Katherine (0s):
Hi everyone. Welcome back to reality. 2.0, I am Katherine Druckman and joining me today are doc Searls and bill window, who is going to talk to us a little bit about real estate and the intersection of tech and real estate and surveillance capitalism and some really good stuff. I'll let doc introduce him in a minute, but before we get started, I wanted to remind everyone to check out our website, reality, to casts.com, sign up for our newsletter.

Katherine (41s):
And I also wanted to thank all of our Patrion supporters and our coffee supporters and all of our supporters and listeners and people who sent us all these kinds of emails. Thank you so much for listening and then indulging us listening to our opinions about life and technology. The other thing I wanted to point out was that we added a new t-shirt because sometimes on weekends I have fun making t-shirts and sometimes I express my opinions about, oh, say Apple's new policy and make a t-shirt that says this screeching voice says of the minority. And so if you wanted to check that out that, you know, it's, it's fair now. So, so doc, why don't you take over and introduce us to bill?

Doc (1m 22s):
I should add by the way about the t-shirt that it was an, a layer lapse of a bare lapse of, of manners and apples, but side to call people who objected to their new, see Sam thing as screeching, whatever it was that, that, that, that explains the t-shirt. I, I wanted to S I, I wanted to introduce bill because if I don't, I wanted to pull him into the show because as some of you know, I've been running this project at the Berkman Klein center at Harvard for since 2006. And the whole idea is to empower individuals in the marketplace and, and to start developing solutions to business problems that can only be solved or best be solved from the customer side.

Doc (2m 5s):
And bill has been on board with that from the beginning, or maybe even before the beginning, his company is real estate cafe he's in Cambridge mass, a human human-like that I'm about to tell you this, but he actually played football for Harvard as well back in the decade. So don't mess with him, but bill knows more about real estate than anybody I know. And, and so I, you know, I wanted to bring him in here because real estate is the, for those of us who end up buying it, it's the biggest purchase we'll ever make in almost every case. And unless we're in, in the yacht re-agent or something like that. And, and it's a really difficult market right now, the prices are going through the roof.

Doc (2m 47s):
It has a lot of the signs, at least to me, as an amateur, looking at it from the outside of something of a bubble, there are, you know, it's a willfully complex marketplace. There's a lot that people don't know when they get into it. There are many different players that some of us don't know. So, so bill, just give us a kind of high level on, on where we're at with all this right now and why, you know, it help us make sense of it

Bill (3m 12s):
Sounds good. Well, I'm going to start by saying, I remember when we met in 2006, and it's really interesting to see how many people are comparing right now to 2006, because that of course was the peak of the last housing. Boom. And so the question is, are we there again, so I'm glad that you began by telling a little of my personal story that I think some of us are naturally defenders and some are promoters, and I've chosen to play defense in real estate. And that means protecting home buyers. There's literally a legal role called the buyer agent. And I tell people that it's like, I see the industry upside down and backwards.

Bill (3m 57s):
I'm on the buyers side, not the seller side. My goal is to get them the lowest price, not the highest price. And so that puts my peer group at odds with an industry, which has a built in seller bias, which we're witnessing right now on an epic scale. Some FOC Vox news called what's happening in real estate right now, a dumpster fire. And I would agree,

Doc (4m 23s):
We, we always hear that often hear this, that the agent doesn't matter who they're, who hires them. They're always working for the seller because that maximizes their income. They get a piece of the take, right? And it, how well, how well is your business? I mean, in, in not your business personally, but, but the buyer agent business doing in a, in a market that's basically rigged for the seller, no matter what it seems.

Bill (4m 48s):
Yeah. Yeah. The bad news is that the buyer agency movement is on life support. It probably was at its peak. About 20 years ago, it looked like it was going to be a player in the industry. And actually 30 years ago, a gentleman named Steve Brobeck, then executive director of the consumer Federation of America recognized the same tension you're alluding to Doug, which is if you're getting paid out of the sales price, don't you have at least a subconscious desire to get that commission check. So he proposed what we call uncoupling. The commission, the real estate commission is a two-sided fee. It's built into the sales price.

Bill (5m 30s):
If your property is in the MLS, you have to offer a cooperating fee. So grow back 30 years ago, predicted if those two fees were pulled apart that consumers would save 10 billion with a B 10 billion a year. Well, 30 years later, that figure has been revised upward to 30 to 50 billion a year. So arguably back of the envelope, math consumers have been overcharged a half a trillion in fees over the past 30 years because of this unnatural tying of commissions. So,

Doc (6m 5s):
So, okay, there, there are some other situations that are going on right now, too. They win. I mean, we've bought a number of houses over the years. And in the old days, there were a lot of independent real estate agents and they were known for their independence and they kind of sold themselves as independent. And now, you know, not only is there other lots of new kind of, you know, we're in the platform world now, you know, so there's sort of the equivalent of the apple, Google Facebook, Twitter world in the, in the world of real estate with some companies that didn't even exist 20, 25 years ago, like Zillow and Redfin, and they're playing a new role here.

