Real Estate: What Changed and What’s New? with Charles Karich | Part 2




Charles Karich is a local California real estate investor, realtor, and broker who has been serving the real estate market for over 43 years. Charles began his journey with Century 21 Masters in Walnut, Ca. before moving on to South Coast Properties.


He was instrumental in building South Hills Properties to one of the leading independently owned non-franchised firms in Southern Charles’ knowledge, expertise and background in the residential resale market is extensive.  Long-standing working relationships with banks, financial institutions along with a network of experienced real estate agents have made Charles and South Hills properties a company is well known for its exemplary service.


Charles believes in giving back through volunteering and financially supporting local and international charities that includes Habitat for Humanity, the Sheepfold and Royal Family Kids to name a few.  Helping others in need are part of his company’s heritage and a core pillar.



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  Thanks for joining us today, once again, our special guest is Charles Karich. What about the existing loan base that’s in place? You know, all these 2,3,4 percent loans? Do you have sellers willing to say I’ll leave my loan in place? Anybody knowledgeable enough to even contemplate that?

Charles Karich  I think a lot of people are thinking about that but it doesn’t make sense to break out of there two or 3% once in a lifetime, perhaps loan to transfer and trade out. I think most of what the looks are that were, most of the people that are moving right now or at least for what I’m seeing a large part of it is people moving out of state…equity and moving and for them. They don’t even have to take a loan out because they’re selling for two times and buying it one time, wherever their state is that they’re going to, see a lot of that movement. I, you and I talked about this before Bruce, I think it’s gonna cement in low inventories, relatively speaking, because I think people are going to think twice about getting out of a 3% or two point something loan to jump into a 6% loan, unless they can just move with cash should not have to worry about financing.

Bruce Norris  Yeah, I, I really think that that will be true. But I did some calculation today. You know, I’m writing this new report. And I’ve interviewed Christopher Thornberg yesterday. And I’ve been reading about the interest rate spreads that are normal and where we’re at. And it’s not inconceivable we could have double digit interest rates.

Charles Karich  Wow. Wow. Yeah, we haven’t seen, are you’re talking about double digit 30 year fixed interest rate? Yeah, we haven’t seen those since about. It was about 87 or 88 was the lasy when had double digit we wish that there was single digit interest rates. Wow.

Bruce Norris  Well, what is, what is an interest rate? today? I thought I just thought I saw a chart that literally in the last five days, it’s moved up a whole percentage point.

Charles Karich  That’s right. I think we’re about 6%. Or hovering real close to a little over six right now.

Bruce Norris  Right. So, you’re at 6%. And your, what’s your 10 year T Bill? Is it three?

Charles Karich  Yeah, it’s a little over three, I think yesterday was about 3.3, 3.03 or something like that.

Bruce Norris  Okay, so you’re borrowing money at six and you’re and your inflation rate is nine. That’s not that, that isn’t a normal number.

Charles Karich  Right.

Bruce Norris  So, yeah, so I, you know, I worked out some the math of some of that, because I always let, I was right to last chapter, last gotta undo I don’t make any conclusions until I, you know, paint the picture pretty clear for myself. So that’s very interesting, you know, we definitely have some challenges in the next year or two. So, and the Fed, I’m trying to understand the Feds buying of assets and how they get rid of them. Are you familiar with that?

Charles Karich  No, not really.

Bruce Norris  Yeah. See, that’s, you know, I know that that’s had been very helpful when the Fed has been basically the backing of the mortgage, you know, they’ve been, they’ve been owning the mortgages, at those crazy low rates, what I’m not sure when they exit who they sell those to, or how they do that, and how that changes the market. But I think it’ll, it’s really going to be interesting, because the conclusions of the report are definitely going to have to say, this could go in three different directions, you know, and kind of say, you know, here’s the conclusion, if the if the Fed gets weary of getting screened out, because in a recession is now occurring, and you’re still raising rates, okay, that would probably be received really poorly. And that could happen very quickly. So, we’ll see. But at anyway, yeah, we’re, I think, you know, we had a meeting with maybe, you know, I talked about this, personally. We had a meeting with Fannie Mae CEO last year at his office. And the discussion was, you got to find a way to let these mortgages in place go forward. You know, I mean, how safe would that be? You’d have people like you say, you can’t even have an REO because the equity position is so great on these mortgages. Well, what’s the problem letting someone say take that over, that means they’re going to have a down payment of what 40%? Your loans in no danger, but you’re gonna have a realtor make a living, think about how a little volume is going to occur. For mortgage lenders and for agents with the current policy of you have to get a new loan.

