EPISODE 014: THE HOUSING SHORTAGE

DRINK INFORMATION

Every episode we drink a different libation – so what are we drinking this episode?

Tom’s Drink – 12-year-old Highland Scotch Deveron

– A light, younger scotch with a less astringent taste. Great for a scotch beginner

Ian’s Drink – A homemade Zinfandel

– An earthy flavor with a deep red color. Bottled in 2016

*Visit our “Tasting Room“

TRANSCRIPT:

Ian Robertson
Hey Tom, how many button-up shirts do you own?

Tom Kubiak
All of them.

Ian Robertson
I’ve known you going on a little over 20 years and I don’t know if I’ve ever seen you in a non-button-up shirt. Do you wear t shirt?

Tom Kubiak
I wear a t-shirt under a button-up shirt.

Ian Robertson
I wear T-shirts over my button-up shirt.

Tom Kubiak
I wear T-shirts when I’m like working on the car or painting or something like that. But I don’t know for the most part I wear. Every other shirt I have is some style of button-up.

Ian Robertson
Yeah, you have to have a collar on or you don’t feel right about yourself.

Tom Kubiak
I gotta have a collar.

Ian Robertson
Okay.

Tom Kubiak
Hopefully if you listen to our one of our more recent podcasts, it’s a my personality type. I wear button-ups.

Ian Robertson
Your personality type has to wear buttons. Okay. My personality is I wear T-shirts. I don’t know. I just realize that as we were sitting here. I’m like, I’ve never seen him in a shirt without a button or a collar.

Tom Kubiak
Yeah, actually we were camping with some friends a couple weeks ago up in Maine and one of our friends took a picture and sent it to another one of our friends who moved recently to Florida. He had said to our friend, take a picture of him because I want to see if his shirt is tucked into his pants or not.

Ian Robertson
Nice.

Tom Kubiak
And it was, of course.

Ian Robertson
See you you look more like Ron Swanson than I do.

Tom Kubiak
I do.

Ian Robertson
You got the stache. You got the you got the shirt, man.

Tom Kubiak
I eat the bacon.

Ian Robertson
You eat the bacon. Did I tell you we bought a pig, like a dead one. And then we ate it.

Tom Kubiak
Oh, no.

Ian Robertson
It wasn’t alive.

Tom Kubiak
Oh, yeah. You told me you were, it was alive when you bought it?

Ian Robertson
No, it wasn’t alive.

Tom Kubiak
Yeah, no. When did you get it just just recently or a little while ago?

Ian Robertson
Oh, it’s probably a couple months ago now. But it’s amazing how quickly..

Tom Kubiak
Okay, have you eaten all of it?

Ian Robertson
No, no, no. But it’s amazing how quickly it goes when you’re just smoking meat day in and day out, you know?

Tom Kubiak
Oh, yeah. See, we get a pig every year. And you know, we’ve gotten to the point where our freezer is full of pork, because we don’t eat it as much as we probably should. But you’re gonna do a cow at some point. Aren’t you? Full cow or half a cow?

Ian Robertson
Usually half. Yeah, a full cow’s a lot. Oh, we do a cow every year, we have a cow.. Tell us what you’re going to do. I want to be in on it. Because we haven’t done a cow. We haven’t found a place to do a cow. And I want to do it. Yeah. So if you’re listening in on the show, and you’re from the city, that’s what we do. We go and we buy.

Tom Kubiak
This is the country.

Ian Robertson
Yeah, this is the country, we go and we buy halves of animals and we split it, we’re like see that cow over there. Let’s cut that thing in half, down the middle. So it’s not like you get the back end and I get the front end.

Tom Kubiak
Like Dwight, we created an invention that allows us to get six hamburgers or 12 sliders.

Ian Robertson
Exactly. We wanted to slip more Office references into this podcast. You know, speaking of Dwight, who owns a house, again, another great segue.

Tom Kubiak
Actually a beet farm, not not just the house of beet farm.

Ian Robertson
A beet farm. Okay, we’re not going to talk about the beet farm market today. But we’re actually going to talk about the housing market. So interesting if you do a housing market podcast or a housing market anything, the snapshot in time is so small.

Tom Kubiak
Yeah, true.

Ian Robertson
If you listen to this podcast, even just a few months from now, or sometimes even days or weeks, or a year from now, whenever, it’s all going to be completely changed, especially now because the market has been nuts. And I podcast on this in other in other forums too, because actually, I’m in I’m in the real estate industry, both locally and nationally and internationally with if you count Canada, and we podcast on this quite a bit. So it’s a subject that I’m pretty familiar with.

Tom Kubiak
Yeah, I think this subject actually is is right within your wheelhouse. So it’s interesting, but before we get down that path, what are you drinking tonight?

