Home Builder in Trouble – I Told You This Would Happen

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We’re seeing so much of this right now. And Lennar just announced their numbers. In addition to announcing their numbers, the most important thing about this is that they’re selling their multifamily units, their apartments, their condos. Now, here’s the thing about this. I don’t care what they tell us. We’ve seen this here in southern California. You’ve seen the oversaturation of all this building that’s going on right now. And it’s know, they build these dormitory type units that are three, four, five stories.

And people are not moving into these like they thought they were. People want a backyard. People want a balcony. People want to be able to take their dogs someplace. Lennar Homes has so many of these units. They’re selling 11,000 of these units right now, called Quartera. That’s their multifamily division. So Quartera is for sale right now, and they anticipate that they could get as much as $4. 5 billion for this.

Wow. That’s crazy. Okay. And it’s listed through JLL, which is a huge here in Southern California. JLL is a huge commercial real estate company. And the thing about this is that the sales, this is what’s disturbing. Sales volume for multifamily units in 2023 are down 61. 9%. 62% right now. And the worst part about this is that the prices per unit have dropped 7. 8%. So not only did the prices drop 8%, but sales for multi units are down 62%, guys.

62%. And they blame it on oversaturation. At the end of Q 370, percent of the nearly 1 million units under construction in the US were considered high end. So everybody wants to go after this high end market. But you’ve got another million units that are still in construction around the country. Who’s going to live in these? Guys? Who’s going to live in these? And the construction cost, the carrying cost for real estate has gone through the roof.

The thing that I love is the people that write me and say, you don’t understand. Lennar gets a better deal from the bank than we do. Okay, let’s play that game. That’s not true. And let’s say that they get 1%, 2% lower. They’re spending more money than ever for the construction carrying costs, and they need to unload these. Now, here’s the thing that really got me going, is that in addition to this, the company delivered 23,795 homes.

And they’re talking about how, hey, think about this. Our home building sector is doing great, okay? But it’s $1. 4 billion in earnings, and the company’s been around since 1954. Now, here’s the thing about this, Lennar. One thing that we covered for the last two years is their inventory of uncompleted homes. And at one point, it was over 26,000 houses that were done. But remember, last year, they unloaded homes.

They’ve done things to where now, as of the latest quarter that was just announced Friday, 14,982 homes. So that is a total of 15,000 houses that are sitting there on the books right now. Now, the crazy thing is the average house price, this still floors me $441,000. I am telling you guys, here in Southern California, you’d have a difficult time finding condos for 441 grand. So new orders rose 31.

6% from a year ago to 17,366 homes, and the value increased 31. 6%. They said backlog. We just talked about that. But the backlog decreased 24% over a year ago, and the gross margin sales was 24%. So sales are down in certain areas. They’re not making as much money. They’re charging more, but making less profit. So kind of interesting, but I think you’re going to see more and more of these home builders have these problems.

Lennar has to have incentives like you wouldn’t believe right now, they’re giving remodeling incentives. When you come into the house, if the house is you want it upgraded, they’ll give you 50,000, $100,000 in our area for things like that. They will buy down interest rates right now also, which is incredible, because they will give you 2% discount. Things like that to get people into the homes. And again, will this work? How long will this work? So again, I don’t think it’s going to last very long because when you have a million multifamily units under construction, that’s a problem.

A million units right now they anticipate are under construction, who’s going to move into these? And they’re trying to unload 11,000 units. So share your thoughts on this stuff, guys, because you’re seeing a lot of problems when it comes to the multifamily real estate, commercial real estate, and now the home builders that have all this extra inventory. So let me know what you think about that. Let’s talk about our sponsor, Dr.

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I want to remind you about our Christmas card list because tomorrow is the last day to sign up for this. It will not be extended. Go to iscretsana. com and you can join the Christmas card list. Everybody gets a Christmas card, but we’re also giving out to selected people. We’re just going to randomly pull them and give out everything from some cash to some gift cards, some gold, some silver, little bit of fun stuff.

So go to isecretsanta. com. Plus I want to thank everybody who sent know Christmas cards right now and holiday cards. I appreciate this so much. The effort to do that is just huge. And the McLaughlin sent me stuff that’s really cool about their local community, which I absolutely love. I love stuff like this. I love the gifts. I love everything you sent me. My address is below if you ever want to do that.

But we keep getting fed a line in our economy. You look at Lennar homes and what they’re doing, they’re seeing problems down the road and getting rid of it. Homelessness for the year is up 12% right now. Now here, it’s a huge problem. 653,000 people they consider to be homeless. And I think it’s a travesty that our veterans are a big group of that people that have had issues.

And it is horrible that we have this now. There is a thing that originally started in Australia called the working poor. And what the working poor is, are people that have eight to five jobs. They are working 40 hours week jobs and live in their cars, and they basically go park different places and live there. That’s here, too. Remember I covered those rvs that were over by the cemetery about two months ago that has been cleaned out.

They got rid of all those van Lords and basically, hey, who’s got the registration on this? And cleaned that out because in wacky Doo, California, they made it that if your car is your residence, it cannot be towed. Well, they said, wait a second. These people are taking advantage of the system, and they’re renting out vans that are broken down that don’t run. Hey, you’ve got a van that doesn’t run.

I’ll give you $2,500 for it. And then charging people with state assistance six, seven, $800, even $1,000 a month to live in a van that has no electricity, motorhome, whatever. So absolutely terrible, guys. Absolutely terrible. So, real problem. The next thing is the holiday hangover. They’re saying that this is going to be the worst year for credit card debt after the holidays than ever, because more people are relying on credit card debt.