Charles Karich  While the refi market is completely gone, yeah, lenders that were booming, are now famishing, that entire refi market is gone. First, do you think their goal is to raise rates fast so they can lower them quickly?

Bruce Norris  Well, it doesn’t appear that the raising and fast, there’s no way if you look at where they should be. They’re not even close. I think you know what, you look back and go, well, I kind of wish they had raised rates earlier, because we got that extra 12 months of astonishing growth in price that really wasn’t warranted, not wasn’t needed. And it put the affordability number in the inflation of the 70, 74 to 80. We had interest rates go from seven and a half to 15. And guys wages everybody’s wages doubled during that cycle. But the reason that it lasted so long have an upside because prices tripled. That was possible because we started with a 45% affordability number, so it took seven years to get into 17. This time we accomplish that in four months.

Charles Karich  Wow. Wow.

Bruce Norris  So, they had very few raises of interest rates. And we were at the max payment historically that we get to. And by the way, you know, it was interesting about that normally, and now we are, we have been euphoric wasn’t when you say last year was a euphoric market when you put something on for sale and you got 10 cash offers and the price went up?

Charles Karich  Absolutely.

Bruce Norris  Yeah. So, so that’s the only way you get to 17%. Affordability is euphoria. Okay. So let’s, let’s think out loud. So let’s say, you know, Jerome Powell calls up and said, you know what, I really made a mistake. Let’s go back to a fed fund rate of 1%, and tomorrow morning, interest rates on mortgages are three, do you still have the urgency in place? Or is that gone?

Charles Karich  Oh, good question. That’s a hard one, really, that’s such a quick turnaround. That’s such a quick turnaround. I don’t know if they magically wake up the next day, and say yay. I know, you and I talked about this. And you’re saying no, it takes a long period of time for it to change back again for that.

Bruce Norris  Yeah.

Charles Karich  My question is, I do not work transitory because they overused it and said that about inflation. But I’m going to use it in a different venue. These high prices, are they so transitory that people aren’t even really aware? Now they go back down, for example, talking to Uncle Ray in San Francisco, he’s saying that their prices have dropped about 10 or 12%. And if you just only had gainsay for a year that were not normal, and then they come back bouncing down, do you think that creates a lot of damage to the buyers in their minds or to the sellers as well, because it was only a little window. And if it bounces back to where it becomes enticing for a seller and a buyer to move forward. These prices have, these high prices haven’t lasted a long time so far. As far as this last stretch.

Bruce Norris  No, because the last stretch was pretty artificial.

Charles Karich  Right.

Bruce Norris  I mean, they were on the backs of mortgage rates. So, you could have a 20% price increase and not change your monthly payment a $1.

Charles Karich  Right.

Bruce Norris  So, yeah, that whole that whole game was manufactured by policy.

Charles Karich  Right.

Bruce Norris  So yeah, that’s part of the part of the calculation of saying, Okay, this is what the damage path might be, is they’ll, there’ll be an assumption of, first of all, where’s the inventory going to come from? Because if it’s if it’s not going to come from lender on properties being sold, you know, that revert to a lender, which I think are there going to be fairly far and few between, then you look to the builders, okay, so the builders they, are they’re going to have massive inventory. You know, are they building massive tracts that they’re going to be auctioning off because they didn’t sell? There’s no way as a matter of fact, now they have an all cash buyer that’s ready to buy the whole tract. So, where’s that inventory going to go? It’s not going to I don’t think it’s going to get in trouble. So, you have now the existing base of homes that’s for sale. And okay, you got a mortgage discharge with the two or three you’re going to sign up for one that’s a 6, so it would have to be an urgent situation. I lost my job in California and I got a new job in Missouri. I mean, that type of thing.