Ian Robertson
So I went again, a little bit overly local. I have a friend that I’ve learned a lot about winemaking. He’s been making wine since he was a little kid. He’s Italian. His father made wines, grandfather made wine, he can just go back and he has wine techniques that he’s done for generations. So he showed me a few things and he gave me a bottle of Zinfandel.

Tom Kubiak
That he made? Okay.

Ian Robertson
That he made and this is a 2016 Zinfandel.

Tom Kubiak
Red or white?

Ian Robertson
First of all, Zinfandel is actually a deep red wine. Typically, this is the standard Zinfandel. Okay, but when we get Zinfandel in the store, it’s usually like a rose, like almost blush, and it’s sweet, but that’s they take the skins out to to get that it’s actually one of the deepest red wines you can get sometimes.

Tom Kubiak
Ah, interesting.

Ian Robertson
And it’s dry typically. But, yeah, you crush these grapes back in 2016, and he does what’s called cold maceration. So, that’s a fancy way of saying you let the skin soak for a longer period of time, okay, and the skins and the pulp and everything breaks down even farther. So you just suck every last bit of tannin out of those skins and it makes a wine that it’s got a lot of meat on the bones, you know?

Tom Kubiak
Oh, interesting.

Ian Robertson
Yeah, it’s not for the average person, like he gave this to me I think knowing, you’ll get it and I drank it, I’m like, I get it.

Tom Kubiak
Okay. Oh, nice.

Ian Robertson
Yeah, Zinfandel. That’s what I’m drinking. How about you?

Tom Kubiak
I’m drinking a 12 year old Deveron, which is a highland Scotch, doing my smell test. It smells good. Not quite as, as strong as.. I think the last one I drank was maybe a 21 year old which is, you know, obviously, it’s sitting in the barrel longer, it’s gonna be a meatier. So it’s got a little bit less mouthfeel, it’s a little bit more watery, but it’s good. It doesn’t have the astringent, you know, that you get sometimes. So when when you have a higher alcohol content, you get like a tingling on your tongue or a little bit of a stringency the I’m not getting that.

Ian Robertson
How much is a bottle of that?

Tom Kubiak
You know, I don’t know, this is something I’ve had in my collection that I just opened for the podcast. And that’s one thing. This podcast is forcing me to open all these bottles that I have never, that I’ve never tasted before.

Ian Robertson
Is that a good thing?

Tom Kubiak
It’s an awesome thing. Yeah, I shouldn’t just have bottles sitting there to look at.

Ian Robertson
And it’s not like it’s gonna go bad. You just cork it and put it back.

Tom Kubiak
Yeah, it’s good. I wouldn’t say it would be a daily drinker for me, but it’s not bad.

Ian Robertson
Yeah. Okay. So does it have bouquets of potpourri and all those kinds of things you usually say?

Tom Kubiak
It doesn’t have any of those bouquets in it. It doesn’t have, you know, an overpowering taste. It’s kind of watery tasting actually. Yeah, it’s not bad. But I’m used to single malts tend to have definitive, you know, bold tastes. And this one kind of is more mild.

Ian Robertson
Almost like a blended.

Tom Kubiak
Mellow. Yeah.

Ian Robertson
Yeah. So is this, is this something that you would recommend the listeners try? Or is it just kind of like?

Tom Kubiak
Yeah, you know, and that’s actually a good thing. This is a Scotch probably that wouldn’t offend anyone. So I’m assuming that when people go into a store, and actually we were at I was at a little group of guys gathering, we’d sometimes we’d go get a beer and hotdog together with some friends. And one of the guys that was there said, you know, he wants to try to drink scotch but doesn’t know where to start. And it’s intimidating if you’re in a liquor store, you’re standing in front of all these scotches, and you don’t really know what to get, and you’re gonna spend $75 on a bottle. And if you don’t like it, it’s just gonna sit there. So this is one of those scotches that probably wouldn’t offend anyone. So it’s similar to Glenlivet, or Glenmorangie something that is easy to drink, and it’s not going to end up, you know, sitting on a shelf forever. Whereas if you buy a Lagavulin, you know, unless you really liked peated scotches, you’re probably not going to go back to it.

Ian Robertson
Yeah. Things like Lagavulin, and things that are a little more niche are definitely deep end of the pool. So that’s an introductory scotch. So that’s good to know. Okay, definitely.

Tom Kubiak
Yeah. Deveron 12. But it’s probably going to be hard to find. It’s not something that’s common.

Ian Robertson
Okay. Well, if you can find it, it sounds like a good scotch then. Yeah.