Doc (6m 47s):
And then there are these people you call I buyers, which are investing buyers. And, and I actually heard something this morning, which I may not have heard it. Right. But it's, it sounded right. We're in Indiana now. And that a huge percentage of the rental market of the rental housing in Indianapolis, which is one of the, you know, top 30 cities in the U S are outside. Investors are not local owners. And, and so the fear that I have, and I think a lot of us may have is that, is that the idea of home ownership of personal home ownership may be going out the window because all the investors are going to get involved.

Doc (7m 28s):
And then all of a sudden we're all going to be renting because we can't afford to buy and that they've soaked up the inventory. So that's sort of several topics at once. So if you could kind of pull those apart for us, that'd be great. Sure.

Bill (7m 39s):
Let me try to pull some of those apart and, and lead me through the conversation if I miss some of them. So the mom and pop shop the demise of the mom and pop shop that one, that one hurts personally because I enjoy being a solo entrepreneur. I know a lot of solo real estate agents. I think they have high integrity and deep knowledge. In fact, I call them real estate sages. My tests of whether you're a Sage or not is whether you've been through one boomer bus cycle. The industry now has 2 million agents. A lot of people jump in because there's the perception of easy money. So we actually have more agents than houses for sale.

Bill (8m 22s):
And some of those agents have chosen to go with big brand names and by definition, then they are part of a giant conflict of interest machine. I don't think fiduciary duty scales. I don't think you can represent a buyer when your house has got, I dunno, a hundred listings that you're trying to get the maximum price. And you're the only person in the office trying to get the lowest price. I just, I, that doesn't square with me. It's a conflict of interest. I buyers, I would say the shape shifters of real estate over repeat that the shape shifters of real estate.

Bill (9m 2s):
When you meet with a buyer or seller, you're supposed to make a clear whose side you're on. I believe every state requires what they call an agency disclosure. And it's just, am I working for you or working against you? Well, there's something called self-dealing, which is I'm actually in it for myself. Some of us call realtors, dealers, they're in it for the commission check. Well, the eye buyers are actually in it to buy your house. So the role that they, once the default that we once assumed in real estate, the person you were meeting with was there to help you sell your home. Or if your buyer help you buy your home is now coming to say, before we have that conversation, you probably don't really want to do all the work you need to do to fix this place up and sell it right.

Bill (9m 53s):
Would you consider an all cash offer? If I can make it to you sitting right here. And some of the surveys are saying as many as 70% of buyers, they're saying their sellers, excuse me, these are homeowners saying, yeah, tell me about it. So that's, that's created an unlevel playing field. And as you said, we now have a generation of young people competing with institutional buyers. And it really has gone to the heart of the American dream. And I would say as a baby boomer, it's, it's really a morality player. We going to be the first generation to take the money and run.

Bill (10m 34s):
Are we going to pass on our housing to the next generation at a price that allows them to enjoy the quality of life they call it generation priced out.

Doc (10m 48s):
Sounds hopeless. So I'm wondering,

Bill (10m 52s):
Let me stay with that. And that is why young people are calling this a dumpster fire. Other people are, I mean, no lesson, Robert Shiller, Nobel prize winning economist said, this is the wild west of real estate, a peer of mine. Who's the head of the Massachusetts planning council as to area planning council. He says, it's the worst market he'd seen in 40 years. I would agree with him. There are lots of, I call it peak real estate dysfunction, lots of very strange things happening that are distorting, just pricing, you

Doc (11m 27s):
Know, in a, in the big short, Michael burry is quoted as saying that whenever you have a great deal of complexity and opacity in a, in a marketplace and, and very high prices, it's a bubble. It's going to burst at some point, but it seems to me that this one may be enough of a shell game where even the people reporting on it, you know, don't know enough about it to, to pull it apart and say, here's, what's wrong with it. And then the regular, I guess I assume the regulators are, are as in this, in some ways as anybody else.

Bill (12m 2s):
Well, depends on depends on what level. So at the state level, the research done by the consumer Federation of America, again, Steve Brobeck is the point person there for real estate. It's been the case of the Fox guarding the chicken coop for decades. In fact, I know he's updating his 2006 report as we speak. So, but at the, at the national level, as joyous discovered, there's a new sheriff in town and the executive order out of the white house named real estate as one of the injury industries that needs a top to bottom analysis of are there anti-competitive practices here that are inflating transaction costs, as well as property costs to consumers.

