Election Year Impact on Housing Market and the New ADU Grant Program With Fred Glick and René Pérez Jr. Of Arrivva

Fred Glick, a Broker, Real Estate Realist, and Founder of Arrivva, holds a stellar track record with over $2 billion in residential transactions while grounded in a lifelong passion for real estate. René Pérez Jr. is an adept Salesperson and Pricing Savant, who specializes in strategic problem-solving and long-term growth. 

Join Fred Glick, and René Pérez Jr., in the We Fixed Real Estate podcast by Arrivva where they share their expertise and insights in the constantly evolving landscape of real estate. Arrivva is a comprehensive real estate and mortgage brokerage, catering to qualified, motivated buyers, sellers, and mortgagees with a commitment to brokering with love, integrity, knowledge, a well-defined plan, and a transparent flat fee structure.

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Here’s a glimpse of what you’ll learn: 

  • The impact of an upcoming election on the housing market
  • Possible effects of political figures and legislative changes potentially affecting housing prices
  • The significance of job security, interest rates, and supply and demand as fundamental drivers of the real estate market
  • Attribution of U.S. housing market fluctuations to macroeconomic factors
  • Importance of considering local factors and long-term commitment in real estate decisions
  • New ADU Grant Program assisting homeowners in ADU financing and the challenges faced by the program
  • Details on the $40,000 ADU grant and income restrictions, with insights into financing and viability. Learn more about the ADU Grant Program: https://www.calhfa.ca.gov/adu
  • Issues with real estate startups lacking practical functionality and industry understanding
  • The duo offers assistance to startup founders to ensure innovative solutions are developed with a genuine understanding of the real estate sector

In this episode with Fred Glick and René Pérez Jr.

Join host Drew Hendricks as they explore the intricate world of real estate with industry veterans Fred Glick and René Pérez Jr. In this episode, they dissect the impact of election years on housing markets, debunking myths and focusing on fundamental factors.

The trio also navigates California’s New ADU Grant Program, discussing its $40,000 grant, income restrictions, and challenges homeowners face in converting properties into condominiums. The conversation wraps up with Fred and René sharing their frustrations about unrealistic real estate startups, emphasizing the need for collaboration with industry experts. Get ready for expert insights, candid perspectives, and a deep dive into the realities of the real estate industry on the We Fixed Real Estate podcast.


[00:00:00] Drew Thomas Hendricks: You found us on We Fixed Real Estate. I’m your host Drew Hendricks. We’re talking with Fred Glick, real estate icon. No response. And René Pérez.

[00:00:11] Fred Glick: I’m the real estate anti-Christ.

[00:00:13] Drew Thomas Hendricks: René Perez, the incredibly fly real estate savant.

[00:00:18] René Pérez Jr.: I don’t know if Fred realizes that him calling himself that is not a good thing.

[00:00:23] Fred Glick: You know, it’s, and then happy Antichrist Christmas to everyone. You know, I’m the Antichrist to the Realtors who have perpetuated, you know, all the stuff that they’re doing and getting in trouble for it now.

So I do something completely different than them. And that’s what makes me their antichrist, but consumers though, I’m Christ.

[00:00:48] Drew Thomas Hendricks: Anti NAR.

[00:00:50] Fred Glick: Right.

[00:00:51] Drew Thomas Hendricks: Talking about NAR, G N A R. We’re talking about NAR, the National Association of Realtors, but we have traded on that for the last few weeks. Today we’ve got a new topic.

The election year is coming up. And there’s this kind of old theory that I’m, or I, we’re trying to investigate what happens with housing in an election year.

[00:01:09] René Pérez Jr.: I think there’s, there’s a lot of differences and dipping on the market, right? Like when you talk about like California, for example, you live in a world where, like, it doesn’t matter who’s going to be president because people still want to live here, right?

