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鈿★笍 What James Harris of Million Dollar Listing thinks about the residential housing market... - YouTube
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Hey, everybody, is Ken McElroy
and Danille. Hello.
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So I'm super excited to have our guest,
James Harris.
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So he's killing it out in California.
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And he's obviously,
people probably know you.
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James has $1,000,000 listing.
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You got a you've got a lot of fame
and notoriety out there.
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You're selling a lot of really
expensive homes to a lot of celebrities.
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And so I was excited to talk to you
about the high end market because,
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you know, for those of us
who art in a high end market,
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a lot of your clients, former clients,
future clients are you know, they're
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they're bouncing out into other markets
and they're buying other
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in other markets
all cash, you know, with their equity.
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And so welcome first of all,
thank you so much and happy
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to be here and excited
to have a chat with both of you.
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So I know we talked about,
you know, you've sold homes, obviously.
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The funny thing is you sell as low
as 1 million as high as 120 million.
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So what's interesting about that is,
you know, in a lot of markets that I know,
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this is certainly not in yours
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1 million as your floor
is a lot of people's ceiling.
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So, you know, what's it like to you know,
and I know you came from England
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and didn't know anybody.
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And, you know, often
what's really cool is your
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your partner,
your childhood friend from from England.
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There's a lot of cool dynamics in stories.
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So give us a little bit about your story,
your background
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and what you're up to now.
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Sure.
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So, you know, we started in the business
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or I started in the business in London
right out of school.
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So I definitely tell people
that school wasn't for me.
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I didn't like it.
It didn't get me excited.
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Unfortunately, I was an academic,
but I was always hungry to make money.
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And I just did whatever it took
to kind of learn the market,
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learn the industry, learn how to transact.
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And in my first two years,
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I did residential and my second two years
I did commercial.
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And then I moved to Los Angeles
when I was 21.
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And we've had our business out here
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for the last 11 years
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and you just never know who you're
dealing with or what it might turn into.
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So we never turn our nose up at anything
no matter what the price point is.
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And we service
each of our clients in the same regard.
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And I believe that's the best way of
of running a business in any business
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for that matter.
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What did you see in 20, 21 that was much
different than you'd seen previously?
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A lack of sleep.
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No, you know, in 20, 21
and look really going back to COVID.
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You know, I remember when COVID hit
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and it was around March time
and I was sitting in my office
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looking at a computer screen
wondering if we were about to hit
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a similar recession, wondering
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if I was ever going to leave my house
and sell a property ever again.
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And I was terrified
and didn't know where it would lead.
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And there was so much unknown back then.
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And then about six weeks later,
it was like we came out of our house.
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It was like there was like
the world was still there.
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And then, boom, it just took off.
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So really, it
incorporates 20, 20 as well as 20, 21.
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You know, we've got these historic
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interest rates at an all time low
or extremely low.
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Borrowing is is next to nothing
for the buyers out there today.
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Inventory is incredibly low.
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But what's interesting through COVID
is that buyers are
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realizing things about themselves
that they didn't even know
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the way they lived, where their kids
go to school, where they go to the gym.
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Do they work from home?
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Is the husband and wife
going to have two separate offices?
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Do you want more security?
Do you want Gates?
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Do you want a second home, a third hug?
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The way we think has just changed
so drastically
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since COVID that it's created
this crazy real estate market.
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And then you think lack of inventory
and low interest rates and all of that
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has just created this pent up demand
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and the market has gone absolutely insane.
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So 20, 21 was a record breaking year
for us
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among many in our industry.
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And I think coming into 20, 22
for as long as rates stay low,
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I think we're going to see that trajectory
stay the same and continue to rise.
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We'll see what happens.
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You guys probably track interest rates
closer than I do, but it's
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certainly going to be very interesting
to see what unfolds.
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And have you noticed a big change as far
as that with like inflation as well?
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Yeah, I mean the cost of living
has gone bonkers.
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We all know that inflation
is at an all time high.
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I think if you look at it overall,
the dollar is shrinking.
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The cost of goods and services are rising.
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The country is in tremendous debt
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and the Fed just can't raise
interest rates too fast, too
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quick, otherwise will end up
in a similar recession as we did in 2008.
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So I think it's going to be
a very interesting ride.
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The Fed have said they will raise rates
three times, potentially up to five
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by the end of the year.
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And I
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just hope everything holds that
that's my my main hope here.
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What what are some of the things
that you saw, like
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what priorities moved up
based on your clientele?
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Because you deal with a very high end
clientele, even celebrity.
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How did some of their priorities change?
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You know, I think security was a big one
right off the bat, you know.
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You know, people look at, okay,
I'm going to cancel my gym membership.
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I'm not about to share the gym
with 300 other people.
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So it's having an at home gym.
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A lot of parents weren't necessarily
thinking,
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oh, my kids are going to go back to school
one day.
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So toning certain areas of the house
into a homeschooling area.
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People weren't going to the office.
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So you were seeing big bedrooms
change into offices.
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And now people are looking at homes
with double space
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for office, double space, the school.
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Again, all the developers
that are now building ground up
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construction,
they're now thinking of different.
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They're thinking differently
about how they're building houses.
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You're starting to see these
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as you again, those were once before
there were options right?
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Yes. Now they're actually things
that they're actually doing
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because they know
that's where the market's shifted.
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Absolutely.
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Not only are they
are they doing those things,
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but people were converting bedrooms
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to gyms, bedrooms to offices, movie
theaters, to home school areas.
