California’s Economic Outlook and Housing Market Forecast 2022 with Jordan Levine | Part 2


VP and Chief Economist at the California Association of Realtors

Jordan Levine is VP and Chief Economist for the California Association of Realtors where he is responsible for the housing market and economic trends and analysis, policy analysis, and data work in a variety of contexts.

Additionally, He manages an EB-5 Immigrant Investor Visa practice, helping to establish regional centers with I-924 economic impact reports across California and the U.S. region, and has provided I-526 impact and job creation analyses for many more individual projects across the nation. Past projects have included call centers, residential real estate developments, mixed-use developments, hotels, retail businesses, high-tech manufacturing, biotechnology, ambulatory health care facilities, assisted living facilities, agricultural enterprises, movie studios, and grocery stores, among others. Well versed in critical issues related to USCIS approval of I-526 and I-924 EB5 applications like construction jobs, tenant occupancy, and establishing a causal nexus.

One critical characteristic that sets Jordan apart from other number crunchers is his ability to communicate complex economic concepts and ideas in a clear and effective style. He has spoken to a variety of groups, ranging in size from small groups of 5-10 to over 800, including industry groups like the California Bankers Association (CBA) and the California State Municipal Finance Officers (CSMFO), elected officials such as the California State Controller’s Office, various local government bodies like County Boards of Supervisors. In addition, he regularly contributes to radio and newspaper articles.

Jordan has a bachelor’s degree in economics from the University of California, Santa Barbara and a master’s degree with Merit in International Economics from the University of Sussex. Prior to joining C.A.R., Jordan worked in consulting as an economist and director of economic research where he oversaw all research and economic analysis on California’s economy and housing market and regularly spoke to trade groups, public officials, businesses, and the media.

Episode Notes:

Narrator  This is The Norris Group’s real estate investor radio show the award-winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever -changing real estate market hosted by author, investor, and hard money lender, Bruce Norris.

Bruce Norris  Hi, this is Bruce Norris. Thanks for joining us. Once again, we have Jordan Levine with us. Yeah, that was one one thing that was really interesting in 1974, when inflation started to really kick in, we had like a plumber making 750. And then eight years later, he was making 15. So, that that was a headwind. Affordability is gonna go down because interest rate hikes but that wage increase kept on fighting that journey.

Jordan Levine  Right.

Bruce Norris  To not make it as bad as it could have been.

Jordan Levine  Absolutely. Yeah. And I think that’s, that’s the kind of recipe for success, right? As you get incomes growing a little bit faster, and you maintain a really strong, robust economy, you add new supply, both in terms of you know, helping people who want to sell their home, sell them, and also making sure that we’re filling the future pipeline full of lots of new homes, you know, that we can sell down the road. And that’s how you get, you know, steady and consistent kind of low single digit price growth, but still get, you know, create a lot of good jobs in the meantime and get those incomes going.

Bruce Norris  Normally, when we get to 17%, affordability, the next two years see a big difference in the volume of sales.

Jordan Levine  Yeah.

Bruce Norris  Also the inventory growing. But one of the participants this time that we already talked about it is the builder, instead of having 150,000 homes built at the peak year.

Jordan Levine  Yeah.

Bruce Norris  And they did it at a bad time to where they started off with auctions. And, you know, take out the equity that somebody thought they had, that is not going to happen this time.