And pay that California tax. Right. So elections don’t matter in that regard. And actually, I think so the reason we brought up this conversation was because someone asked us like, “Oh, I think we should wait and buy closer to the election because I heard that house prices go down in election years.” And if you look at it like from a Bay Area perspective.

And we saw this when president, the president from China came to San Francisco. It seemed like they cleaned up San Francisco, right? So in a world where, you know, my take is that I don’t know who people are going to vote for, but I think that Gavin Newsom is going to run for president in a world where he runs for president.

One of his conversations is going to be, I’m going to clean up San Francisco, right? I mean, that’s his, his whole take is going to be to like, “Oh, we’re going to, we’re going to revitalize…”

[00:02:17] Drew Thomas Hendricks: We have a bigger agenda than that. If he’s running,

[00:02:19] Fred Glick: Wait, wait, wait he’s not going to run for president and say he’s going to make San Francisco better. That’s crazy.

[00:02:24] René Pérez Jr.: No, but that’s no, but if you’re running for president, you want to see, you want to see that you’re going to change something, right? And right now

[00:02:31] Fred Glick: Globally, not locally.

[00:02:34] René Pérez Jr.: Well, not locally, but a lot of what people are going to hit on him or is going to be like, “Oh, San Francisco is garbage.”

[00:02:41] Fred Glick: It’s a mess. Right.

[00:02:42] René Pérez Jr.: And California as a whole is filled with homelessness and blah, blah, blah. Right. So his whole thing is going to just like create this. I mean, just in general, like, okay, we’re changing the tune. We’re making San Francisco better. We’re revitalizing it as things are changing.

So what’s going to happen, you know? As they so and so quote, “clean up San Francisco and other places in California,” prices in San Francisco, for example, are bound to go up, right? Because people might think, oh, it’s okay. It’s changing. Right? So, my take is in a world where an election is happening. And people are going to say negative things about the way San Francisco is being handled, LA is handled, all these, you know, huge metropolitan areas, it actually goes higher in an election year.

[00:03:32] Drew Thomas Hendricks: Well, I guess if your governor’s running in that state, he’s going to clean up the state that he’s in to show what good work he’s done.

[00:03:39] René Pérez Jr.: Exactly.

[00:03:40] Fred Glick: Guys. This has nothing to do with it. In an election year, here’s what it’s all about. Here’s what it’s all about buying a house. You put it in your mind. It’s like, my job’s secure.

I want to establish roots. And then it comes down to, oh, the rates are too high or the rates are good. That’s it. The supply is there. The, you know, the demand and the rates are coming down. So the problem is there’s going to be more buyers because the rate is coming down.

I forget there was some statistic, like for every half a point in rate a half a half a million people or a million people qualify now or five million. It was some insane number, but it’s generalized and it’s all over the nation. But the bottom line is you’re going to see two things. You’re going to see refinances. That’s already started. But the second thing you’re gonna see more buyers and more people getting qualified.

So what happens? Supply demand. Again, I’ve talked about this a million times. This is all about supply and demand when the supply stays about the same and maybe goes up a little bit, which is what I think is going to happen in this next year, the demand is going to increase. And it’s going to be back to stupid and listens in California and the high-end stuff.

And, you know, but the vanilla play, I don’t know, let’s go to, let’s pick Riverside, California. I mean, it’s slowed down. There’s not as much employment, but who knows? Somebody comes in and wants to build a mega factory and employ 10,000 people. Well, guess what? They don’t have the number of houses. The supply is low. The demand is high.

So you see what it is. Look at your local market supply demand. Throw in the interest rates. Forget that it’s an election year because they’re going to be screaming about all their crap. They’re not screaming about the housing.

[00:05:25] René Pérez Jr.: Okay, fine. Well, we’ll make it a supply-demand problem on an election problem. So let’s put a supply

[00:05:30] Drew Thomas Hendricks: It’s a problem of uncertainty.