The buy now, pay later thing, really? Do you really need it that bad? Seriously? Seriously. I’d like to sign up for this just to see how it is and see what the interest rates are and things like that. But there was a pizza place that was using buy now, pay later last year, and everybody freaked out about that. I just thought it was insane because your $30 pizza, what is that going to cost you in the end that you eat tonight and you’re paying for it over the course of months? So let me know what you think about that.

I think that we haven’t seen anything yet in the economy. If you think that things are going to get better, good for you. I’m really happy for you from somebody who is getting involved with that foreclosure company. I’m telling you guys, what the banks are getting ready for is end of days. Lennar Homes is getting ready for end of days. And the idea with this is that when you want to get rid of 11,000 houses right now, and you’re going to sit there and say, oh, the corporations are going to buy them.

Lennar is one of the corporations guys. Why are they unloading their houses right now? Oh, Dan, you’re such a naysayer. It’s just know. Here’s another one for you. With the student loan forgiveness program, there were some people that actually got physical checks. And what happened was if somebody actually paid some of their student loans back, they were entitled to a refund, partial refund of some of the money that they paid.

Whether you think that’s fair or mean, I’d like a refund on some of my stuff. I think it’s kind of ridiculous myself. But Lois Wyatt, she got a check for $5,298 from the federal government and put it into her chase account, JPMorgan Chase account. Not only did they freeze the account, but they closed the account after they accepted the deposit. Now, Lois was like, wait a second. This was a check from the federal government.

How do we know that? And again, if you do anything abnormal in your checking accounts, and what I mean by that is, if you don’t normally put 5280, $98 checks in your account, take a picture of the check, take a picture of the paperwork, any letters, any correspondence, anything that can support why you got that money, even tax refunds. Guys, I recommend that people do this. I recommend.

Hey, you had an overpayment. Here’s your money. You have that letter. Because these banks are doing this more and more. You smell what’s going on with the banks. If they think that you are not a good risk, they’re not even worrying about. Now, JP Morgan Chase seized her account. The entire account was seized. So again, give this advice to other people. Not everybody has this problem, but Lois White still doesn’t have the money right now.

And she says, I’m going to be homeless as a result of not having this money. So, again, do what you can do to look this up and to make sure that when you have this, you are protecting yourself. They have a big thing called Winter Wonderland. I’m out here at the bay. The Newport Dunes. And they do a holiday festival which won’t have the same feel for it during the day, especially in the morning like this.

But they’ve got an ice skating rink and things like that. And this gets a real big crowd out here every year, so it’s nice to go ice skating when the weather’s like this, don’t you think? I’m going to finish this video with these last few stories. First one is goodwill, you know, the second hand store that people drop things off at. Jessica Vincent was in a goodwill store, and she saw a vase that she thought, oh, this is kind of cool.

It’s got blue and sea foam green that wraps around it. Thought it was really nice, $3. 99, bought it, and then just thought, there’s something about this that’s worth something. Gets it appraised, sends it to auction, and gets 100 grand for it. $100,000. How would you like to be the fool that took Aunt Mabel’s vase and gave it to goodwill and just unloaded it and didn’t think twice about the value of that? Isn’t that crazy? So there’s that.

The next one is Christina Grace. You’re going to hear this more and more and more as this goes on. What happened was there’s a copycat lawsuit right now with the realtors. And what she’s upset about, she’s from Marin county. She said, hey, it’s unfair that when I sold my house, I had to give $54,000 to the listing agent or the buyer’s agent. Pardon me, the buyer’s agent. And I was forced to do that.

So she wants to get class action status. This is going to change the way real estate is sold, guys. You’re going to see more and more people that thought about this, that think about this. 54 grand to the people that brought the buyers into her. It’s a lot of money. A lot of money. Now, the final story. There is a very high end nursery in this city where I’m standing right now in Newport beach called Rogers Gardens.

And I’m telling you, it’s not just nice, it’s not elegant and high end. It is the highest price place in the world. The stuff is fantastic. The place is beautiful, absolutely beautiful. But they were plagued because one thing that when you go into this place, they have parking attendants, like, park here, park there. It’s really up there. So one thing that kept happening was they kept getting robbed at night because they have to leave certain merchandise out in front, certain pots, certain plants.

And they noticed that the same guy was stealing stuff. So they were like, this is ridiculous. We need to do something. Filed police reports. Can’t do anything. The guy covers up his face and what did they do? They stuck an apple air tag into some of the pots. And eventually one of the workers at Rogers Gardens got notified at 02:00 in the morning on a Saturday night that, hey, the air tags in a new location calls the Newport beach police and they go to this guy’s house.

And he has $8,000 worth of merchandise at his house decorated even in the front of the house. He didn’t have to go inside the house. Didn’t. Probable cause. They could have got a warrant and all that fun stuff. No, didn’t need to. Found merchandise that he had stolen from the video in front of this guy’s house. He is now going to be charged with four felonies. Felonies. What are you in for, Michael? I’m in for stealing from the nursery.

Okay. It’s going to be a tough, can’t make joke. I can’t go Dan on this one. You know what I mean? Michael Meeks is in a little bit of trouble. Okay, so share your thoughts on all this stuff, but you haven’t seen anything yet. I got to go to Rogers Gardens and show you that place because that place is just, again, it’s just the most elegant high end nursery ever.

And it’s pricey, let’s put it that way. And it’s one of those things that’s just really high end. And this guy got eight grand with the stuff, and they caught him red handed. So great way to catch people, too, is those apple air tags. Don’t forget to hit the like button. Take a look at our sponsor, please, if you want to email me anything. Hello@iallegedly. com? Great stories.

And one thing, Michael from New Hampshire. Dan, look, they’re going to lower our electricity rates. So I get all this stuff, guys, that you send me, and I read as much of it as I can. Like, subscribe. I will see you guys very soon. Thank you for being here. Rest close. .