Tom Kubiak
But going back to what you said, about the housing market, and how, you know, this is a very moment in time type of thing. So, you know, we could see changes in the housing market six months from now that are or maybe even less that will make this podcast? irrelevant, irrelevant, irrelevant. We could do a Max Headroom. For our younger listeners, they have no idea what that is.

Ian Robertson
Like, who’s Max Headroom? Is he a TikToker?

Tom Kubiak
The interesting thing is some of the pressures that the housing market is facing right now are very time specific, you know, roll back the clock 18 months, and we didn’t have the interest rates where we do right now. For instance, you know, we were looking at an interest rate market where 2.75% was a common mortgage rate of 2021. But now we’re looking at a mortgage rate of 7%. With it likely to be even higher than that. And that is a significant difference from where we were just a couple of years ago. So even if income hasn’t changed that much, or even, realistically, even if you have an increasingly better financial situation, that factor alone keeps people out of the housing market.

Ian Robertson
Yeah, you know, and people who tend to reference the interest rates were like lower interest rates, raise interest rates, my position on it, and I was reading an article, I read Forbes a lot for and Zillow and realtor.com. Those are my three mainstays for a lot of my real estate information. And then I also trail off on to a lot of others and, and everything, put it all together. I don’t think it’s as simple as a lot of us try to make it out to be because it’s not a matter of interest rates. It’s a matter of housing shortage.

Tom Kubiak
Well, those are two factors, right that affect people? Yeah.

Ian Robertson
Two factors. Yeah. Right. But let’s say you made interest rates zero today, you still couldn’t get a house. So it doesn’t matter if interest rates right now or 30% or zero. There’s just not enough houses on the market.

Tom Kubiak
Yeah, but I think even that statement is not as simple as what it sounds like. Because one of the reasons there are not enough houses is because a person who has a 2% or 3% loan is not going to list their house, even if they want to sell their house, they’re not going to be able to because for them to transition, even into a house of similar value is going to increase their costs because of the higher interest rate for the next mortgage. So that interest rate environment stops people from being able to buy and actually realistically stopps people from being able to sell.

Ian Robertson
Yeah, no, that is actually a really good point. And one of the articles said that, well over half, there’s estimates well over half the people that own a home right now have interest rates, well, under 6%. I think it was like 70% of people or 60% of people, because I mean, you had you had everything all the way back when the great recession. The US hasn’t hit interest rates at six to 7% since the Great Recession, right? Yeah,

Tom Kubiak
I would say probably, yeah, 15 years, at least.

Ian Robertson
So anybody who’s bought a house in the past 15 years, or more importantly, refi’d. So if you refinanced your house. So the vast majority of people out there are sitting on interest rates well below what they can go get a new house for. So now you they call it something judiciary moves or whatever, basically, you move just because you want to, those are at an all time low. Now people only move out of necessity, or sell out of necessity, somebody passes away and you sell the estate, you get a new job, and you have to go buy a new house in a different area, that really limits the market. So I come from the home inspection industry and the home inspection industry is actually suffering right now.

Tom Kubiak
Oh I believe it.

Ian Robertson
It’s a perfect storm of problems. So you go out to Grand Rapids, Michigan, this is going on, I don’t know, maybe eight to 12 months ago now. Home inspectors I know there went out of business and the one guy said go look online how many houses are for sale in Grand Rapids, was a little over 220.

Tom Kubiak
In the entire metro area.

Ian Robertson
Yeah, in an area of 600,000 people.

Tom Kubiak
Wow.

Ian Robertson
I’m like, I don’t know how anybody can stay afloat 200 inspections, or 200 houses would be inspections enough for to keep maybe a few companies alive. But so he went out of business, he ended up retiring. But then of those houses there, the vast majority are starting, were at that time skipping inspections. And then now they’re doing that again, because if you want to make an offer, you have to make the offer look good. And one of the things they do is they take away the inspection contingency, we won’t inspect the house, or we will inspect the house, but we won’t negotiate on anything. And that’s created a lot of liability. There’s lawsuits going on right now, all over the country, Massachusetts is actually trying to introduce a law that will not allow you to remove the inspection contingency. And you have to give them, every sale they don’t require the inspection. But they require the contingency to be in there. And that hasn’t passed yet. I don’t know if it will at all, but they’re one of the first states to make trying to make it mandatory. Because of all basically it creates a ton of legal liability. But that just shows you that that’s a very niche part of the market. That just shows you how bad things are. And it’s very regional.

