're probably going to come back down at some point. That's going to have an impact on pricing because home values will probably tighten up really quickly when that happens. But the long-term prospect is that you're going to be at home for a period of time, and it will be great.

Joey: Let me ask you a question, and if you don't know the answer to this, it's okay because this is going to come out of the left field. If we see deflation kick in, if we see... So right now, the Feds are increasing interest rates in an attempt to counter inflation.

Josh: Yeah.

Joey: And a lot of people are like, well, the inflation is there because there was printing and distribution of money, agreed, but also supply chains were heavily impacted.

Josh: Sure.

Joey: If over the next year or two, we see the supply chain start to catch up, all the stuff, all the COVID, the ships being off the coast for a year, all that stuff, we get back to normal, where supply chains are kind of normal.

Josh: A new normal.

Joey: And we kind of see that. For example, we're getting a... The contractor is finally being able to build our garage. We had to do this two-car garage, and they said, "Hey, well, good news," 'cause we signed a contract a year ago. They said, "Supplies and materials have dropped dramatically.

Josh: Oh, yeah.

Joey: You're actually... We're going to be able to do it cheaper. When was the last time you heard that? And that's why, because supply chains are kind of catching up now.

Josh: That's right.

Joey: That crazy wood, plywood, OSB that went up, it's come back down. So the thing... I read a couple of things that said, hey, if those supply chains catch up and you've got... If you still have these higher interest rates, you're going to see deflation, which means prices suddenly start to drop. Do you know what effect a deflationary market might have on real estate?

Josh: Well, that's a really good question, man. I don't know, man. I'd have to think through all of that.

Joey: Sorry, I knew that was out of the left field, but I've been thinking about it, and when there's... Then you have all the other answers. I figured you'd know. Like, "Well, Joey, it's real easy. Now, let's look at Japan from '87 to '92."

Josh: Well, this is proof, Marcus, that I don't have... This isn't scripted. So, you're right about the supply chain. Right now, we are seeing things soften up, but think of it more of a supply and demand.

Joey: Yeah.

Josh: If my warehouses now are becoming full...

Joey: Yes.

Josh: Okay. I need to make room because I still have a whole bunch of stuff coming in, right?

Joey: That's right.

Josh: And so if my warehouse is full, I've got one of two choices, I could stop the orders from coming in, but there's profit in that, in bringing those orders in, or I would need to start discounting my pricing so I'd make some room in my warehouse. And as soon as they start making that decision, now a competitor sees that I've made that decision, now they want to get stuff out of their warehouse too, and so you see the snowball effect of things beginning to loosen up, prices starting to come down. And so, to your point, I agree that as a supply chain re-establishes itself, you will see the cost of materials and goods going down.

Joey: I think so.

Josh: And I think that'll happen before labor does.

Joey: Yes.

Josh: Okay. And I... And for the people listening to this, I just say that labor and material and supply cost are two different things because labor and stuff, if I still have margin in there, I'll drop my price, it doesn't matter, I'll drop it. But if you're asking somebody to drop their wages, that impacts what the other things they're able to do too.

Joey: I don't see that happening for a long time.

Josh: It's going to be a challenge because it's almost like you're going to have a situation where a lot of people are going to say, "I'm not willing to work for less," and it's like, "Well, I can't... Then I can't afford you anymore," and then you start to see some layoffs. So that's where the recession piece is looming out there. I think a lot of experts are saying they're projecting the first quarter of next year... Even... And above those, some people would say we're in it now, but going into a recessionary period, if they have... If I have... If I don't have as much work for my employees, what will I do?

Joey: I think they'll lay people off.

Josh: Yeah, and we can't deny the fact. I'm reading reports right now of companies that are making these layoffs now. I'm seeing 10% cuts, 10, 20% cuts. So our industries right now are getting cut, lenders are getting blown out left and right, real estate agents, because the volumes will drop, they're beginning to leave. So there are some impacts there.

Joey: Some tech giants are doing it too. I just saw that Twilio laid off, I think, 800 people.

Josh: They did. It was about 10% of their overall workforce, so...

Joey: That's a tech company.

Josh: Yup. Yup.

Joey: Big-time tech company.

Josh: Yup, so it's something that we just know, that this reconciliation, if you will, is coming. And I think it's smart to say, "Okay, well, if that's coming, what will it look like?" Well, the inventory is like we said. They're 2.93% or 2.93 supply... 2.39... Or 2.93 month's supply of homes for sale. So that's not a lot of inventory.

Joey: No.

Josh: If that inventory was six, seven, eight months, that's when you really see things getting soft.