Katherine (12m 56s):
I, you know, something you said earlier made me wonder about the, the statistics that I have read about the us homeowners. So among us homeowners, they value of their primary residence is a very large portion of their net worth. And I wonder if that fact is also at odds with the system, because then you, then it sort of the, the social responsibility maybe falls upon these individuals who are so reliant on the value of their property. And they're in a weakened position in relation to the system, quote, unquote, you know, the, the larger entities that perpetuate the way, the, the system that we're in, that, that prevent younger people from buying in.

Katherine (13m 47s):
Like if you didn't buy in, in time. And, you know, I, I shudder to think of how difficult it would be for me. If I were just a little bit younger to scrape together a down payment to, you know, do all of the things necessary to buy a house. And, and, but shifting that, that sort of the moral, the morality on to individual homeowners is also problematic because you're gonna have they're in a position where you know, that that is their security, that's their safety net. And so, so I don't know, like how do you reconcile those issues?

Bill (14m 20s):
I hear the tension that you're speaking about, and it is it's troubling. I assumed that housing was a human right in the U S and I was surprised to find that the us is among the countries where it is not a human, right. So there's a very, unfortunately very dynamic woman under of Canada, who was formerly with the UN, who is among the people who is trying to lead a global movement that we need to realign the moral compass, that housing in fact should be a human right. And I find hopeful how we get there from here. I don't know, as you say, there is a, I would say there's a generation of baby boomers who have rigged the housing market to enrich themselves.

Bill (15m 5s):
I mean, we changed the tax laws. We have created artificial purchasing power over the past decade with low interest rates. And so we look really good on paper. And about two years ago, a Zillow, well, actually about eight years ago, I think it's city lab did a story called the great senior sell-off. And they basically said that the next generation can't can neither afford, nor do they want these houses, that senior sell-off has yet to come. And in part, because baby boomers do associate their security with the value of their home.

Bill (15m 48s):
And so they're staying there. Yeah. In fairness to them, we also have a tremendous imbalance in the inventory of the market. If you lost a spouse and you thought, you know, I'm haunted by this house, I just want to buy an affordable condo. You may not have that option in your city.

Doc (16m 9s):
That's interesting. How is it? I just, I would just assume there are plenty of condos and smaller places like that, that you can pick up, but maybe, yeah, it

Bill (16m 22s):
Is a market by market situation, but just a quick stat. I believe that 28 percentage of adults now are single person households. And I believe that 85% of our housing inventory is oriented to single family or larger. So, and it is that low hanging that first rung of the housing ladder that both first-time home buyers and empty nesters are competing for. So I want to pull this into the language of intent casting, which is that, you know, one of the problems in the current supply demand imbalance is that we have an imbalance of what exists in the marketplace.

Bill (17m 5s):
And certainly the economics of new construction, forced people to build larger, more expensive homes. But I think we also, with intent casting, we will have in a sense of time housing census. And if you're a city planner wondering what's the highest and best use for that parcel that the church used to own, but now they're out of business like a hundred thousand faith communities across the country. A hundred thousand of them may go out of business. What's the highest and best use for that parcel of property? Is it, is it luxury condos or is it downsizer units or first-time home buyer units?

Bill (17m 46s):
And I think intent casting will help answer that question, doc. That's why I'm

Doc (17m 50s):
Yeah, that's a, you teed up a good one for us. We're first both to explain to the listeners what intent casting is. That's where I'll just go rewind just a tiny bit, which is that when we started the project at the Berkman Klein center, the one of the purposes there was to improve the way that demand and supply signal each other. And what w we live in an economy that where the, where the supply side is got all the advertising and makes all the noise and the demand side basically just chooses what they see. And the idea is that anybody should be able to intent casket, cast their intent to buy something that could be anything but real estate is one of them.

Doc (18m 34s):
You know, I'm looking for, for a house that's near this church and this school, you know, whatever. I mean, there are a whole bunch of variables that might be involved in that. They're, they're casting their intent. It's, it's sort of like very narrow broadcasting through a system that is not rigged for the seller. It's rigged, it's rigged to maximize contact between both sides. And that in fact is why we, my wife and I are in Bloomington Indiana right now. Cause we're working on unintended casting in a, in a public marketplace, in various places. We're looking at farmer's markets and other things, but we very much want to work. We already are working with bill and his cohort on this. We want to see it happening in real estate.

Doc (19m 15s):
So, so there's, that's part of it, but the idea, but we're, we're actually looking at new tech, that's outside the web, it's outside, it's outside any existing platform. It's not platform bubble in the same way. And so it can't be trapped in quite the same way they could, you know, you have, it's more like a real public marketplace where anybody can say what they're looking for and, and, you know, the sellers can match that or ignore it or do whatever they please, but, but they can find each other.