Jordan Levine  Yeah, yeah. No, I don’t think it’s going to be new supply to the rescue. But I think we need to get really serious about it, you know, not just as a real estate profession, and, you know, people who are kind of deeply enmeshed in all the nuance of development and all that stuff. But I think, just as an economist, again, you know, if you think about the kind of wage pressures, the inflation, all of that stuff, you know, if you talk to businesses now, USC did a great, I think it was the USC Dornbusch that they did a survey of businesses talking about, you know, what are the biggest challenges to your business? And, you know, it wasn’t California’s tax climate, or it wasn’t at least number one, right? Or the hostility to business, those things are all, you know, evergreen, and we know about those things, you know, we’re certainly, you know, it’s, it’s now May, so we just did our taxes, and we know how painful that is. But, you know, the biggest thing they were talking about was a lack of workers that they can’t offer a wage that equates to a quality of life that makes these jobs attractive. And, and if you look at the out migration data, even though it’s a small number in, in, you know, in the context of a 40 million person, state, it’s only a couple 100,000 people a year, but it is net out, you know, consistently and under the hood of those numbers, that is somewhat scary, because of the people, you know, the people who are leaving are the ones that we need to grow an economy, it’s, you know, it’s our kind of frontline managers, not necessarily all the business owners, but the people who are helping us run these businesses day to day, it’s, you know, skilled trades people, it’s carpenters, it’s plumbers, electricians, it’s teachers, it’s cops and firefighters. And, and you know, it through that lens, it starts to become, you know, hard to envision, you know, how do we, how do we even get to 200,000 homes a year when we’re, you know, not just have high lumber prices, but now we’re, you know, running short on on folks who want to take these trades, you know, positions and, and it’s just becomes the kind of double whammy again for supply and all of that stuff. And I think it, it, it’s more important that we get that together now, because people can work remote, they do have that flexibility, instead of just moving out to the Inland Empire moving to you know, San Joaquin County or what have you from the Bay Area. Now you can just go move to Idaho and that’s why you got a 700,000 and some home price up there. But you know, it’s, it’s, it’s more critical and urgent, I think, for California to get this sorted out. Now, we kind of had a gun to people’s kind of, you know, metaphorically in the sense that we had a great economy and if you wanted to partake and all these high wage jobs and stuff, you had to, you know, kind of stomach the cost of living here and now I think that’s not not the case. People still want to be in California and you’ll have a hard time dragging me out of here but I do think that some people are out there looking at the costs and the benefits and making that decision and that’s the 300,000 or so people you see leaving every year.

Bruce Norris  Yeah.

Joey Romero  Jordan is density going to, going to beat, you know, like I, you know, these builders, yeah, they can put 300 homes or 900 units? Well, when the building density is that going to, you know, be, you know, it’s going to take the day at the end of the day. Because even if you want it to build, like, where’s the dirt?

Jordan Levine  Yeah.

Joey Romero  In North County, there’s none, right?

Jordan Levine  There’s, there’s actually a lot of developable land, even if you look in LA, there’s places to build, they have a big spreadsheet on the LA planning website, and it has, you know, all the kinds of lots and they’re planning status and what’s, you know, the existing use and things like that. I mean, there’s places that we can build, I do think that we’ll continue to see more density and I think, you know, multifamily developers and things like that are responding to that same supply and demand thing that we already talked about where there’s so many more bodies and not enough homes to put them in. And that means rental properties going to be attractive too, right? But I think we can get, you know, density is kind of a dirty word in the nomenclature, I guess, lately, but you know, there’s, there’s all different kinds of ways to do density. I’m trying to write a paper right now, you know, called roadmap to 2 million, but I think there’s a way that you can get a significant number, whether it’s 2 million or whatever the number ends up being, in ways that aren’t as intrusive. You know, I think even if you just kind of I mean, we have 6 million owned owner occupied single family units in California, even if just 2% of those put in an ADU, right, that’s already a year’s worth of housing production right there. And we’d love 98% of the housing stock unchanged, right? If we get, you know, a couple of row homes on the corner of a single family neighborhood, not a big 10 storey skyscraper, but just, you know, three row homes for row homes right on top of our annual production, I mean, you’re talking about over 5, 10 years, that’s a couple of 100,000 units, I think you can, you can increment your way up to, to a meaningful number, with an all of the above approach, that doesn’t mean that all of our neighborhoods are, you know, kind of filled with skyscrapers.