[00:05:32] René Pérez Jr.: Yeah. So, and you can happen. So the other thing that can happen is as an election year does loom. Okay. How does the legislation change and you see, you see it in places like Palm Springs, right? Where they limit Airbnb usage. You have all these people that I’ve listened to, like, ” Oh, become an investor, buy a house, and rent it out.”

So what happens when you have a mixture of a lot of inventories from rentals that are no longer being able to use as Airbnb. And you see, that’s not just like in things like Palm Springs, places like Palm Springs. But in places like Napa, right, where there are limits as to how you can rent out a property and so there’s that angle of no more Airbnbs in a lot of places and people wanting to downsize.

I mean, we are kind of, I mean, the next five years or five, 10 years, you do have a generation of people who want to move to smaller places, right? And, you know, not to be cynical, but people do die off. There are a lot of generations that have multiple properties. What happens then? Right. So we could kind of see the movement of more like way more supply, especially because I think I, I think I saw an article saying that this year was one of the lowest transaction volume since like 2008, which again, totally different market from like what was happening 2008 to now, but.

[00:06:57] Fred Glick: That sounds like a generalized national number, right?

[00:07:01] René Pérez Jr.: I think it was a national number. I don’t know. Actually, that would be a good thing to check. Well, I did.

[00:07:07] Drew Thomas Hendricks: So, on a national level, because you mentioned this a couple days ago and it’s got me thinking. So, I did a lot of research and I think a lot of people are, there’s a lot of noise right now with the election go down election year.

But if you track all the past elections, there is a marginal decline across the United States in an election year on housing. But if you look at each one of those declines, it was more macroeconomic factors that had nothing to do with the election. It’s just a coincidence. So what we have to look at going into 2024 is yes, there’s gonna be a lot of noise with the election. But is it really affecting housing and the uncertainty of it?

[00:07:41] Fred Glick: Yeah, if you looked at the 2008 election, and you know, there was a crisis going on in real estate, and yes, values went down, values went down, but it was caused by the idiocracy of both, the two Fed chairs in that period of time, Ben Bernanke and Alan Greenspan, supposed to be brilliant geniuses.

Well, if they’re such geniuses, how could they not tell that a hundred percent option arm, one percent made-up interest rate was not going to come back and haunt everybody? Come on. That was pathetic. It’s absolutely pathetic. But that’s, that’s more thing. The other thing is, and I’ll throw this out to be a little controversial, but if the wrong guy gets, if the wrong guy gets elected in November, and on day one of his term in 2025, he does become a, he does things that the Constitution doesn’t allow, let’s put it that way, there’ll be a lot of people saying, “I’m out of here.” And you know, that’s when our Mexico business is going to get really busy, and we’re going to have plenty of supply to sell.

So here’s how an election might impact it. So if that’s the case, you’re going to get tons and tons of stuff, yeah, values are going to go down, but you may not have a job because the economy starts falling apart. So, I mean, it’s all tied together.

[00:09:05] Drew Thomas Hendricks: A lot of pronounced equations.

[00:09:05] Fred Glick: Yeah, the bottom line is all real estate is local.

You’re only buying one house in one neighborhood, okay? So, look at the neighborhood. Know you want to live there. You’re going to live there a long time. That’s the other thing. You know, we get people, they lose houses by five grand. They say, “Oh, I’m not paying anymore.” You know, it’s like, dude. You’re going to own this house 20 years.

You’re not going to remember what you paid for it. And five grand isn’t going to be anything because values are just going to keep going up in California 20 years from now. Inflation is going to go up. The values are going to go up. That’s why people buy real estate and don’t buy real estate. It’s like, you can’t be, you can’t be chicken.

I want it for what the value is today. That’s not what you’re buying. You’re buying this piece of land that just happens to have real estate on it. That’s going to be a long-term hold. Doesn’t matter what you buy it for. So

[00:09:55] Drew Thomas Hendricks: You look at in the scope of the interest rates, five grand, what, I mean, you’re paying 99 percent interest anyways, the first few years, five grand is going to work out to like two bucks.