Bill (19m 45s):
Could you, I know Hadrian is not in the conversation. Can you talk about powder rhythms because

Doc (19m 53s):
I'll do better than that. I'll pull in somebody who I know is on his call, located the term pilgrims. All right,

Joyce (20m 3s):
Here she goes, hi, this is Joyce Searles. And yeah. Okay. We can talk about algorithms. There's a couple of things that this conversation has progressed. I've had thoughts about, and the idea of what's happening in real estate now is so dark. And I have been talking about this recently. I just want to wind back to this thought where bill was talking about the institutional buyers, the eye buyers. And, and what I've been saying is it's like the family farm movement with that family farms sold out to agribusiness.

Joyce (20m 47s):
And it, that was the way that agriculture became big ag and there. But before that agriculture in the U S was all family farms. And my fear about residential real estate is that these are our family farms now. And what will happen next is that the I buyers will come in and there'll be agricultural type giant conglomerates. So it'd be residential real estate, giant conglomerates that buy and run. And we then have to, you know, get our housing from the, the equivalent of big ag.

Joyce (21m 29s):
So I, I, the reason I really care about it is because I have been a small landlord and I've been a small homeowner. And I really think that there's so much power to having your own agency and your own way of, of, you know, running your own business, your own show, even if you have a job at a corporation, but if you own some, a cup, a duplex or something that you are as a small landlord, you have a sense of agency. So why real estate really resent, resigned resounds with me in this is like, let's not do what happened at big ag to, to resin, to the American dream, the actual American dream, which is, you know, owning your own home.

Joyce (22m 17s):
So I wanted to just start with that. And then now I can stay a little bit about what we're we're doing with this on our customer comments. Non-profit, I'm building something called the byway, which is the alternative to the web, the web. Remember the information highway that Al gore talked about? Well, the information highway turned out to be basically your choice of big tech, you know, your choice of platform. You can be on you, can you have full agency as long as you're, you know, selling on eBay or selling on Amazon or, or buying on any of the big or you're, you know, you're driving for Uber or whatever.

Joyce (23m 3s):
So the, the big platforms have, have cops captured in the same way that I was talking about with big ag have, have captured tech. Now let's just use the internet to take the by way, which is kind of like, you know, the back roads of America. So it's the back roads of tech so that I can just connect with whoever it is. Maybe I want to sell my house, I'm getting ready to sell my house. They'd be, or my parents is getting ready to sell. And there's a lot of work that needs to be done.

Joyce (23m 43s):
But if I have the availability of connecting with, you know, locals in my community who might be interested in buying my house, if I can connect with them directly without the giant industrial system that is industrial real estate, then I might really have a very satisfying transaction and have the, the right outcome for what I want. And I believe that the baby boom generation, which bill really spends a lot of time talking about is ripe for this. We're like, we want to do the right thing for the next generation.

Joyce (24m 24s):
And so Y if we, if you're not saying everybody's going to do it, there's plenty of people that will do it the way, whatever way that is out there to be done, but have a, have an alternative. So, and okay, so the question actually was palmaris pretty far field

Doc (24m 45s):
From college, but

Joyce (24m 47s):
The idea is, is that, that I, my platform, my machine is my platform so that I could have an algorithm that runs on my data and the runs on what I'm concerned with and my financials and my ownership, and that I would have an algorithm, which would work on my personal data and help me to figure out what I should do, and that I could buy this from an independent app store. It doesn't have to be an app store, that's run by Google or apple. And it would be an app of my own, an app for me.

Joyce (25m 30s):
So that's why we called it a powder in them like personal algorithm, but also my buddy. And, and that it, it reports to me. So it's not out there, you know, giving information to the some larger platform. So that's,

Doc (25m 47s):
And, and that's where we get technical. I mean, so this is, it's sort of a technology podcast, and it's always been interesting to me that we don't have algorithms of our own because we actually don't have enough data of her own. That's really our own in the form. You can put into that. But if we really had something else that Joyce wanted in 1995, and we still don't have, which is our, our own personal dashboard or cock, that that has all of our health and financial and property and other information, you know, that's actually pretty complex when you start adding it up and you've been on earth for a while. That's, that's a lot of stuff. What am I paying? You know, what debts, what debts am I carrying? What, what have I bought already? I forgot that I had, you know, there's all kinds of information there that could be really useful to know my contacts, my calendars, all those things ought to be in my own dashboard, but we've, you know, because the web is a client server system where we're always the client and never the server in most cases.

Doc (26m 46s):
And I realize a lot of geeks on this call on this are run their own servers, but in a generalized sense, most of us do not have that agency. And we should. So let's start over

Bill (26m 56s):
If I may jump in, I just want to say Joyce, I think the two points you made or the point doc made about the home dashboard and the point you made about Pelger rhythms, I think they may come together on a new real estate ecosystem where you own your own, your properties identity, and you choose when to permission people to know things about the house, or to know that within five years, you hope to relocate back to X, Y, Z. Right now, these are inferences that surveillance capitalism is making, watching you as you move from site to site across the internet.