Joey Romero  With everything that’s, that’s a holdup to penciling a lot of the times, is it gonna be able to catch up in time? Or is it just gonna take a while because…

Jordan Levine  Yeah, well, I mean, we’ve got a big hole to climb out of in terms of housing supply right. I think even you know, some of the conservative estimates, I think the governor even said, when he got elected, he won three and a half million units. He’s downscale that now to 2 million. But I think even you know, that’s a lower bound, we, you know, we have a long way to go. But, you know, the reality is, if we keep, you know, adding jobs at the pace we add, and we keep building at a third, the level we did three decades ago, you can expect prices to go down, I think, you know, what you can expect is just a continuing kind of hollowing out of the middle, right, where you’re gonna have this kind of landed, you know, cohort of hyper wealthy individuals, and then like a service sector economy here kind of catering to all the personal care needs, and gardening and all of that stuff that goes along with it, not the kind of solid growing middle class that we’ve been known for, for kind of, you know, I joke about my dad, but he didn’t even graduate high school, and he had a great life, because he bought that house for 35,000. A couple $100 a month payment, right? It is 12%, and was wondering how the heck he was ever going to make the $300 a month right? But but, you know, guys like that, if you did it, and you got that home, you scrapped your way into making that $300 a month payment, then you have a kid who can go out and become a spreadsheet nerd, and do you know, stuff like this. And, you know, that’s kind of, it’s good for the realtors and it’s good for the real estate profession to have adequate housing supply. But it’s also just good for a steak because like, that’s the quid pro quo, right is that you come here and you work in these killer jobs and then this is what we can kind of give you on the back end is a life that leads to, you know, not just more wealth for you, and kind of quality of life and all that. But it leads to like, you know, generations down the road, to get us to this hyper strong economy with all these smart innovators that we have today. We want to keep that going. And to do that we got to be able to deliver on that American dreams.

Bruce Norris  On inflation in the 70s, and inflation that we’re facing now. How is this one different? And it will be, will it be much shorter in duration?

Jordan Levine  Yes, I do still think it’s shorter in duration. Like I said, there’s a huge supply chain element right of this because you had kind of, on the one hand on the other hand economy coming into this right. There’s people at the high end of the wage spectrum who could work remotely the spreadsheet nerds like me who can just continue working and no longer drive to the office paying for parking and gas and all that stimulus money coming in whether you asked for it or not or whether you fell on hard times or not, those poeple are out spending, right? I’m not going out anywhere, I’m not going to eat, the restaurants are all closed, I’m gonna buy stuff and you know, I’m gonna buy a better TV, I’m gonna remodel my house, I’m gonna get a better, you know, whatever. And so you have this kind of, you know, surge in demand from one segment of the economy that was pretty much unaffected from the crisis. And then at the same time, you had factories shutting down, you had sawmills that couldn’t keep up with the lumber demand and all that stuff. And so there was a kind of one, a one time kind of surge in inflation, just from that perfect storm of imbalance, you know, of increasing demand and decimating the supply chain at the same time. You know, now we’re starting to get the wage growth on stuff go into kind of replace that. And I do think we’ll see still persistent inflation in the next year, you know, for at least through the second half of this year, because there’s still that big gap between labor supply and labor demand that’s pushing those wages up, but presumably, the, you know, it’s the I mean, you know, people have bills to pay, so at some point, people will go back to work, and that labor force participation rate will increase, and I think alleviate some of that pressure, a lot of the stuff in the 70s was stuff that was out of our control, right, we didn’t we, you know, with all the kind of oil price war, that stuff going on, I mean, this is mostly a function of just the cyclical nature of our own internal economy, and just kind of temporal, you know, gaps between the supply and demand things that, you know, the market mechanism is still alive and well. So if, if there’s a labor shortage, and wages go up, that brings workers back into the labor force. And I think that kind of econ 101 market dynamics still alive and well. And so I think that it will be transitory, especially if the Fed keeps on jacking up rates, right, that that will discourage people from going out and borrowing or putting new TVs on their credit cards and that kind of stuff.

Bruce Norris  Okay, so let’s, let’s play that out a little bit. If they continue to be aggressive. If we’re already at say, 17%, affordability at 5%, then you’re pushing below a number that historically you can’t get to without a phony loan market. So, it seems like the if you’re doing an equation that, that has to come out of median price at some point, because the payment is not not a bearable thing, or you just don’t have the volume, you know, because you don’t have the volume of buyers. But you also don’t have the presentation of tons of inventory, because I’ve got all these people saying I’m not selling my house because they’ve got a 2% mortgage on it.