Charles Karich  Right, no, I agree. I think the only cup that, that could be increased with the inventory, are not the banker builder right now it’s the traditional sellers. And just to your point are they going to want to give up their two or 3% loan for 6%. And only if they have to or only if they don’t need it going forward? In other words, let’s say they have 50% equity in their home here, with a 2% they can go to Missouri and pay cash, no matter if rates are 12% and still have money left over. You mentioned to me, tell me what percent our market is out, out of state buyers? I mean, out of state sellers?

Bruce Norris  People that are selling and leave California is that what you’re saying?

Charles Karich  Of a total seller makeup of traditional sellers, what percent are actually moving out of state?

Bruce Norris  It’s a little over 30%.

Charles Karich  1/3 of our market.

Bruce Norris  Yeah. And but that’s actually not unusual for California, you’ll, you’ll range probably from 25 to 30%, if you go back a long time.

Charles Karich  Right.

Bruce Norris  So, what’s interesting now is your you’re actually losing so much migration, over immigration, so you’re really losing buyers, but you know what, you haven’t built anything. So, that’s the other thing, ‘cos usually peak market. So let’s say euphoria is at 17% affordability, look at how many homes were constructed in 80, 89, 05, 150,000, 160,000, last year 60,000.

Charles Karich  Wow.

Bruce Norris  And it wasn’t more than that. The last, say eight years before that. When the other years it was, it was 160 at the peak, and 140 last year before that, and 135, and so forth. So, you’ve got really a million homes in this last cycle that were not built in California.

Charles Karich  Wow.

Bruce Norris  So, you don’t have you don’t have an abundance of inventory that’s going to auction tomorrow, buy from the builders that is not going to occur. And that’s why you have all these needs for okay, how do we do an ADU attached to something that you own because we kind of need the space. So, it’s a really unusual, it’s really an unusual market Florida’s going to be interesting to play with these statistics, because there you have a lot of cash buyers. And intentionally, you know, we’re um, specking houses. We’ve, first of all, we did a lot of research as to what, where the margin is, you know, what can we build that has the most margin as far as when we’re doing a sale on resale. And so the margin exists when you have a pool, when you have a Lanai that’s covered. And you have a third car garage, you know, it’s basically you double your profit by having those things. And your percentage of cash buyers is much higher in that price range than it is on your starter home. So, that inventory is got the migration of people coming from New York, New Jersey, and Canada wanting those amenities and having sold something that sold for twice as much as what they’re buying from you. So, that’s the safeguard in Florida, you know, there’s a lot of that. So, it’s just going to be a really interesting time, I think the one chart that you can pretty much say that’s going to get killed as the volume of sales, if they do not let the interest rates that are in place go forward. And I hope they do. I hope there’s some power to be this as you don’t want. We’re overriding this because it’s because it’s, it’s healthy for the country, and not in any danger of the lender. What if you did you know, you made an interesting comment that the people that are there buying now we’re willingly signing up for a seven one. Okay, so transfer the loan and make it a seven one. So, now the lender is not on the hook for the all the whole time.

Charles Karich  Right.

Bruce Norris  Interest rates enough to make entice the sale, and the broker actually makes a living. Because if you don’t do that, I mean, how many brokers are going to be around if the volume is 50% or less of what it is?

Charles Karich  That’s right. No, it’s gonna be a lot of people leaving the industry for sure.

Bruce Norris  Yeah, that seems to be almost a certainly, certainty. It’s just interesting. Some of the things you know, we’ve been able to go back to Washington a few times and one of them. I suggested they have a nothing down loan program and about 2010 to get people into homes and have one foreclosure law, Nationally, well, you’re six months delinquent, okay, the opening bids, the late payments, so you have no REO danger. You know, going back, can you imagine how many lives people, how many lives that would have changed? For families?

Charles Karich  Oh my gosh, that that would, that would solve the whole foreclosure market. Absolutely, that would be an incredible program.

Bruce Norris  I think, I think it would have solved. Or, like the have and have not programmed to our problem, too. You’d had so many people now with equity and a payment that’s not even close to rent. And they’d have equity and they could be entrepreneurial. And they could see that side of the world. You know, we just missed a big chance. We sold all those homes to Wall Street for 20 cents on the dollar. And I was in some of those meetings where we were offered a billion dollars to spend for them. And I said, they’re just not my thing. Don’t want to do that.