Tom Kubiak
Yeah, it’s an unusual, you know, cascade of effects. So you’ve got, you know, you’ve got the downturn in the economy, at first, reduced people’s ability to be able to buy a house. The second thing is you’ve got the increasing prices of houses, just because of the boom in real estate values, which now means that a lot of people are, you know, boxed out of housing for that purpose. And then the third thing is you’ve got the, you know, the inability to, you know, get reasonably cost, reasonable financing. So as a result of that, now, and I think what my thought is, as far as what’s causing the current problem we have is that your, your funnel that normally would be catching all of these people selling their houses is just turned into a trickle and there’s nothing going into the funnel. So as a result of that, there’s nothing available for people to buy. So even if you have the money, and even if you can afford, you know, the house purchase at current interest rates, you have a very small pool to choose from. So as an example, you know, my wife and I just keep an eye on housing, you know, because we live in a townhouse. We’ve been here for about 17 or 18 years. And we would like to find something that’s one floor. So I search on Zillow, every so often, for one floor for ranch houses and there just is nothing that comes up, like it’s it’s hard to find anything.

Ian Robertson
But here’s the thing. I mean, how do you fix that? Because every year this has been going on now for a couple of years. The housing shortage, every year it goes on, all we’re doing is building more buyers and more buyers come into the market, but not enough houses come on the market to handle the buyer. So there has to be some catastrophic event that causes people to sell their houses in mass to make it change because right now, it’s a very basic principle of if you have five diamonds and 10 people, those diamonds become very expensive. You have two diamonds and 10 people now, they become a crazy..one diamond 10 people and they all want that diamond. You charge whatever you want. So there’s a house down the street from me and I use this as an example a lot. One story house, starter home. So that’s the problem is there’s no starter homes right now, you have to make like 70 to $100,000 a year to afford the average starter home now. But the average median income for a family in the US is like $66,000 now, so it’s like.

Tom Kubiak
Yeah, they’re priced out of it.

Ian Robertson
Yeah, so you price out everybody. Now you have guys on Wall Street. They’ve been buying up houses for the past two years, single family homes, because of what I’m about to tell you. Well, you know this. House seven years ago would have gone for about 140, 5 years ago maybe 160, 169. It sold a year and a half ago for $300,000. Wow, that’s crazy. It was nuts. There’s houses around me that are selling for double what they were in 2019, double or more. I’m seeing houses that are fixer uppers. I’m like, Oh, well, that’s a that’s a finally a normal price for a house, I saw houses like 380 or 360. And I look and I’m like, it was almost a teardown. And they’re like, great piece of property. Handyman special, which means gut the whole place. I’m like, Yeah, you gonna put 150 grand into this thing. And it’s still just a standard 1600 square foot house.

Tom Kubiak
Yeah, my brother and his wife had the exact same circumstance, they built a house and sold it and did did really well on buying it. But then they’re, they’re transitioning into something else. And they literally put offers in on 15 properties. And they were continuously getting outbid. Finally, they found one, paid the asking price. But they went into it knowing that they had to renovate the entire house and what they’re paying for the house is more than what they should be paying for it, like it should be done. But there’s just nothing out there.

Ian Robertson
So that creates another issue though a lot of people are buying these houses because they’re desperate for some place to live. So apartments are hard to come by in a lot of parts of the US and Canada right now. So they’ll buy a house, and they’re like, oh, we’ll fix it up ourself. And they may not have the skill, they watch YouTube, they mess things up, things get more expensive than they anticipate. Now, they have a house they can’t afford, they walk away from it. And instead of getting foreclosed on, it just gets sold to the next person, they kind of facilitate a vicious cycle of basically not being able to renovate and finish the house, how do you go get a loan, let’s say you make $80,000 a year and you finally get a house, but it’s a renovation, and you need to put 100k into it. But that 100k turns into 150k, you just stop, you don’t have 50k. And the bank’s not gonna be like, Oh, you just miss miscalculated. Let’s give you another 50k.

Tom Kubiak
The other issue that I have is a lot of new buyers. And you know, I’m a tax account, when we advise clients on, you know, what their ability to buy a house is, or what they should think about when they’re buying properties is to come in with a 20% down payment. But that happens so rarely, most people are are using every dollar that they have to buy the house. And as a result of that and and on top of that they’re getting a mortgage for almost the entire value. So they are savings poor, after they close on that house. And the inevitability, you own a house, I own a house, you know, something’s gonna break. And as they can’t afford it, it ends up cracking them financially.

Ian Robertson
I’ve been an inspector for almost 20 years, and the vast majority, all but I would say 98, 99% of my clients were buying at the very maximum of what they could afford. And they were always stressed during the inspection. Because they’re like, I can’t afford this. I’m like, Listen, if you can’t afford a doorknob and three light switches..

Tom Kubiak
Don’t buy it.