[00:10:05] Fred Glick: Yeah. I mean, it’s nothing. It’s just right. Exactly. And you got our, and for an advertisement, you got our rebate to help you get up in price. So don’t forget that kiddies. But anyway, –

[00:10:18] Drew Thomas Hendricks: And we do talk about this quite a bit though, but I mean, we’re recording this in the, you know, the week of December 12th or so.

And you know, the Fed chairman just talked and he’s kind of hinting at three rate reduction.

[00:10:36] Fred Glick: Here’s the bottom line. Follow core CPI, core PPI. Those are coming down. That’s all that counts. As soon as the bond market sees that, they say, “Wow, rates are going to come down.” So I heard something really stupid yesterday or a headline from a news organization that claims to be in the real estate business saying, “Fed to lower mortgage rates three times next year.”

No, that’s not the way it works. Federal reserve funds, you can’t borrow them. Only a bank can borrow them. They have nothing to do with mortgage rates. There’s been days where the fed raises rates and guess what? The mortgage rates go down because everybody knew it. And maybe they think the next way is down. So it’s, it’s one’s got nothing to do with the other.

Mortgage-backed securities, that’s it. 100 percent of why mortgage rates move. Not even the 10-year treasury, because that’s sort of a benchmark, but it’s not, it’s because it can be supply factors. There could be a company going out of business, selling off its portfolio, which kills the bond market because the prices are going to go up because of supply.

I mean, or up or down. I mean, we just don’t know. So don’t try to outsmart the market. Don’t try to outthink the market. Don’t, but do not even think about the Fed when it comes to mortgage rates. Only if you’ve got a home equity line of credit, because that’s prime plus, but not on a 30 year fix. Fed’s got nothing to do with 30 year fix. Zero. Okay, I’m done 2 cups of coffee later.

[00:12:20] Drew Thomas Hendricks: So, election year, we’re all going to wait and see, but don’t get too involved in the noise and try to my advice is try to also kind of distinguish it. There are people writing blog articles just for probably blog articles because they

[00:12:34] Fred Glick: Look great.

[00:12:35] Drew Thomas Hendricks: Sense of data. No, I mean, keep an eye out for that. But let’s shift. I want to shift to this ADUs and there’s a new grant program that just opened for funding last week or the first of this week.

[00:12:50] Fred Glick: Yeah. Well, there’s a couple of things. It’s about ADUs. Let’s let me go backwards. So the state of California passed a law that said if you own a single-family house and you have the room and I won’t go into what the room is to put in an ADU, a second little property, a container home, a prefab, whatever you’re putting there, what they’re going to let you do now is make your single family home land, this land. Forget the building right now, the land into a condominium as opposed to being simple. Now, what does that mean? Basically, it means, let’s say you have your single-family house.

It’s on two-thirds of the land, and then there’s this ADU you put on that’s one-third of the way up, so you have a controlling interest of 66 percent and they have 33 percent of the condominium you’re going to have rules, regulations, just like it was a high rise, but it’s obviously not, it’s two singles.

And that means you can then sell off that ADU to somebody else. So now we’re going to add a lot of property into the housing market. And you know what? It might be, and René, you even mentioned people scaling down. Somebody might say, look, I have this four-bedroom house, my kids are gone, I don’t need it. I just need this little place.

So they decide, they put up the little ADU in the back, and they live in there, and they sell off the big house and pocket the money. So it’s pretty cool. That’ll be one way, or they sell off the individual thing, you know, to a person or couple or whomever, just this big one bedroom whatever. But, now comes the but.

Two things. Two big problems. Each individual county must approve this. So I don’t think a single county has approved it yet. Second of all, there are rules and you have to follow these rules that Fannie Mae wants you to have in terms of reserve replacements. You need a reserve study, you need the proper insurance, blah, blah, blah, blah.