Jordan Levine  Right.

Bruce Norris  And the builders didn’t over build. So, it just might be a very interesting year or two.

Jordan Levine  Yeah, I think best case, it comes out of price growth. And I think worst case that comes out of prices themselves, right. So, like, that’s the ideal is where you can get price growth to stop going up at 12%, you get something lower than incomes, you let the incomes catch up. And that can help offset you know, the, the effect of of higher rates. But I you know, and I think the reason why I’m not really pessimistic on price, prices, or you know, I’m not kind of immediately agreeing that we can see prices go down over the short run, it’s just because a lot of these folks do have skin in the game, they left most of the equity and so even on a really soft, kind of demand environment where buyers get priced out and they can’t afford these rates. And you don’t see that same insatiable appetite, I think you’ll just see a lot of sellers just kind of camp out on and wait for the long term, you know, to swing back around, you don’t have all these No Doc kind of stated income five, one option arms where even if you keep your job, the mortgage blows up in your face, and your payment goes up by two grand a month or what have you, and you decide to just dump it because you already cashed in the equity and you can just rent drive your RV off into the sunset, you know, or whatever you’ve spent the money on, you know, we don’t have that kind of a lending environment this time. And so, you know, people will probably, and I think, you know, look at Hindsight is 2020 but even in San Francisco, whenever every time I go give a speech up there, you know, it’s like prices, prices, like you said went from 500 and something to just under a million, I think by the height of it. 2006 – 07, and then they plunged and all these people threw the keys back to the bank and foreclosed and you look at where San Francisco’s median prices now, you know…

Bruce Norris  Two and a half million or some crazy number.

Jordan Levine  Right? You hung on and that would have been the best decision of your life, so.

Bruce Norris  Yeah, well, what, what’s probably different this time and much healthier is the foreclosure percentage that will come into the market.

Jordan Levine  Absolutely.

Bruce Norris  I feel that, that’s a that’s a key factor in the price damage.

Jordan Levine  Yeah, totally. And you know, it’s just the better borrowing. We have better loans and better under writing and more money down. And all of that kind of good, healthy kind of mortgage market dynamic going on. But the other thing is that even when people got into trouble this time, and the MBA puts out a forbearance report, and they survey, I think, like 80% of the market or something in terms of servicers, and if you look at those numbers are really encouraging too from the, from the standpoint of foreclosures, because, you know, banks are on board with helping people stay in their home, right, there’s been all kinds of ways that have been worked out, you know, you’ve got a lot of folks who’ve taken miss payments and added it just to the end of the loan, you have some that amortized it in or, you know, did a new rate and term and stretched it out over a new 30 year term, probably a lower interest rate even and maybe even ended up saving money on their monthly payment, you’ve got, you know, a lot of loan modifications where, you know, there’s no, the point being is that there’s no like 15 month balloon payment, where you got to come up with 20, grand, and all of that kind of stuff, right? Assuming you get your job back. And the jobs numbers show that most people have gotten back to work, not all but a lot, you know, then that really helps out from the standpoint of, of kind of systemic risk and incentive to foreclose, right. You just pick up where you left off, on your monthly payment, you’re, you know, kind of back on track again, and, and that will help enormously plus the home equity, right, you don’t, you know, throw the keys back to the bank on a home that’s worth more than what you paid for it.

Bruce Norris  A lot more. Yeah. Well the price damaged, usually comes when it lands into the REO world. So, you can have a trustee sale, but if it gets bought by a third party bitter, then that’s not a consequence to the market, it doesn’t become a comp, it becomes a you know, buy and hold or becomes another retail sale after it gets fixed up or improved.

Jordan Levine  Right.

Bruce Norris  That’s a whole different world. But yeah, there’s a lot of safeguards in place this time, the low interest rate loans, the honesty of actually, you know, qualifying for the loan.

Jordan Levine  Right.

Bruce Norris  It seems like we learned and we didn’t touch the equity near as much.