Ian Robertson
I would never tell them that. But it’s like, you know, there’s also a mentality too, like there’s a you know, we have a TikTok channel now, so sorry, everybody on TikTok, but I call it the TikTok mentality.

Tom Kubiak
Yeah, true.

Ian Robertson
You see your contemporaries living in a nice house. And subconsciously, that puts in your mind, this is the house that I should have. So what maybe me and you when we were younger, would have bought and quote unquote, settled for, we would have been okay with and at the time, it was like, oh, cool, yeah, fix it up. And now it’s like, I want it move in ready. I want hot nine foot ceilings, and I want this and I want that. And there’s very high expectations. So if they get a loan that says, you know, it should really buy in the $225,000 range, but we can give you up to 360. They’re buying a 359.

Tom Kubiak
They’re buying them, that’s a terrible decision. I had a client the other day telling me you know, she has a small business, which is not profitable. And she’s saying she you know, she wants it to be profitable, because she’s going to be able to she wants to be able to get a mortgage to buy a house in this affluent area. And as a result of that, she’s going to do everything she can to get the business to show a profit even if it means she doesn’t claim some of her expenses, which bottom line is not the right thing to do. Like that’s, that’s not, you’re cheating the bank basically. But I’m more concerned about what’s going to happen the day after she closes on the house. If she can’t, you know, pay the bills, she’s going to lose the house like that. That doesn’t make any sense to do that. But that’s unfortunately, your your comment about the mentality of people. That’s what’s happening. Like they’re not. They’re not, well, and I think part of it is that they don’t want to buy the starter home anymore. But the second piece of it is there are no starter homes available that are reasonable cost.

Ian Robertson
Well, and maybe this is a generational thing. It’s going to be old guy Ian talking.

Tom Kubiak
Did you ever think you’d be saying that, old guy Ian?

Ian Robertson
Oh, I’m an old man, I, you know, I was an old man when I was a teenager, my friends would be like, let’s go to a concert. And like 8:30pm. And I’m like, okay, show’s ending, let’s go home. And we’re like, no, that’s just intermission. They got an encore, that was just the opening band. I’m like, Oh, my gosh, I want to be home, sitting on my couch. But it really is a problem that we cannot fix things and work on things like we used to. So your generation and my generation, my generation, most of the guys that I hung out with, most could not work on their own house or fix things. It was starting to dwindle. But like guys that were older than me, most of them and their friends could figure stuff. I’m not saying that people nowadays can’t figure it out, you have YouTube and stuff like that. But it’s part of owning a home. So my house is well maintained, I can fix about anything. And just in the past month, my basement flooded from a freak broken hose. And it traveled down an underground sidewalk that a previous owner had put in and just buried and went down the pipe and flooded my basement, who could have predicted that. Some, I needed some mold remediation, because we had torrential rains for three weeks, and it went into a crawlspace that was normally fine. And it just soaked the ground and the water I had nowhere to escape. I know how to do that stuff. But you know what, I still spent $500 in equipment and materials, it still takes me, you know X amount of time, if you paid a guy to do that mold remediation that I did, 3500 bucks, and then you still need a mold assessor,

Tom Kubiak
Or more.

Ian Robertson
Or more. You know, it adds up quicker than people realize, stuff breaks all the time. So YouTube is great, but you can’t YouTube a lot of the stuff.

Tom Kubiak
No, well, and I think, in some cases, people are not inclined to do that, you know, and this, this goes back to the whole discussion about, you know, what are you comfortable doing. And I think you and I both have the same kind of characteristic, like, we’re not afraid to try something. So if something in my house breaks, I might not know how to fix it, but I’m not afraid to try it. You know, I’m not afraid to look up what to do and to, you know, do my best to fix it. That’s my first inclination. Same thing on my car, if something breaks on my car, my first inclination is I’m going to, I can fix it myself. But a lot of people today are not inclined to do that. But secondly, and more importantly, they don’t have the savings to be able to fix it. And that that’s the thing that really can break them. So that’s why I really recommend strongly. If you think you’re gonna want to buy a house, the best thing that you can do is to start paying the bills of owning a house. So if you’re, if you’re renting a place for, you know, 1200 and you and you say well, we can afford a mortgage for 2000, well start paying 2000, you know, right now. And what will happen is that extra $900 a month that you’re paying in, put it in a savings. And you’ll start to see the cracks in your finances. And you’ll start changing your behavior. You won’t eat out three nights a week, you won’t, you know, you won’t go to the movies, you won’t do things. And that’s what’s going to happen when you buy that house, is you’re not going to have the ability in your budget to make those payments.

Ian Robertson
Yeah, and that’s a beautiful point. So if you’re paying $1,200 And you think you can afford a $2,000 mortgage, take that and add $400 on to it. Perfect. So you’re an accountant. Yep. 2000 minus 1200, actually 800, Tom, so.