Bill (27m 41s):
So you're actually unintentionally signaling your intention. And they're guessing what that intention is, but to be able to own your intention own the digital identity of your house, I think is a very exciting future. And I think you're the, this is the tool builder conversation that we need to have.

Katherine (28m 1s):
So I'm glad you mentioned that actually, because I was wondering if we could talk a little bit about the problem that this solves, which is, you know what I mean by that is the current landscape and the current sort of ecosystem of, of real estate technology. And what's actually the reality today, because I think maybe a lot of our listeners might not know that much about technology, the technologies as they apply to the real estate market and the kind of surveillance capitalism, like you mean, like you mentioned that the real estate industry applies.

Bill (28m 36s):
Okay. So I want to take a step back in 11 years and say that doc invited me to participate at an event called something at the Harvard business school, Harvard law school. I forget what it was called. We had a number of those. Yeah. And I, I felt totally inadequate, but I thought if I aspire to ride a mini Festo, maybe I could pull that up. So instead of a manifesto, I wrote a mini Festo and I've literally got that document in front of me. And I'm going to use it to open up Athens question and point number 22 on that manifesto was that decisions to buy and sell homes are proceeded by a continuum of intention.

Bill (29m 20s):
Exactly. The book doc wrote around that time. And so how does the real estate industry work right now? They spent about $10 billion a year on guess what lead generation and intent guessing is all about owning your own intention and simply putting that out to the market. So as these lead generation companies try to guess what kind of life transition you might be going through because of the unintentional signals you're sending to the marketplace. Some of them literally asked permission to read former clients emails, and they will make guesses about whether you're going through a life transition.

Bill (30m 5s):
And then they will flag that former client for the agent and say, I'm not going to tell you whether it's a divorce or a high school graduation or a death in the family, but that looks like a life transition there. What don't you get in touch with them? So that's one way the industry gets leads. There's also a whole industry within the industry of what they call predictive analytics. Again, they're watching hundreds of data points about your house, and they literally come up with different things that roughly are all move scores. What's the probability that you might move. So with 2,002 million agents competing for 5 million listings a year, there's intense competition to be the one who gets to sell your house.

Bill (30m 54s):
And the way those decisions are made is once a lead looks like they want to talk to you, you get a listing appointment, you go to the house and you say, this is what our company can do for you. Or would you take this cash offer right now?

Katherine (31m 9s):
Yeah, that's some good background, I think. Yeah. It's funny how there are certain. And I think I, you know, as a, as a younger technical person, I think there are a lot of industries that let's say geeks like me are not that familiar with. I personally am pretty familiar with real estate for other reasons, but, but it is sort of interesting to go beyond let's say the, the Facebook and the, the Instagrams and the sort of the, the, the retail tracking and that sort of thing to think of how these things apply to something like real estate. Because I think it's, it's not necessarily something that, that a lot of people consider.

Bill (31m 46s):
Well, there's one, there's one other anchor I should put in my reply to you. And that is for decades, people who have used what they call it, the multiple listing service. So these 2 million agents, because their legal duty is to get the highest price. If they're on the listing side, their job is to get the highest price for you. So they maximize the exposure to the marketplace by putting your property into a multiple listing service. And this is one of the areas that has really gone undergone some very controversial changes and where we're now seeing listing data silos instead of shared access to listings. And that puts upward pressure on housing prices.

Joyce (32m 29s):
So bill let, let's, let's dive into that for a little bit in the old days, because as I said before, I was involved with real estate years ago, the public did not have access to the MLS, the multiple listing service. So you actually had to go get an agent to be able to expose homes for you. And that was, that was that really a lot of the power of the agent was that they could give you exposure to houses. So the platforms, when they came along the Zillows and Redfins, and all of that, that they blew that open. And it was a huge boon for, for the public to be able to actually see this on their own.

Joyce (33m 12s):
I remember when I was trying to find stuff like I would have a real estate agent friend who would be able to look up for me, even though I wasn't actively a buyer or a seller, but I wanted to know what was going on in the market. And I wasn't an agent. So I think that was a good thing that we got this way of seeing what was on MLS. But the sad news is is that because now there's this open way of saying everything that's available. Now, the advantage of knowing something that isn't open and available becomes the thing that everybody's trying to have, they want like a pre MLS listing service.

Joyce (33m 56s):
So, so in, in the old days, there used to be something called a pocket listing, which would maybe be one, one agent would, would know about one listing, but now there's a whole series of, of listings that are held off the market. And what it does is it makes the market look like it's, there's less inventory available than there actually is. I think it'd be really interesting for you to explain to the, to the listeners about that and how, how tech really, you know, made that possible because of the, because of the platform situation.

Bill (34m 33s):
Well, I'll make a first pass at it and pull out things that I miss. So you're absolutely right. The original MLS was actually a phone book sized document that would come out about on Thursday. And then you would arrange appointments with your clients and go driving, and you would hand them the MLS book, like it was some kind of sacramental document, and they would have to agree to give it back to you in a, before they left the car. So that was there. The internet began making access to agents. Agents began sharing listings around 96, by 2000.