Joey: Okay, because I was going to think in a deflationary period, cash will be king again, right?

Josh: It should be.

Joey: I think to... Because of interest rates, this is where we're getting way out of my... I'm not an economist. I play one on TV. But I'm a... I'm not an economist. But I'm thinking, "Okay, if price started going down, cash is going to be king, and then what are they going to do with credit? Are they going to... Are interest rates going to come down to try to counter that or... Yeah, it starts to get...

Josh: Well, it gets really weird because, again, real estate mortgages, so people getting loans to buy homes, that rate is a lot different than what the Fed is doing right now. Mortgage-backed securities are all about investors who buy those mortgages knowing that most people pay them off in four or five years and buy them at a coupon rate. So if the Federal Reserve decided to go out there and re-purchase a lot of these mortgage-backed securities, if they came out today and said, "You know what, we'll buy everything funded at... We'll buy coupons of 4% all day long." The mortgage lenders would then go out and sell these loans at 4%, and they would have a buyer in the market, which would be the Federal Reserve buying them at 4%.

Josh: So with a policy action, they could change the mortgage rate today. And this is the thing that I'm constantly aware of in my mind when I look at real estate valuation. It's like, "You know what? Once real estate gets hit, it's highly likely the Federal Reserve would step in and shore that up," because they don't want a foreclosure market. What they don't want is a massive short-sell market where you're trying to sell your home for less than you own it because of the expense that they carry and the banks carry, and the taxpayer has to pay to get people out of that situation. Because everybody pays when that happens is greater than if they were just to start buying those mortgage-backed securities. Does that make sense?

Joey: Oh, it totally makes sense.

Josh: Yeah. And so I'm kind of bullish on the Feds stepping in, and I think that would be a lesson they've learned from last time.

Joey: And also, you know what we're talking about is the overall California market versus the renting market, one of the great things that we have going for us in this market is low supply, that keeps prices steady.

Josh: It does.

Joey: Yes, they're down a little bit from the super high...

Josh: Because interest rates are up?

Joey: But that's... They're not... They didn't plummet.

Josh: No. It's not an over-supply issue.

Joey: No. If you know what I mean...

Josh: Because as soon as prices... As soon as rates go down just a little bit, we see it every weekend here, where rates are at 6.5. Things are a little soft, right? Drops to 6, boom, the next week, the corresponding effect a week later, buyer demand picks up. The demand is there. It's not a demand issue. It's an affordability issue. You know what I mean?

Joey: Yes.

Josh: That's why I'm confident that when rates go down, prices immediately stop, and they start to firm up, and if they really go down, they go up because the demand is there, people want to purchase, they do. We see it every day, but affordability is a hurdle that they absolutely have to be able to overcome.

Joey: Case in point to your materials versus labor, my contractor didn't tell me he was going to do it for cheaper. He just said I was...

Josh: No. That's right.

Joey: My material is going to be... He didn't say the good news is I'm taking a 20% reduction in pay, no.

Josh: But if there are three contractors competing for your job, then now, all of a sudden, they start making decisions on labor terms.

Joey: I don't see that happening. And everybody knows I have a crystal ball, and I nail it every time, but I just don't see that happening because I don't think we have the labor. I don't think there's an abundance of labor. Maybe there will be.

Josh: But there isn't today because there are still people wanting to do stuff, but if you look around at the real estate construction boom over the last 24 or 36 months, okay? If that demand gets killed off over the next, let's say, 6 to 12 months, for some reason, you're going to have skilled labor without a lot of work. What do they do?

Joey: Yeah.

Josh: What do they do? They have to make a decision, right? Either I'm not working, or I'm going to work for a little less. That's the decision that'll have to be made. I've seen this because... I remember this in '05, '06, and it was... I didn't think it was going to happen either back then, and quite honestly, all I'm doing is borrowing from back then. People were getting paid a lot of money to build stuff. The market corrected, alright, and when it did, that meant that the cost of labor started going down. I built a home in 2007. I built it for like 100 bucks a foot.

Joey: Oh, wow.

Josh: I know it's... Sorry, everybody. But if I would have built it two years before, I probably would have paid about $130 to $140 a foot, okay? Part of that was the supply and the cost of materials going down a little bit, but most of it was in labor.

Joey: Yeah.

Josh: Most of it is because of labor. People were willing to do a lot more... To do work for a little bit less.

Joey: Okay. Yeah, it's funny. You don't get a jobs report for Shasta County, do you? Does anyone publish something like that? We need confirmation.

Josh: That's a good question, man. For anybody who's listening to this, if you have it, let us know.

Joey: Yeah, no kidding. I'd love to link to that.

Josh: Yeah.