Tom Kubiak
Sorry, I couldn’t remember if I said 1100 or 1200.

Ian Robertson
You may have said 1100. Oh, well, either way, add $400 on a month for stuff. So now there’s stuff that you’re not going to think about, like trash pickup.

Tom Kubiak
The stuff that you called your landlord for.

Ian Robertson
Yeah, exactly. So trash pickup, you know, trash pickup was part of my taxes where I lived before and I moved to a new house and they’re like, no, oh, and by the way, there’s a sewer fee. And your, your taxes are X amount of dollars per year. So add up your taxes, take $400 for all the little sundries and things breaking, you’re going to end up with, like 1500 to $2,000 a month on top of your rent. So now take that, let’s say $1,500. By the end of the year, that’s $18,000 If you can save that, not only will you have $18,000, but now you prove that you can own that house.

Tom Kubiak
You can prove that you can do it right. Yeah, I 100% agree, but we live in a generation that wants it today. And when you know, they’re looking on Zillow, and they’re looking all these beautiful houses that are $500,000 and the disservice is the bank tells them oh yeah, based on your income, you can spend 350,000. But that’s the maximum with nothing breaking ever and no costs going up. And that’s just not realistic. Taxes alone are gonna go up every single year, they’re gonna go up, sometimes they go up 10%. And you don’t have that much room in your budget.

Ian Robertson
And then you have to think about if you live in a colder climate, heating fuel.

Tom Kubiak
Yep, heating costs are crazy.

Ian Robertson
Is it oil or natural gas, electric. If you live in like Florida, you’re going to have hurricane insurance, you’re going to need to get a windmit.

Tom Kubiak
Which interesting, a lot of those homeowners insurance companies in Florida are leaving the state.

Ian Robertson
Citizens is pulling out.

Tom Kubiak
Saying that they’re not renewing policies, like that’s a significant problem.

Ian Robertson
Is it citizens that’s pulling out. I know, it’s one of the big ones.

Tom Kubiak
I think it was Citizens. I think there were two insurance companies in the past couple of months that I’ve seen, said they’re not renewing policies in Florida, which is only going to drive the other companies higher. So anybody who stays now says, Hey, we can charge more.

Ian Robertson
And there’s all sorts of crazy stuff. If you’ve never dealt with it. It’s like, and I’m not downing anybody that can’t fix things, because maybe that’s not how you were raised. I got shoved outside with a shovel and said go go do this kid, you know, but it’s also a matter of just not knowing what to do in a situation. I remember one of the first things that happened. When I moved into my house, brand new sewer system goes out to the road. I’m like, Oh, beautiful. There was an air gap issue, long and complicated story. But basically, there was an air gap. So I had to open both ends of the pipe to let the air gap through. So I open it all sudden, you hear a big rush of air, and it drained out. But before that happened, poo water shot out of one of my one of my pipes. It was coming out of the drain for the washing machine. But I knew exactly I’m like, Okay, this is what we do. And if I didn’t know that, you just have poo water everywhere. And now you’re hiring a plumber at 100.

Tom Kubiak
You would have ended up spending yes, 600 bucks to have somebody do that for you.

Ian Robertson
Yeah, exactly. So it’s..but I’ve been an inspector for 20 years. You know, I can’t do that on my car, a mechanic might give a might give a podcast on owning an older car, you know, these home inspectors, they can’t fix their own car.

Tom Kubiak
But I think if you wanted to fix your own car, you you know, you’re the type of person that could figure it out and do it.

Ian Robertson
No, no, I can. I’m just making an analogy or a hyperbole or whatever you want to call it. But another issue is it started it keeps getting farther down the line. They’re counting on home builders to save the market.

Tom Kubiak
To build more.

Ian Robertson
To build more. And that’s that’s always been kind of like a fallback. Like, okay, builders, let’s build more. But the builders were crushed, a lot of them were sold, selling houses, a common friend of ours bought a house that cost him a lot to build it. And the builder basically just broke even on it. And he’s like, You bought this and he built it and building materials went crazy. Remember when it was like $100 for one sheet of three, three quarter and one three quarter plywood there. And it was nuts. And so a lot of these builders lost a lot of work. And also, they’re having a skilled worker shortage.

Tom Kubiak
Yeah, agreed.

Ian Robertson
So I go down to my bank, and they have a sign on the door saying we can’t find enough people. So we’re only open from, I think it’s like nine to, nine to 11. And then three to five.

Tom Kubiak
Wow.