There’s a whole bunch of things. And we’re happy to help because we know what these things are when it comes to fruition. So to make these things financeable, cause that’s the big important thing. You’re going to sell them off that way. So, this is exciting. I haven’t seen a single city approve it yet, but once they do, we’ll be on it.

And now, separately, as Drew was talking about, there is a program, and I assume, Drew, we can put up the URL when we do that talks about getting some special financing from the state for doing the ADUs. Well, so I won’t go into all the, yeah,

[00:15:39] René Pérez Jr.: It’s not just financing, but it’s a grant, right?

It’s a grant. Yeah, it’s a 40, 000 grant. And again, like the problem with all these grants and programs that do exist is that there’s only a small little gray area amount of people who actually qualify, right? Because they have income limits. So I think for this grant-specific grant, I think the income limit is 110 K.

[00:16:08] Fred Glick: Yeah, it’s something like that. That’s for one person.

[00:16:13] René Pérez Jr.: And, Mary, I think it’s 150, I guess it’s fairly limited. So the problem is if you’re making less than that. And an ADU is going to cost, you know, 80 grand, where do you get that 40K, that other 40K from the ground, right? Because you do have permits to, I mean, the permits themselves, they can easily cost 40K, just a permit.

[00:16:37] Fred Glick: Yeah, I was going to say the 40K is great for all the soft costs. And maybe it’s enough for laying the foundation and putting in pipes and electric to go if it comes down to it that you’re going to throw something on a slab. So yeah, it helps. It’s something, but there’s also going to be once this condo thing goes through, it’s going to be much easier because you’re going to be able to just get a regular mortgage up to 95 percent loan to value up to 1, 149, 825.

I haven’t memorized that, but that’s the new Fannie Mae one unit California, like Los Angeles, San Francisco, you know, the big city limitations. So four unit now is over 2 million, 2, 000, 211, 600. So you can buy a four-unit building 5 percent down and have a mortgage of 2 million and change, whatever I just said, owner-occupied.

So that’s pretty cool with mortgage insurance with other things, probably reserves. Stuff is out there.

[00:17:49] Drew Thomas Hendricks: That’s interesting. You got to keep us updated on that condo.

[00:17:53] Fred Glick: Yeah, I will.

[00:17:53] Drew Thomas Hendricks: And I go to like divide your property without dividing your property.

[00:17:58] Fred Glick: Yeah. And I’m sure, you know, there’s going to be surveyors are going to be busy with this mortgage approvals, property approvals.

Yeah. So we’ll, we’ll all be into it. We’ll be helping to get the properties approved, condos approved, telling you what to do. So this just comes out because we’re learning every day.

[00:18:18] Drew Thomas Hendricks: Well, Renée, as we wrap down, any last words of wisdom?

[00:18:20] René Pérez Jr.: No funny taglines today.

[00:18:22] Drew Thomas Hendricks: No funny taglines.

[00:18:23] René Pérez Jr.: Yeah, but I will be.

[00:18:26] Drew Thomas Hendricks: How’s the pulse of the market as we’re wrapping down this year?

[00:18:29] René Pérez Jr.: Well, so I think actually I have a small little rant before I go. So I think what’s happening right now in terms of the market, I mean, there’s, there’s a level of slowdown, right? Just for their winter break. But what I am seeing is a lot of real estate startups coming out. And the problem, and it is a small little rant because I went to a Christmas party Wednesday night, and I spoke to a, to a founder who was building this as we talk about, like, building costs and et cetera, et cetera, this founder that was taking the county records and showing how much a specific construction cost.

Right, so the kitchen remodel, oh, it costs 150 K for this person. So you, as a consumer, if you’re a neighbor, that’s where you should be spending on. Right. And it’s like, okay, sure. I look at the cost. It doesn’t actually have like, like, there was a county record saying that a kitchen remodel costs 480k, and it’s like, in no universe is a kitchen remodel supposed to cost 450k.