Bill (35m 13s):
The question was, are we going to open this to the public and people who were first movers and who said, I'm going to share my MLS access with the public actually risk disciplinary action. So I would say the golden era of public access to the MLS was roughly 2004 to 2014. By then it was a not unreasonable statement to say everything that's for sale is not only in the MLS, but it's in these real estate portals. And of course there's a low, became an early leader there and actually bought one of their competitors truly.

Bill (35m 53s):
So I believe the lowest statistic I saw was the Zillow has 1.8 million visitors per day, realtor.com 1.4, it's a hairball of statistics. So I'm just going to leave it at the number of people who visit these sites are stunning millions, tens of millions of people per month visit these sites. So w why did I cut it off in 2014? Well, at that point, there was an expo say in California that the MLS played an important role in less than half of all sales. So here you have this myth that you can get access to all the listings. When in fact half of them are being sold essentially through an underground housing market or through friends of friends.

Bill (36m 41s):
You know, I, I have a tendency to maybe shame people too much, but access to information is essential to have a just functioning marketplace. And if half the inventory is being hidden and Coldwell banker calls it, their exclusive look program, I believe, or first look compass is shameless in saying, Hey, our we're staking our competitive advantage on having exclusive listings. You know, these are, these are problematic because now you have exacerbated a real problem, low inventory.

Bill (37m 23s):
And so you've created artificial upward scarcity value. And at some point that's simply unsustainable. And I think we passed that point already. And I love the statistics coming out of San Francisco and other cities. I believe that San Francisco itself, the price of single-family homes fell 5% month over month in the bay area. They fell 3% month over month. They're still way over where they were last year. But last year we were still coming out of the pandemic statistics.

Joyce (37m 55s):
This is really an, I think a very interesting shift in the story is, you know, how technology plays, and it's not just the tech, it's not the Internet's doing it. It's the way the business has evolved to creating, you know, sort of the, the big tech approach, the aggregation approach to,

Bill (38m 21s):
To

Joyce (38m 23s):
Get privileged information, because everybody knows that the way, if you're, if you're trying to buy something, if you walk up and down the street and tell everybody I want a black skirt size 10, you're going to get the best price. You know, everybody knows for sure, I need of blood. You know, like anybody, that's got one we'll, we'll say, you know, buy mine and it's whatever, but you're not going to get the best price unless you keep close what it is that, you know, so there's always this spot back and forth between the buyer and the seller. But when you have the buyer and the seller in the room together, they find out what it is that is to their advantage.

Joyce (39m 6s):
But when they're held apart by other other parties, that's when the other that when they don't, they're not able to make the best deal for each other. I mean, that's my view of the market. Yeah.

Bill (39m 21s):
Joyce than not just tell the part, they actually, once, once they express once a property does hit the marketplace, whether it's pre MLS or in the actual MLS, we, the industry has a blind bidding system. People engage in blind bidding warriors, and often they're bidding against their own fear of loss. And if I had one magic wand, wish that I would love to have seen in pur, and I would say falling prices make it even more urgent. We need an emergency real estate transparency act now being realistic. I don't think a legislature is going to act that quickly, but my God, why aren't we talking about price gouging in real estate, essentially, that's what's happened.

Bill (40m 10s):
We've taken scarcity. And I believe San Francisco leads the country in the percent of homes sold 30% over asking price. I mean, that just makes you throw up your hands and say crazy time. Some something's going on and is bidding. You're bidding against the unknown. It's a blind process. And I hope it ends up in a class action lawsuit a couple of years from now. That's the kind of punch back we need from consumers. And thank God, the department of justice has reopened their, invest, their inquiry into the industry. And they, they have a none, nothing less than an executive order out of the white house to do their work.

Doc (40m 52s):
Billy, if you were, if you were regulatory God, I mean, I think there's, I think there's the kind of thing we need to two things. One is it technology solutions like the ones that Joyce and I are working on and you as well, and the other is actually regulatory help. What would you, what would you recommend there? I mean, if you were to wave your magic wand or your magic ghost to the MLS,

Bill (41m 20s):
What would be my regulatory wishlist? You know, I did a lot of thinking about this energy, this interview, and I actually did not pull up that question. So I'm just going to pull things off the top of my head. So there's a very sharp guy in the industry named Rob Hahn, and he's an attorney and he says many of the same things I do. And he might say, that's an overstatement. I would say, I've said some of the things that he now says years before he did. And Rob is warning that the government's going to go after the realtor organization itself, that it has a three level organization, national state and local, it has mandatory fees and it imposes its will coast to coast.