Ian Robertson
And then we talked about this another podcast go down to the Wendy’s down the road. And half the time they’re closed because they can’t find people. So it’s not only a worker shortage, but a skilled worker shortage. These builders can’t find enough people that want to put a nail gun in their hand.

Tom Kubiak
Yeah.

Ian Robertson
You know, they can’t find a plumber. They can’t find tradesmen.

Tom Kubiak
And I think what you’ve got is each one of these things, interest rates, you know, the, you know, instability in the economy, the lack of, of supply, the increasing demand, the lack of skilled workers, all these things have contributed to be, you know, to be a tsunami of effect on the housing market. And as a result of that, if you’re looking for a house right now, you’re you’re feeling stressed.

Ian Robertson
You’re gonna overpay, there’s no way around it.

Tom Kubiak
Yeah. And you’re gonna overpay yep.

Ian Robertson
Yep. Yeah, you just have to, have to count on that chart going up, even though you’re gonna overpay, eventually, it’ll come back down, and you’re gonna feel it, and then it’ll go back up, but you’re gonna overpay no matter what.

Tom Kubiak
But I do think that housing prices will eventually stabilize or decrease.

Ian Robertson
So here’s my concern. I feel like the average American and average Canadian have now just been completely priced out of the market. And I don’t think it’s going to go down drastically enough to fix that.

Tom Kubiak
I feel similarly. Yeah. Yeah.

Ian Robertson
I forget one of the US economist’s was talking about that, and I can’t remember which one, but he was saying we don’t see any, any way for it to drastically go down again, because the demand for housing is so high and it gets higher every year that you know, 10 people to that one diamond, the next year, it’s 12 people to that one diamond, then if you get five diamonds, but the 30 people, it doesn’t fix the problem, it’s just always going to keep the perceived value of that property up.

Tom Kubiak
Agreed. And I think like we said, there’s factors, more than one factor in this, if it was only interest rates, and you could wait out interest rates or artificially lower interest rates, you’d solve the problem. But it’s it’s a multitude of factors that are creating the housing market problem. So you can fix one or even two of them, but you’re not likely going to be able to fix all of them at once. And in certain cases, even if you fix them, it’s not an immediate response. So for instance, with interest rates, the first thing is you can’t fix interest rates independent of the economy. So you need a persistent length of time where the economy is decreasing for interest rates to come down. So that’s going to have a negative effect on the economy, on buying power, at least it might, you know, make more availability there. But it’s going to create a negative trend for people’s buying power. And once that happens for a little bit of time, then you’re going to start to see interest rates come down. But in order to get back to where a person can feel comfortable, giving up a 3% mortgage to transition to something else, they have to come down a lot. So we’re decade off from that probably at minimum.

Ian Robertson
Yeah. And that’s a sad reality of things. And anybody looking for a house listening to this podcast, their hearts just dropped. But that’s unfortunately, they they kept the interest rates too low for too long, in my opinion. Because all that did was get everybody situated in their house. And they’re never going to move until it goes that low again.

Tom Kubiak
No, no incentive.

Ian Robertson
No incentive, even like, they’re counting on a lot of like Baby Boomers to start moving. And some of the older generation, but they’re unusually hanging on to their homes more so than previous generations.

Tom Kubiak
Well, I would differ with you a little bit on that the previous generations thing, because think about your grandparents, like they lived in their house the entire time, like my grandparents, they never moved, they lived in their house the entire time I knew them. So 50 years, 60 years. So I think the the concept of moving frequently is, is more recent than our grandparents, maybe our parents, and more likely than actually even, you know, our generation, our generation tends to move more. Our parents tend to stay, you know, our grandparents and our parents tend to buy a house and stay there for a long period of time, whereas us, and the generations following us don’t. So I think what we might see is we might see more of that, where you buy a house and you stay in it for a long time. And there’s no more starter homes. I don’t know that, you know, definitively. And I think that that would require a change in the standards of people because, as you mentioned, the TikTok generation, they can’t accept the fact that I’ve got a starter home and I’m gonna live there for 30 years. That’s not part of their makeup.

Ian Robertson
Yeah, I know. And that’s kind of kind of a sad reality of things, you know, on a different podcast, President of InterNACHI, which is the largest association of home inspectors in the country, and he is actually the, in the world rather. And he actually owns IREP, or runs IREP, which is one of the up and coming associations of real estate agents. He made an interesting comment, he goes, we’re seeing a marked change in..this isn’t exact, is not an exact quote, we’re seeing a marked change in how younger people, people perceive home. So he’s older, he’s like, 60, and his wife is like 34. So that’s a funny story. Yeah, that’s a funny story. But I’ll let you all do the math, but he laughs about that. But he goes, my wife, he goes, she couldn’t care less if we owned a house. She cares more about life experience, where she is what she do, what she’s doing. And he’s like, for me and my generation, I want to be home, and that’s like pride of homeownership. And he’s like, statistically speaking, or anecdotally, or however he was talking about it, he went on and elaborated on the fact that the younger generation doesn’t view homeownership, like, my generation and your generation. You know, it’s not a life goal anymore. Some people it is, but they oftentimes view it as..