Joey: because I still think... What's funny is now that you're bringing that up, I was talking to a couple of contractors I know, and they're still... It's funny because the mentality is, they were talking about how they're not booked out as far now as they were, and then that conversation shifted to... They were like, "Yeah, I'm only like nine weeks out." I'm like, "That... Nine weeks. That's over two months and... "Oh, yeah, but this time last year, I was seven months out."

Josh: That's right.

Joey: And then we... Then it shifted to, "Okay, well, four years ago, what were you... " And they're like, "Oh, we were about seven to nine weeks out," and I'm like, "So this is a normal market?" But in their mind, they're so used to that white-hot market, and they're like... They're freezing up a little bit. And they also said people are... Yeah. So I don't know where that's going to go, but all of that...

Josh: Well, mine is just a guess, but I'm taking a little bit of what I saw last time and kind of applying it this time and thinking about supply and demand. If the demand for labor goes down, and the supply for it is... Four minutes left, Marcus, six. But the number of people that are available to do the work is pretty high. What do people do? Because a ton of that was in profit, right? So if you take a couple of years ago, when, everybody was rebuilding from the car fire, right? A lot of that was on insurance money.

Joey: Oh yeah.

Josh: So they were charging a lot of money to build a home. The supplies weren't that much higher... What was higher?

Joey: Labor.

Josh: Labor. Labor went up. Why? Well, because there were only so many resources of labor available, people were basically stealing labor from each other, I'll hire you on my crew for more money, kind of a thing, and that was happening a lot. But now that that insurance money is gone, they can't necessarily charge the same amount anymore. And so this is what the impact is, and I can't help but think that the cost of labor for a lot of what we're looking at right now, I'm not saying it's going to go down in half, but for it to go down, it wouldn't surprise me at all.

Joey: Well, yeah. When you say it like that, I forget about that, which was pretty crazy. People were racing to get those homes rebuilt, and some of the contractors were like... I remember hearing some of the people, and they were months, and months, and months out. And then COVID hits, and the supply chain gets completely disrupted. And we've gone through quite a bit in the last couple of years, now, to say it loud.

Josh: All those wild cards. Yeah, all those wild cards. But remember, and just to put a little bit of a red bow on this thing here.

Joey: Yeah.

Josh: If somebody's making a little bit less in the labor market, but the cost of all your goods and services is also going down, it doesn't necessarily mean you're going to hurt.

Joey: It's in relation to each other.

Josh: It's in relation to each other.

Joey: You get a 20% raise, and if products go up 30%, you lose money. And vice versa. Yeah.

Josh: Right. Exactly. And you have to think about the supply and demand issue and what's created as a result of that.

Joey: To me, all of this that we're talking about is if you don't own a home, and you can afford to buy, then all this stuff doesn't matter. It's... You need to buy a home.

Josh: Well, it's an asset. You're securing a position in the market. You've secured an asset. So if that asset goes up in value, you receive the benefit. It goes down in value. You hold it longer. It's one of those two.

Joey: And also if you're renting a house, you got two houses side by side, one's being rented, one's being owned, I know in my neighborhood, you know who the homeowners are.

Josh: Sure.

Joey: You know what I mean? On the weekend, instead of partying at the local brewery, they're out there pulling weeds and putting fresh paint on the trim. And it's increasing the value.

Josh: Adding the value. That's right, adding to the value.

Joey: Yeah. And the renter's like, "Yeah, I didn't take my trash out again. It's overflowing." You can tell. So it's like... I think that's even a good thing for young people.

Josh: 100%, I totally agree.

Joey: All of these things that we're talking about, I'm trying to figure out if I should dump my 401K and buy a triplex, or should I sell a duplex and buy Apple stock.

Josh: Calm down, be diversified. Relax, take a deep breath. Recognize that this... As with all things, this will come to pass too. And be smart about it. Just don't do emotional stuff. Recognize that, look, buying and selling in real estate, if you're doing it for, "I'm gonna try to flip it and make a quick profit." This is not Bitcoin, I don't think that this is...

Joey: Which is down, big time.

Josh: It's down, big time. Right? It's a long-term strategy, but I've watched a lot of people, and I mean a lot of people, retire because of their investments in real estate. So I would strongly encourage looking at the numbers, so in any case.

Joey: Well, thank you, Josh. I appreciate it. I hope we helped some people today.

Josh: I don't know if we did or not, man.

Joey: I feel like we did good.

Josh: Alright. That's great, so.

Joey: Okay.

Josh: Well, thanks for your time. I appreciate it very much.

Joey: Thank you, sir. See you next month.

Josh: Okay.