Charles Karich  Right. No, I didn’t want to participate in helping with that either, really didn’t feel like they’re moving into our market, just to capitalize as quickly as it could and, and then exit out once another asset class was more favorable. But it was that asset class as your of the moment.

Bruce Norris  Yeah.

Charles Karich  …with a vengeance.

Bruce Norris  Yeah, that was the existing homes, and now it’s new homes.

Charles Karich  Mm hmm.

Bruce Norris  You know, so, you know, John Burns is really involved in that, you know, he’s the, he’s probably the lead consultant for Wall Street companies that want to own rentals, that’s for sure. So, it’ll be really interesting at the I Survived event, when he’s on the panel, because that’s certainly part of the demand that is in place. Are you getting called about people buying your inventory?

Charles Karich  Well, we yeah, we do get calls a lot. Texts and emails quite a bit. I think it’s more not from the institutional buyers, maybe more smaller Investor Buyers, but…

Bruce Norris  I’m getting…

Charles Karich  …a bit but.

Bruce Norris  I’m getting calls for let’s say, we want to buy all your stuff.

Charles Karich  Oh, wow. Are the entire, the entire pool?

Bruce Norris  Yeah. Because it’s newer stuff. They just had this, you matter of fact, you have to have 10 or more for them or to be interested. But if you have that product, yeah, they’re very interested. I get called every other day. It’s crazy.

Charles Karich  Wow, they just want to buy the entire pool of homes you have that are new?

Bruce Norris  Yeah.So, okay, but that’s a backstop right to problem. That’s right. And that’s a new buyer that wasn’t, you know, that wasn’t prevalent in 2008 and 9.

Charles Karich  No, we didn’t have that at all.

Bruce Norris  Right. So, that’s the new toy. It’s not the existing home that’s an REO. It’s the new home. That and John Burns said something to me that I didn’t even realize could be possible. But some of these Wall Street companies have arranged financing, that’s very cheap for a while yet, like years still. So, they have a big advantage of what they’re paying versus the rate that we’re seeing.

Charles Karich  So, they’re they’re still getting really low interest rates to finance their pools.

Bruce Norris  Yep. Yeah. So that’s, you know, that’s a big advantage in the marketplace, and certainly would entice them to make that, make use of that money, that’s so cheap. All right.

Charles Karich  Are you seeing our interest rate for 30 year fixed, it’d be a lot higher than it is with our 10 year Treasury at three 3%.

Bruce Norris  No the 10-year T Bill, 10-year T Bill, has no business being at 3%.

Charles Karich  10-year should be a lot higher than 3% is what you’re saying?

Bruce Norris  Well, yeah, if you look, historically, was an inflation rate at nine. It shouldn’t be, it shouldn’t be under nine. Wow. But it doesn’t mean that it’s going to be anywhere close to that. But it’s there’s some formula that I’ve looked at today, number of times, and you’re just going holy cow, the differential between, like the historical chart going back to when the inflation was in the 70s. We’re at a record differential of where we have been before. So, the interest rates are so much lower, then it’s like we’re really not fighting inflation for real yet. It’s still transitory in somebody’s mind.

Charles Karich  What’s the normal spread?

Bruce Norris  It almost doesn’t exist, but many times it’s over the inflation rate.

Charles Karich  Wow. So, the 10-year is normally higher than the inflation rate?

Bruce Norris  I want to make sure I think about this. No, the mortgage rate can be higher than the inflation rate.

Charles Karich  Wow. Wow.

Bruce Norris  The 10 year T bill’s less than the mortgage rate. Right. Right. Right. So I would say the mortgage rate Well just think about when the inflation in, in the 80s. You had mortgage rates, I borrowed money at 17%.

Charles Karich  Right.

Bruce Norris  So, I don’t think inflation was that high. I think it was certainly in 12 or so maybe even 14 or something.

Charles Karich  Wow. Wow. Wow.

Bruce Norris  So, yeah. So, you know, yeah, we have an interest rate that’s still really interesting. So, you know, this is out of my, out of my league to say there’s a time attached to it, where this is going to change radically. But there’s no history there is actually that’s one thing that always when I look at charts is have we ever been here before? And the answer is no.

Charles Karich  Wow. That’s why you said, we really should probably be at a double digit 30 year fixed right now.