Jordan Levine  Yeah know, we I think, you know, back then we weren’t really using the the home equity as just the line of credit, right. And you were just out shopping. And I mean, you know, it was one of those things where, and actually, one of the reasons I think, why I got this job is because but you know, I used to work for another company, and we were seeing the price to income ratios getting all out of whack. And, you know, the borrowing and the hope, you know, cash out refi numbers were just absolutely through the roof. So, it was like you weren’t qualified to get the home in the first place, but you still got it, and then you cashed out all the equity. And it’s like it, you know, it didn’t take a mathematician to kind of add that up to risk of foreclosure right. And, and, and so again, this time around, you know, people were much more diligent, in fact, even on the rental side, like housing, just in general was such a priority that, you know, we, California, even with our prices, and even though we went you know, so much harder, faster for longer on the pandemic stuff, we actually have more of our mortgages current than I think like 45 other states in the nation are in like the top five in terms of current mortgages, and actually, similarly on the rental side, right, is that people actually prioritize still paying rent and you know, over like missing car, or credit card payments and things like that, you know, I think it kind of is unique to the nature of this crisis, where our homes were more important to us than ever, right? Like, if you’re stuck at home for two years, then the one thing you don’t want to screw up is your kind of is your home situation. And you’re like, you can come repo my car or whatever, right. But I need this place to live real bad. And I think you see that in, in the numbers too. And I think that will, that helps as well, right? It’s just we have more people who stayed on track for housing.

Bruce Norris  I think I think the lenders obviously learned a lesson, maybe the rules, rein them in, but when affordability got to 12 for 13%. I was shocked because that was not the history of California.

Jordan Levine  Right.

Bruce Norris  So, I thought, okay, there’s must be a missing part that I don’t know. And I hadn’t borrowed money in years. So, I didn’t really understand. So, we interviewed a lender in front of an audience. And I opened up with this question I said, just stated income loans, where does the stated income number come from? And without batting an eye, she said, Oh, we just make it up. And there was a there was a pause of like, 10 seconds, I, as I absorb what she just said that every law loan created is fraudulent. And we don’t care. And I even state that publicly and I just went, you know, I don’t think I need to ask any more questions. I didn’t.

Jordan Levine  You’re like ‘I got it.’

Bruce Norris  I get it.

Jordan Levine  I get where the 10 to one home prices are coming from.

Bruce Norris  Right, and then I realized, wow. But the lenders also, I mean, when they were foreclosing, they didn’t get it either, because we’re, you know, pretty well known as a property buyer. So, we would get calls from the REO agents. Okay. Are you going to be in this cycle? Yeah, great. So, they foreclosed on something that was a 360 loan. And they put it up for 295.

Jordan Levine  Yeah.

Bruce Norris  Ultimately to get 75. And when they started getting 75, you had delinquencies chart still going, escalating constantly. And all of a sudden, the foreclosure charts started to decline. So, they realize we can’t foreclose on this stuff. We’re gonna get 20 cents on the dollar.

Jordan Levine  Right. Yeah.

Bruce Norris  I think they learned.

Jordan Levine  Yeah, didn’t do themselves any favors by just going, Hey, you’re on your own. And there’s no you know, and then, then people were like, Okay, I’m on my own. Well, so are you, and there’s the keys and good luck with it, right. And everybody kind of ended up taking it on the chin, I think we did really, fundamentally realize that we we are all in it together, right? Borrowers, lenders, I mean, any, you know what I mean, anybody who’s in the market is is affected. So, that makes sense.

Bruce Norris  Let me, let me just finish Joey, before you go. What’s, what also was very impactful is when, when the lender inventory dominates the MLS, dominates the appraisal world. And they cannot make a sensible decision. They have to look at all the comps. Well, in Riverside, eight out of 10 comps were a vacant REO with no kitchen, basically. And so when we would go to fix a house, you know, two years ago is 365, we’d buy it for 65. Put 20 grand into it to make it really nice, put it up for sale at 100 and a quarter have 25 offers in a couple of days.

Jordan Levine  Right.