Bill (42m 9s):
And so when the question of should pocket listings be out, came up and the industry did what they called it, a clear cooperation policy. I call it a clear cover of policy. They basically gave a blessing to various forms of hiding inventory and what I call the inventory gate like Watergate inventory gate. I think it's a scandal that needs more reporting. And in hindsight, two years from now, we'll know the magnitude of it. You know, when you, when you're a renter and you're thinking of moving, you have to tell the utility company I'm going to be moving on such and such a date. I think public disclosure of intent to sell.

Bill (42m 51s):
I would like to see that. I think one of the questions going into this decade is how are we going to handle this intergenerational handoff? And so the timing of transitions will be as important as the price of transitions. And if we're going to get it right, if we're going to correct the inventory imbalance we need, the metaphor I've been using is we need to create a transition bank because when you decide to sell, could create a six-figure difference in what you walk away from that property with. And right now, one in nine properties in Massachusetts is selling a hundred thousand over asking price. I don't think we're going to be there a year from now.

Katherine (43m 34s):
When you say, you know, making your intent to sell public. I mean, aren't you doing that when you list, when you lift the house, I'm not sure I understand the subtlety, the difference there. Well it's because

Bill (43m 46s):
Those who were those who you were hiring to sell your house may not tell the market that you're selling your house.

Katherine (43m 55s):
Ah, you're talking, we're going back to the pocket listings, exclusive

Bill (43m 60s):
Platform world that doc can Joyce, that alluded to there's one of the big players, or one of the big platforms is what they call an in-house dashboard. So there's one company locally that says that they have 30,000 seller leads and 200,000 buyer leads in their in-house dashboard. They don't need an MLS. Do you have anything in house?

Katherine (44m 20s):
And if the buyer, I mean, again, you know, that can, especially in a market like this, I would guess that that's potentially helpful. So if you can afford it, the very tool

Bill (44m 32s):
Was supposed to level the playing field has actually now been thrown into reverse. Another very sharp guy in the industry. Mike Del pet says the industry is entered the dark ages of real estate that we're hiding listings and listing data silos. And that's created artificial pricing.

Doc (44m 53s):
It's amazing. I mean, <inaudible>, you just mentioned, you have, you know, this many thousand sellers and then we have the swarm of buyers. They jumping on that entirely inside our own private system. And of course the price is going to go through the roof. It's just that it's just naturally going to happen.

Katherine (45m 12s):
I think that depends on the market and, and, and let's call it quote, unquote, normal market it's I think the, you know, the in-house transactions are not, well, they aren't, they, it wouldn't be like it is today. I, I speaking from experience, you know, five, six years ago, you know, you're not looking at, you know, a hundred thousand dollars over asking price in most markets. I think day it's a completely different conversation. Yeah.

Joyce (45m 36s):
The thing is Catherine normal there, you know what the, I hate this word that they're already saying the new normal, but the new normal is the new normal. Right. And that is that, you know, when these things can be manipulated, these things can be held apart. This is, we're not going to get back to the normal where, you know, as bill was saying, the sweet spot of total MLS, you know, disclosure was 2004 to 2014, like, okay, can we go back to that? Right.

Katherine (46m 10s):
And how much of that is how much of that is the result of these big companies like Zillow, Redfin, Trulia, those, you know, coming in and, and change shifting the market and the way that they have. I mean, is it, is it mostly that, or is that a small contributing factor? Is it, is it something else? Is it something we haven't even considered? You know, I wonder, you know, what, what made the market the way it is today? Well,

Bill (46m 33s):
I it's too long for this interview, but I have actually been tracking 17. It's actually up to 18 now, 18 words that start with the letter. I, and I call this the, I cover not a recovery, but an I cover. And the number one thing is what's happened with interest rates. So just some quick stats that between 1990 and I guess it was the 10 years before the real estate, the 10 years before nine 11 interest rates were only under 8% once after nine 11, you know, we shed jobs.

Bill (47m 13s):
The country was in tremendous anxiety. So they dropped interest rates, 14 consecutive times in 20 2006, the height of the.com bubble or the height of that boom bust interest rates were 6.4. Last year, we hit 16 record, low interest rates bottoming out at 2.65. So behind all that dizzy math is artificial purchasing power. We basically have made funny money. We've created dollars. Now that by 50% more house, let me, let me say that the 2.6 we're presently at 2.75, that's about 45% more house than you could buy at the peak of the last boom bust cycle.

Joyce (48m 7s):
And of course you're not getting 45% more house. You're just paying 45% more for the same house.

Katherine (48m 14s):
You know, it's funny money early that's

Joyce (48m 18s):
Right, right. Well like a pyramid game, you know, you want to be in early, you know, I've talked to people who you know about real estate in the past, and it's it, at some point, if you're not really into real estate are not really into watching this stuff. It's really hard to grok that people don't care what the number is. It could be 2 million, 4 million, 6 million doesn't matter. It's only how much you can pay every month. And so then you take the calculation of obviously interest rate is the biggest calculation, but then there's also property taxes and there's, whatever else goes along to make it.