Bruce Norris  You know, when I heard that, from the gentleman that I interviewed yesterday, I was, I took it seriously, because he’s, you know, he’s, he’s no joke as far as either. He’s got a really good head on his shoulders and really understands the history of things. So, that I started unpacking all that and going, Wow, it’s, that’s a possibility.

Charles Karich  That was Chris saying that?

Bruce Norris  Yeah.

Charles Karich  Wow.

Bruce Norris  Yeah, you should, should listen to that interview, because that was, that was pretty interesting. Because he also thinks that I don’t think he thinks it’s going to create a lot of damage you and that was, you know, didn’t get into the math of that too much. But I think it comes from the same idea that who’s going to sell their house with a 3% mortgage and go sign up for a 10, it has to be an urgent situation. Okay, well, that’ll be some percentage of the market, but it’s not going to be a dominant player.

Charles Karich  So, we basically freeze our market, maybe the only sales really will be traditional sellers moving out of state. And then with the shifting demographics, and the aging of our population, may be the trust in probate homes, where people, the elderly, their parents passed now they got to be selling those homes. So, there’ll be older homes, that maybe are in good, solid, strong neighborhoods, that will be sold and transferred down that maybe were held in the family for 30 or 40 years. And now those are being freed up to be sold.

Bruce Norris  Yeah. And cash buyers.

Charles Karich  Right.

Bruce Norris  So, yeah, I could see, you could still have a 50% of the market as far as number, but think okay, but then there’s a reverse problem. So, I’m just working on this chapter. I’m thinking all this out. So, right now, the last the latest numbers that came from car as you’ve gone from 430,000 sales here to 380.

Charles Karich  Wow.

Bruce Norris  That’s, that’s not a big deal. But the trajectory is going to occur more. So, let’s say you get to 50% of the sales 200,000 sales. Well, now the other problem becomes bigger. Okay. So, you automatically have doubled with the months of inventory if you’re selling half the homes, right?

Charles Karich  Right.

Bruce Norris  Doesn’t doesn’t have to change the number of houses for sale, it just changes how many months you have. But it also changes the percentage of foreclosures that do ultimately show up as a percentage of what’s for sale. And that’s a very dangerous number. So, that’s I don’t think that’s going to happen this cycle, but the lower sales go the higher percentage, all that other negative stuff becomes a percentage of.

Charles Karich  Right. That makes sense.

Bruce Norris  Ah.

Charles Karich  You’ve got a lot to wrap your arms around for your report, that’s for sure. And things that never occurred before. It’ll be really interesting to see.

Bruce Norris  Well, see, see, that’s the math, the math function of it is just one part of it. We kind of have four chapters at the end, and they go, okay. You’re not out of the woods yet. And then the next chapter is, yeah, there’s still more woods. And so every time you think, okay, that’s, that’s it, right? No. And so you’re, you’re contemplating something that so, you know, when you’re, that’s why I asked you, if you go back to a 3% mortgage tomorrow, after four months of changing. You don’t have the willingness of that buyer to pay the same payment. It’s, it’s gone. You don’t have 10 offers, just because that happens. So, so, you can, you can do the math equation and say okay, here we’re back to this, but historically, and that’s what I was telling you that affordability number is unvisited only in euphoria, and it’s visited 80, 89, 05 and 2022. So, a very long time period.

Charles Karich  Do you know what the current affordability number is right now?

Bruce Norris  The last? And it’s unfortunately, it’s been the wrong quarter to have no information. But I would say it’s got to be 17 or less. It was 24 when interest rates were three and change.

Charles Karich  Right, right. Yeah. 24, right. Yeah, I’m sure, I’m sure it’s probably below 17% right now.

Bruce Norris  Well see if that’s true, then there’s no history of it staying there in the legitimate lending world.

Charles Karich  And what’s your experience as far as once it hits 17%, how long until the market completely changes? How long does it stay strong, before it goes bad once it hits 17%?

Bruce Norris  Well, that’s one of the problems for this market, is that every other time you have that happen, you get relief by interest rates going down. So, the uncharted territory part is, oh, that’s not what you have. So, you’ve, you’ve ended the cycle at a price per month. That is the max and now you’re going to raise interest rates and at same time, lower your buying mood toward the product never happened before. So, what, what’s the math of that and it’s not pleasant. It is not pleasant. So, we’re doing the, the matrix of that right now. So, we have what I call the moodometer that’s something that we created.