Bruce Norris  And then the appraisal comes in at 90. So, the appraisal world had no choice but to look at the dominant comp, and they destroyed the industry. I mean, not only did they create foreclosure losses, but they created the likelihood of more because there was no realistic value.

Jordan Levine  Yeah. It was a self fulfilling prophecy.

Bruce Norris Yeah, it was the REO price was the number. And so I think they learned Okay, let’s don’t do that we would, we’d be far better off instead of foreclosing on 6% of the world, and making it 80% of what’s for sale, then let’s be patient.

Jordan Levine  Yeah. Yeah, no, absolutely. I mean, I, it was funny, because back then we were always reading articles, like, you know, will banks dump their shadow inventory of… you guys looking at the numbers? I was like, they’re dumping REOs, like crazy.

Bruce Norris  That is funny. Joey you go ahead.

Joey Romero  Yeah, speaking of articles, you know, the ones leading up to now and, you know, when the foreclosures hit, you know, it’s going to be, you know, headlines of foreclosures up, you know, 800%, you know, but when you look at the numbers are gonna be very minimal. So, one of the other, you know, one of the things that people talk about, I was kind of wondering, Bruce just mentioned it, vacant homes, how did, how does CAR and you take that into account? Is it minimal? Is it non existent? Or does it actually affect some of the charts that you guys put out?

Jordan Levine  I think it is part of the universe of kind of price per square foot stuff that people see in, in the data. But I think, you know, from a consumer standpoint, it’s just part of the housing stock, right? It’s a substitute for any other occupied or whatever. And I think that when you have this kind of imbalance, supply and demand, it kind of tends to wash out in the aggregate statistics, right, we see filthy sales going up, we see prices going up by a lot. And I think it’s just, you know, part of the kind of otter housing stock that’s just always kind of in, in the mix, we have a lot of old homes in California, kind of by virtue of not building new homes too, is a lot of our housing stock is old. And so I think there’s always that kind of diversity, shall we say, in the MLS of just, you know, parcels and and things like that, you know, housing vacancy is still really low in California. So, I don’t get the sense that it’s kind of dominating one way or the other in the MLS data, but I do think it’s there but I just think we always have a pretty diverse group of homes in the MLS anyway.

Bruce Norris  I don’t, you know, I’m in Florida now I live in Florida, and we, you know, selling homes in Florida. And so I just wanted to ask what percentage of California’s buyers are cash buyers do you think?

Jordan Levine  I think we did an all cash number. I think we only looked at investors the, I have to go back and look at the owner occupants. It wasn’t very high, though. I think, you know, even on the investor side, you know, there was still I think it was like, you know, four out of five we’re still financing some of it right there was 17, 18% it Investors putting all cash we did see buyers use all cash. But what’s funny is it’s hard to measure the all cash right? Because sometimes people all cash means I got the money for mom and dad, and you know, did an all cash offer and then went out and refi… day and things like that.

Bruce Norris  Yeah.

Jordan Levine  But a lot of people putting 20% down that was the dominant share a lot of these high downpayment long term renters. As much as you know, I think I still read about all cash, but actually, you know, you only want to use as much of your cash as you need to, to get your offer accepted, I think in this kind of market environment rates are so low, right, it’s like you want to use as much of other people’s money as you can, but just using more of your own cash becomes a tactic to stand out from the crowd as a, as a buyer.

Bruce Norris  Well, I mean, the last time we had a home for sale in Florida, which was not very long ago, within six hours, we had 11 offers, 10 of them all cash, and for a price that was 15%. higher than asking, so if you’re a finance buyer, you’re getting taken out 10 to one with cash offers. So, it’s hard to get a yes.