Joyce (48m 59s):
And it's only about how much can I pay every month because nobody expects. They're going to beat payoff the 30 year loan. So I think that that, it's, it all, it all goes into this stew of, of complication that people who are just like, I just want to buy a house and move on. They really just want to know what is it I have to come up with every month. And it really does a number because of course, when they have to go sell, they have to get what they got out of it, because it's got to cover that loan. And if that isn't gonna happen in the, you know, five years later, when they decide they're going to sell, because five years later, you know, the world looks different and the interest rates are different and everything is different, then they'll worry about it.

Joyce (49m 45s):
And then you have another, you know, 2007.

Bill (49m 49s):
Yeah. Jerry. So I'm glad you said move on because I want to make sure we talk a bit about transitions and the role of intent casting potentially in creating transition as a service. I believe that that's a phrase that you coined in one of our previous calls.

Joyce (50m 6s):
Maybe she's good at it.

Bill (50m 9s):
Well, we have 70 million baby boomers and above half of them plan the downsize. And do you want to say, take it from there?

Joyce (50m 20s):
Well, I, I just, it transitioned as a service. Yeah. I guess people could see what that is. But the truth is from my point of view are the whole baby boom generation really does want to do the right thing for the next generation. And they really want to, you know, use what they have to do the right thing. And I feel like if we're able to start to signal, you know, what it is we want with the transition that is into, you know, when you're downsizing or whatever you're doing, that if you have the time and you can, you know, talk to people about it without being thrown into this chaos, that is the market, you know, the current real estate market where you just want to think about, I might be selling in the next five years or something.

Joyce (51m 14s):
And if you could have some way of engaging without being thrown into the maelstrom of, okay, I've now listed my house and everything happens. Cause they all come at me because as soon as you start to say, I'm thinking about selling, they come at you and you, and you, if you're really into a transition that you want to do in a thoughtful way, suddenly you're in the midst of this transactional thing. So I just think that if we had a, you know, if there was like a way of, of baby boomers, having the ability to thoughtfully transition to their next stage without just like, okay, gotta get as much money for this as possible.

Joyce (52m 0s):
So I can move on. I mean, there's lots of places that we can look at where people, when they've done something thoughtfully, feel so much better about how, how it's turned out. And so it's good for the generation that's passing away and it's good for the younger generation because it'll, you know, if you work together, will we have much better opportunity of getting a good result for humanity rather than just like, okay, more dollars for these people to pass onto their kids.

Bill (52m 35s):
So I'm glad you put that in very human terms. And I, I believe that psychologists say you, you won't transition until you have a better vision for yourself. And so I think we have a, there's a new book out called who do you want to be when you grow old? And it talks about how growing old is a path. You know, there's no trace about growing old, the cook choices, whether you will grow happy, whether you're grow wise, whether your last years will be your golden years.

Bill (53m 16s):
And so you may recall that I talked about return on intention and I would, I think we have the opportunity to have a conversation about what is the intent land we want to co-create and then how do we get there as a generation and as individual consumers. And I hope that what you're doing in Indianapolis will be part of that conversation. Cool.

Doc (53m 39s):
Well, Bloomington, but close enough, excuse me. Thank you. That's all right. And I think everything in the Yana, right. Rounds to Indianapolis, somehow it, which here they call Indy that we found out. All right, well, this has been fabulous bill. This has been really great

Katherine (53m 57s):
So much. I think it's a, it's a, it's a, a new perspective for a lot of our listeners. I think, you know, it's funny. We actually, we know we have a lot of international listeners too, and I think that it might be kind of interesting to, to, you know, explore the differences in their housing markets, in other parts of the world. And, you know, I hope that actually our listeners will give us some feedback because it might be eye opening. This is one of those areas. It's like healthcare, right? People, people in other parts of the world are sometimes a bit shocked at how things work here versus how they, they work in, in other places. And I think it might be a similar, a similar thing. If

Bill (54m 36s):
There's anyone in the listener audience who would be interested in data unions, experimenting with real estate and data unions, I would love to hear from you. Yeah. Give

Katherine (54m 46s):
Us, give us some feedback. We love it. We love to hear from you and we love, we would love to hear your experiences with real estate. I think most people have some experience, whether it is a, as a tenant, a landlord or a homeowner and

Doc (54m 60s):
Bill is at, he is his website is real estate cafe.com all one word, not hard.

Bill (55m 7s):
And my preferred method of communication is Twitter. So. Okay. And you were what on Twitter? You're at <inaudible> real estate cafe. Cool. Awesome. Well,

Katherine (55m 17s):
Thank you. Thank you everyone. Thank you everyone. Yeah. Yeah. It's always fun. I always thank everyone for making it this far in the episode if they have, so thank you. Made it this far.