Charles Karich  Right.

Bruce Norris  If that’s all you ever had in real estate, you would know approximately when to be an exhibitor have property and a buyer of property, it’s, it’s that clear, and it’s repetitive. So, there’s only a few times we’ve ever breached the 60 plus percent of a median income being the PI payment. Okay, so that’s, that’s happened just now. But at the bottom, you’re at about 28% of that. But that’s not normal, either. So, those are, I hate real estate, or I love real estate.

Charles Karich  Right.

Bruce Norris  But so now you can do we play with the math, but that’s literally what we started today. So, which take the price, right now is 868,000, or something like that median price. And what we do is we feed in to it an interest rate, let’s say it’s six, and then at seven, and then at 8 and 9 and 10. And you have to replicate that same payment. Okay, well, it doesn’t fit past six. So, that’s okay. So, that’s to come out of the price equation. But, but now let’s say you can’t end up at 60% mood, right?

Charles Karich  Right.

Bruce Norris  So, now you have a double whammy. Your interest rate hike is taking away your capacity to pay that number. But your mood isn’t to pay for it anyway. And so yeah, the math of that. I haven’t done all the charts yet. But I can see that that is much, much more aggressive price declines that are possible. If you have a lot of, a lot of people having to sell, you know, okay, and how does that occur? Well, you’d have to have, you’d have to have a fair amount of people lose their job and say, I got no choice. You know? So, yeah, Uncharted, yeah, it’s a perfect title. I, I didn’t want to do crash, too, because I didn’t even think of that being a possibility. I don’t, I still don’t think that but I, I think we ought to take a look at that math and go, Holy cow. That’s, that’s scary. Some of those numbers are scary.

Charles Karich  Right. I saw I think it was Sean O’Toole. Or no, maybe it was him. And September last year, and he was thinking that California is going to be strong for another 10 years. But this was before we had all the doubling of interest rates and everything else. So, very interesting.

Bruce Norris  Yeah, he’s gonna be on the panel at the Nixon library to you know, how do you, how in the world could you predict that we were going to have the cheapest rates go a year long and add 25% remember, I mean, the report that I wrote at the end of 2019 was looking at the best set of charts ever, with CalPoly Pomona appraises about 1000 or 2000 homes every quarter the same house 25% of those were already going upside down negative in 2019 at the fourth quarter with no foreclosures, I mean, none of the normal stuff, damaging price, and affordability still very high. So, you look at that and go, Wow, if we are not going up in price with that set of charts, and we probably will have a downturn, which is what I said, then then pandemic changed the urgency of everything. It changed the urgency to buy something to move wherever you felt safer to put your home office in, and prices exploded. But all that cash. I don’t know if you and I talked about this, I have a really good friend that bought a 60 foot yacht and he said the sentence the one sentence I’ve never heard in my life. He said I could buy, I could sell my boat for a profit. That’s when you know, something’s wrong.

Charles Karich  Crazy anomalies. Absolutely. And you’re right, I bring myself back to the fourth quarter of 2019, we had one property right off the main area where open house that we did would have just flourished with fire activity, and are in a great pristine area. And we’d have nobody come through. And I’m not talking when I say to you or I’m talking days where we did it. On the weekend. Now one person came through, and nothing had really changed other than, and there wasn’t any inventory really spike ups, it was still the low inventory. But the demand, I don’t know where it went, it just kind of disappeared. And then here comes COVID and all the anomalies with it.

Bruce Norris  I remember you and I talking at that time. That’s right. It was part of what you know, part of me thinking, Okay, wow, if you can’t, if you can’t sell a decent home with that kind of exposure, and you know, when you already know, the market well enough to say this is the price. That was definitely an influence where you think, Okay, I’m having the same feeling with the stuff that we’re flipping, you know, the the reaction of market is telling me, this isn’t going up anymore, there’s not enough demand for that to occur. So, but, and, and now we’re, now we picked ourselves to the peak payment at an interest rate. We were fortunate that the interest rate that got us there was really 5% anything past 5%, you start having an affordability problem below 17, I would say, or a moodometer payment problem and so forth. And so you go, okay, that’s got to come out of somewhere, or the sale doesn’t happen. So, that’s the thing. Okay, so you’ve you’re going to have, you’re going to have sales happen, but it will be without financing or it’ll be from somebody that selling an asset that they can go somewhere else and buy it for cash. So, but that, it’ll be interesting. I still I haven’t even written the last chapter yet. We just started playing with the numbers. Right before I was talking to you. I looked at the numbers for the first time and went Oh, it’s not good.