Jordan Levine  Yeah, absolutely. And you know, like the FHA and the VA loans, right, that’s where a lot of the first time homebuyers come from, and if you got to three and a half percent down, right, and you got all these extra hoops that you got to jump through for the FHA to be happy with the loan and just more potential, you know, areas where the deal could fall apart and whatnot, and you got somebody with a bag full of money, you know, it disadvantages that being said that I think there’s still FHA and VA loans getting closer to a pretty small share of the market. But there’s still people getting in with three and a half and 0% down, I, you know, one of my good friends in the organization are in you know, organized real estate, Sabrina Brown, she works with first time buyers almost exclusively and bats and stuff like that, and, and she’s still got some inventory that says, ‘Look, we’re gonna have to make, you know, five gazillion offers, and we’re gonna have to look at every single one, and it’s gonna take a while, but we can get it done.’ And, you know, but they are there. And I think, you know, again, when you commoditize the housing market, right, it’s the people who are on the margins that are the ones that that you know, bear the brunt of it. If you got millions of dollars in the bank and you’re worried about higher rates and inflation in the future, then it still makes sense for you to you know, go 15 grand above asking price, because it’s, you know what, I mean, get in while the getting’s good kind of my mentality out there, so.

Bruce Norris  Joey?

Joey Romero  You’ve interviewed a lot of people that you know, have land on the different side of inflation, deflation, Jordan, with all these jobs not being filled. How long before it gets innovated past? You know, we’re like, Okay, we’re gonna look for a different solution and use technology or innovation to, to fix it.

Jordan Levine  Yeah. Now, I think you’re already seeing that, like, that was already a motivation, even before inflation, right was how do we get these pesky workers out of our hair and everything? And what can we do with computers and robots and, and all of that kind of stuff. And I think this only fuels that, that drive to innovate, right, and things like that. The flip side is you need someone to develop the robot in the first place. So, I think for that side of it, right, that, you know, we’re still gonna have a lot of high tech demand and doing stuff like that. But I think there’s all new modes of business and, you know, door dashing, and all this stuff that you know, and kind of automated delivery services and all of that where, you know, it that will play a role in the labor supply and demand dynamic going forward. And we’ve already seen a lot of people, you know, have their jobs, outmoded, and things like that, right. And, and I think that will only continue. The question is, how do we like retool folks or get folks to want to take up other other professions and things like that. And I think that’s where, you know, it’s kind of a policy challenge for those congressional people and the White House or whoever to like, make sure that we’re taking care of the people who are left behind innovation is ultimately a good thing. You know, we just got to take care of the people, you know, no one would say we should still be cruising around in the horse cart and buggy, right. But you got to make sure that the, the horse cart and buggy people have have some other outlet to not be on the dole, so.

Bruce Norris  That, that process is inherently deflationary, though.

Jordan Levine  Yeah, definitely.

Bruce Norris  Okay. So that’s, like we have the short term inflation problem. Do you think we have a long term that’s more deflationary than inflationary?

Jordan Levine  Very long term? Yes. Probably like, you know, past when we’re alive and whatever. But you know, I think that that you know, and that people talk about, like, universal basic income and stuff like that, because what, uh, you know, if, you know, how do people feed themselves if robots are doing all the work right, then there’s got to be some kind of a new and I do think you know, there’s, there’s a great book called humans are underrated, right? And, and it talks about, like, all of the kind of stuff that humans will still need to do. But I, you know, it’s all of the stuff that like, you know, kind of working with people and you know, being empathetic and whatever and being able to really understand and be strategic and things like that. And I do think it behooves everyone to start moving in that direction, because we’re not going to need people to just like be punching keys and whatever. It’s like, we can scan license plates and just, you know, all of that stuff so.

Joey Romero  Bill Gates started talking about like, charging robots Social Security tax.

Bruce Norris  Yeah.

Jordan Levine  There you go. Yeah.

Bruce Norris  That’s funny. There’s a there’s a good book you might want to read called the Price of Tomorrow. And that has to do with tech taking, you know, lowering costs of things and having it be deflationary.

Jordan Levine  So, yeah, totally.

Bruce Norris  Good book. All right, Jordan, once again, I’ve enjoyed the heck out of it.

Jordan Levine  Thank you so much for having me. It’s always a pleasure. I learned more from you than I ever do wherever else I got, so I appreciate it.

Bruce Norris  Oh, man, I appreciate that very much.

Narrator  For more information on hard money, loans and upcoming events with The Norris Group, check out For information on passive investing with trust deeds, visit

Aaron Norris  The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669.  For more information on hard money lending, go and click the Hard Money tab.



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