Tom Kubiak
But not the way it was for previous generations.

Ian Robertson
Not the way it was for previous generations. Yeah, it was a family affair. You celebrated it. Now. It’s, oh, okay. I invest in real estate or I have children. So I’m going to move here, but then we’re going to move there. And oftentimes, I mean, it’s the whole van life culture. That’s all you see on TikTok and stuff. Everybody living in vans, like when I was a kid, if you lived in a van down by the river, you’d be eating government cheese. And now people are doing it on purpose. You know, it’s a completely different world.

Tom Kubiak
Matt Foley, motivational speaker was pretty inspiring.

Ian Robertson
He inspired an entire generation to live in a van down by the river. But it’s interesting. I almost wonder if that’s going to eventually, I think your 10 year mark, I think that’s actually I think it’ll get better year over year. But to turn to anything that we could call normal, I’m agreeing with you on the 10 year mark.

Tom Kubiak
Yeah, it’s quite a ways out. Yeah. And it’s a different, you know, it’s a different set of circumstances for, you know, young people who are coming into a housing market expecting that they’re gonna find something like their parents did or like that, you know, like has happened in previous generations. And it’s just not, it’s not realistic. It’s not realistic. It’s, it’s got to be a change in mindset.

Ian Robertson
So this was a depressing podcast, Tom. But it’s a real one.

Tom Kubiak
Yeah. Well, you know, like we said, it’s, it’s very time specific. So, you know, it’s similar to our situation, our discussion on AI, either six months from now, we’re gonna have another discussion. And we’re gonna go back and say, you know, how, how does the current situation compare to what we spoke about, you know, a few months ago.

Ian Robertson
To be honest with you, it was a completely different situation a year ago, two years ago, three years ago, so we could be completely wrong, and things could completely change. But it’s definitely a wild market. So if you’re buying a house, and you’re having some troubles, you’re not alone, bear with it, maybe make some adjustments in your goals and expectations even, possibly, and just work with what’s out there. Nothing wrong with living in an apartment. At the same time, it’s, it’s kind of hard to find an apartment now.

Tom Kubiak
Well, that’s yeah, that’s another set of circumstances. But I would say that’s exactly what I was gonna say is just change your expectation. So don’t view homeownership as like the path to happiness, because it’s not realistic right now. So instead, focus on you know, have living a financial life that is reasonable and wise, and building habits, that will end up helping you down the road and wait out the market. You can keep looking. But don’t, don’t end up getting yourself into circumstances that’s going to be costly for you down the road, because you’re just at the top end of your financial capacity.

Ian Robertson
Good advice, Tom. Thank you. So after that depressing situation, that was a nice pep talk. And can you take us out on a joke?

Tom Kubiak
I will, you know, my, you know, my, my tendency to have bad jokes. So I found a good home repair joke. Okay. All right. So what did the Guardians of the Galaxy say when they were retiling the bathroom?

Ian Robertson
I don’t know.

Tom Kubiak
I am grout.

Ian Robertson
That is terrible. That’s not even. That’s not even a bad dad joke. That’s just terrible. Terrible. Okay, so if there’s any real estate agents listening this, this, only you’ll get this. If you’re ever lost on a desert island, and you made a little sign that says SOS, and nobody’s finding you, you can get found very quickly by changing that to FSBO, F-S-B-O, which means for sale by owner, and then every agent in the world will save you.

Tom Kubiak
I’m not a real estate agent, but I get the joke.

Ian Robertson
Yeah, so if you’ve ever tried to sell your home, I have to explain the joke now, if you ever tried to sell your home without an agent, all you’ll do is have agents calling you every day telling you that they can sell your house.

Tom Kubiak
Tell you what they could do for you.

Ian Robertson
Yeah. I can’t end on that one. Attorney joke. What do you call a bus full of Real Estate Attorneys driving off a cliff?

Tom Kubiak
Well, thanks to Michael Scott. I know the answer is, a good start.

Ian Robertson
A good start. Exactly. Office references, sneaking them in.

Tom Kubiak
Thank you for The Office reference.

Ian Robertson
All right, everybody. Thank you for listening to Drinking With Tom. And Tom, thanks for having a drink with me.

Tom Kubiak
Ian, thanks for having a drink with me. Talk to you later.

Ian Robertson
Later.