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You saw everything
in anything you could imagine.
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And it was all in direct
correlation to COVID.
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And now things are getting better.
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And I'm just beyond joy to see that
things are getting better
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and the numbers are going down.
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But I think people are still thinking
differently in terms of the way they live.
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So as far as people moving
and the shortage of supply,
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why do you think all of a sudden
there was a short supply of houses,
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even though there was one before?
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It seems like it's much more
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pronounced now.
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Yeah, it's it's a great question.
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You know,
I think people aren't necessarily
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thinking about moving the ones that oh,
they're not thinking about transitioning.
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They're thinking about holding
a lot of people
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couldn't even afford to hold.
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But the government
put their mortgages on hold
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and they didn't need to make
those payments.
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Therefore,
they decided just to hold and not sell.
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But I think the inventory
is getting better
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and the market is becoming more fluid
in terms of transactions.
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But again, with these low interest rates,
most of these sellers say, okay, well,
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I can sell my home today.
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What am I going to buy?
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And then they're in this big catch 22,
I'm going to get this big number
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for my house.
It's probably going to sell 20% overall.
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It's going to go into multiples.
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I'm going to get 15 offers,
but what am I going to buy?
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And if you're talking to a family,
I mean, it's it's a big question.
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You know, we just sold our home and bought
a new one, and my wife just wouldn't
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let me put our current home in escrow
until we found a new one.
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So it is that catch 22, by the way.
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Smart wife, you know.
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Yes, yes, yes.
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It's let's let's find
a hope for our family.
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Before you left, let's the one you're in.
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I think that's kind of the issue
I found that, you know, to your point,
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people are looking for all these things,
but prices are going up.
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They have a lot of equity, but
they're not really making lateral moves.
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Here, are they?
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They're stretching again.
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Is that would that be accurate?
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That's very much stretching again.
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It goes back to low interest rates.
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People are scared
that they're going to get hiked up.
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So if I'm a guy who can borrow $5 million,
let's just say for argument's sake,
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I'm going to borrow
that full 5 million right now
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because my debt on a ten year interest
only I'm going to borrow in the twos.
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Well, at the end of the year from now,
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maybe it's in the threes,
maybe it's in the fours.
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So people are definitely trying
to capitalize on the low interest rates.
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So for those people, you know,
we get this question all the time, right?
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I'm waiting for the crash and waiting to
buy for the crash or for the adjustment.
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What do you tell them?
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You know, I got a client who's been
waiting for the crash now for nine years.
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Yeah, it's it's it's really interesting.
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You know, it's like
we don't have a crystal ball nobody does.
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It's whether you're buying crypto,
whether you're buying
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or whether you're buying real estate.
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Nobody has the crystal ball, right?
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We all look at the same fundamentals.
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We're all listening to the same analysts,
experts, professionals.
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I often say to people, certainly
when they're looking for their family.
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So I'm not referring to investment.
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I'm looking to family home,
which is also an investment.
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You have to look at the next 20, 30 years.
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And then if I go back to 2008
when we had the economic subprime crisis,
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most people that lost their homes back in
2008 had very toxic debt.
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So the way I see it is
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if you can buy a home now,
even if you're going to pay 10% over
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what you think it might be worth a 20%
over what you might think it's worth
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if you're holding it for the next ten,
15, 20 years and you have great debt
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and you can weather a storm
no matter what happens.
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Buy now and hold because sales
and real estate, it's all cyclical.
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We go up, we go down,
we go through market cycles
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and as long as you can buy hold
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and you're not going to end up
giving the keys back to the bank,
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put your family first.
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And don't think about the crash because
you're never going to time it, right?
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And when it does crash, you're probably
not going to want to buy then either,
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because then you're going to be trying
to find the bottom of the market and it's
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just a bad cycle
and you can't time anything perfectly.
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I'd love to hear
where you think things are heading
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so people
can kind of wrap their head around that.
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So as long as you don't hold me to it now.
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So I'm a very, very half full glass
kind of guy, my glass is always half full.
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So I'm a realist,
but I'm always very optimistic
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so if I were to give you my $0.02,
I think we're going to see the rates rise
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three times between now
and the end of the year.
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I reckon we see a three quarter of a point
raise between now and again.
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The end of 20, 22.
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I think inventory will become a little
more available as the year goes on.
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I think that if we see rates go up,
we hope that we see
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prices come down a little
so that it somewhat evens out.
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I don't want to see the market
keep going up.
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I want to see the market levels.
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I think we're already starting
to see that.
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And I just want, you know, the market
to continue to remain steady
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by the end of this year.
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I think we're going to see again rates up
probably around that point inventory
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more available.
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But I do believe the buyer demand
will remain in place and I do believe
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the market will remain strong
and what's the what's the best way
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people can reach you if they're interested
in getting more information?
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Absolutely.
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James, at the agency, our ecom is my email
you're welcome to reach out via email.
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I would also love comments, feedback and
thoughts on read the blueprint outcome.
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We're very passionate about it.
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It's definitely a passion project
that we put a lot of time into.
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We're going to continue to do so.
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We've heard nothing
but great things so far,
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so I'm hoping that we're putting out
great content to the people to read
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and hope you guys enjoy it
and feel free to reach out any time.
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Well, we will for sure.
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We come out there every summer
and so we'll reach out then
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it's been a pleasure talking with you both
and thank you so, so much for having me.
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For sure, James, thanks.
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