So then the founder tells me, oh, well, it’s because they mixed in a lot of different things, and the county records didn’t really, like, transparently put the cost associated to what it was actually remodeled. It’s not just a kitchen remodel. So it’s like there’s all these startups that are creating these products that are not actually functional.

And then and then we’ll stop it there. Thursday, so last night I went to another Christmas party. There was another real estate founder who was building the same thing. Different company, different everything. And it’s just like, okay, how are you building this? It’s like, okay, well, we just thought it would be a good idea.

It’s like, okay, do you have any real estate experience? It’s like founders who want to build something for real estate but don’t understand that real estate has not been, has not been displaced or just changed. Because they have no experience to why things don’t work.

[00:20:30] Fred Glick: Oh, oh, and I love some of these guys, these founders.

Oh, I’ll just get an API from the MLS, and then I’ll hard draw the documents and then I’ll come up with all this. Guess what guys? You can’t have an API from any multiple-listing service. Period done. End of sentence. You want to put that stuff up on the web. You got to do it in their approved format.


[00:20:52] René Pérez Jr.: So this is my call for all real estate founders that are in

[00:20:56] Fred Glick: Call us first.

[00:20:57] René Pérez Jr.: Please let us, we will help you. We won’t even charge you for a consultation because we want to change. We want to change how real estate is done, right? So please let us know what you’re building and we will tell you why it will or won’t work.

And of course, it’s like every founder’s idea is like, “Oh, well, just because he told me it won’t work, you know, maybe I can make it work.” Well, I mean, sure you can do that, but then I can tell you, well, just so you know, six months ago, I worked with a founder that was trying to do this thing. And then they gave up because they realized it wouldn’t work.

So I’m just trying to save the, you know, even if, even if you don’t want to listen to me, maybe I can just put you in connecting with another founder that I spoke with, and you guys can get together and say like, “Oh, what didn’t work?” Right. So please do let us know because I don’t want something crappy being continued to build, especially when there’s, you know, you guys said you founders are that have technical abilities, you know, you guys can build something great.

So I don’t want anyone to waste their time. So, yes, please reach out to us. Yeah.

[00:21:58] Fred Glick: And by the way, if there’s somebody out there who wants to build something that’s going to work, I have something. So just get in touch with me. It’s, that will revolutionize. I’m picking, I’m looking to pick somebody to build it right now.

I got the specs done, so it’s really interesting and will absolutely work and change how real estate is done. It’s got nothing to do with how much the kitchen’s going to cost. And guess what? All these things, how much a kitchen is going to cost once they get the contractors in, and then they send the prices have already gone up.

And then you got to pay different labor costs and they’re going to give you six different bids. So what you got is completely from the beginning.

[00:22:39] René Pérez Jr.: Yeah, I was gonna say too. It’s like the reality is that the county record is not going to show what someone in the back end negotiated down and these contractors, they work under the table, you know, like the people who really get the good deals.

They’re not going to be public records. Things go unpermitted, right? So, it’s just, it’s not going to work in the long run.

[00:23:03] Fred Glick: Good luck.

[00:23:05] René Pérez Jr.: Yeah, that’s the final rounds before we close out this, this call.

[00:23:09] Fred Glick: Okay, and again, happy anti-Christ Christmas to all of you anti-Christers.

[00:23:16] René Pérez Jr.: I do not condone that. I’m extremely against that. So anyway.

[00:23:22] Drew Thomas Hendricks: Well, it’s been another fun episode guys.

[00:23:25] Fred Glick: Yeah, no. And everybody enjoys your time off in December and early January. Let’s put it that way. The world’s vacation.

[00:23:34] Drew Thomas Hendricks: Talk to everyone later. Bye bye.

[00:23:36] Fred Glick: All right.

[00:23:37] Drew Thomas Hendricks: Bye.

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