Charles Karich  Yeah, it’s it’s it’s the scenario, the worst case scenario that you painted. You said, I sure hope we don’t get the sky high prices, with a real high interest rate on its increased on an increase. And if we do, we’re painted into a corner, it’s not going to be good. And that’s where we’re at right now. High prices, and interest rates going up and up and up.

Bruce Norris  Yeah, I mean, that’s, that is definitely where we’re at and the damage path. See, okay, you know, again, this will all be in the in the seminar booklet, but their stuff, the Feds Is not this the lowering of interest rates, it’s the accumulation of assets they’ve never owned, they’ve never own mortgages. That’s not, that’s not typically what they do. They do overnight lending right to lenders. They just haven’t been the buyer of mortgages. And now all of a sudden, they’re going to be the seller of that stuff. And maybe on wind, almost a $9 trillion pile of stuff they have. Well, that’s not received well, either.

Charles Karich  Well, does that all that stay in the bowels of Fannie Mae and Freddie Mac?

Bruce Norris  No, I don’t think so. That’s a good question. I’ll ask Doug Duncan. But no, I think that’s that’s the Federal Reserve has now bought those.

Charles Karich  Hmm. Wow.

Bruce Norris  Because I, as I recall, the times that I was back there at Washington DC, they were talking about it was part of their mandate, they had to get rid of ownership of mortgages.

Charles Karich  Wow. Well, I think what they need, Bruce is, are some excellent guidance in some programs that you’ve mentioned to them before. They could really in a simple stroke, fix a lot of the complexity of where we’re at and stabilize the homeownership and help homeownership for our country to benefit not only the seller, but the buyer and is also the lender and really strengthen our country. And yes, good ideas. And I think that would be amazing for, for the GSEs. To adopt.

Bruce Norris  Yeah, um, I don’t know, who’s the, you know, we got one of the top guys that is given us inroads to, you know, have lunch with the CEO so that if you can’t have a conversation, it seems like that’s the top of the heap, right? How about doing this? It seems like it ought to be able to go from there to see if it could be a policy change. But at the time, there wasn’t any urgency. But now there is.

Charles Karich  Right. Well, next time you go up there, I’d love to go with you anywhere I could help. I’d love to go up there with you.

Bruce Norris  That’s right. And we’ve dealt with a lot of the GSEs and seeing the good and the other parts that can greatly be improved. So yeah, what’s your ideas? And I think it would really benefit the whole financial mortgage market world for the better.  Yeah, you know, as John Burns is, I’m sure he had a chance to, to do some of those conversations, I would think I would hope I mean, because he’s a bright man that has a lot of influence and a lot of clients that. Yeah, that wouldn’t be a bad idea to have just a small consortium of very experienced people with different you know, like, you’ve come from the realtor world, investor world, John Burns is the builder world and you know, that type of thing. It would probably be a good brain trust to have, have, them have to sit down and say, Okay, what can we do? What do we need to do? Well, it’s always funny when I go up there because I’m always talking to a PhD and I have a high school diploma. You know… I’ve gotten over that. But it is funny that, that does occur to me once in a while. It’s just like…

Charles Karich  Oh, well, you know what? I believe you’ve been put where you’re supposed to be. And it’s part of your calling. And I think God’s put you in these places where you’re supposed to be, I’ve been surrounded in places myself with PhDs and treasures in the United States wondering why am I here? I not supposed to be here, but…

Bruce Norris  Here I am.

Charles Karich  So that’s favor. That’s good. That’s very good.

Bruce Norris  All right, Charles. I guess we better wrap it up. I always enjoy talking to you, man.

Charles Karich  All right, Bruce. So good to see you. Joey in the background. Thank you.

Joey Romero  Thank you.

Charles Karich  Take care.  See you, Bye.

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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