Hey, everybody, is Ken McElroy and Danille. Hello.
So I'm super excited to have our guest, James Harris.
So he's killing it out in California.
And he's obviously, people probably know you.
James has $1,000,000 listing.
You got a you've got a lot of fame and notoriety out there.
You're selling a lot of really expensive homes to a lot of celebrities.
And so I was excited to talk to you about the high end market because,
you know, for those of us who art in a high end market,
a lot of your clients, former clients, future clients are you know, they're
they're bouncing out into other markets and they're buying other
in other markets all cash, you know, with their equity.
And so welcome first of all, thank you so much and happy
to be here and excited to have a chat with both of you.
So I know we talked about, you know, you've sold homes, obviously.
The funny thing is you sell as low as 1 million as high as 120 million.
So what's interesting about that is, you know, in a lot of markets that I know,
this is certainly not in yours
1 million as your floor is a lot of people's ceiling.
So, you know, what's it like to you know, and I know you came from England
and didn't know anybody.
And, you know, often what's really cool is your
your partner, your childhood friend from from England.
There's a lot of cool dynamics in stories.
So give us a little bit about your story, your background
and what you're up to now.
Sure.
So, you know, we started in the business
or I started in the business in London right out of school.
So I definitely tell people that school wasn't for me.
I didn't like it. It didn't get me excited.
Unfortunately, I was an academic, but I was always hungry to make money.
And I just did whatever it took to kind of learn the market,
learn the industry, learn how to transact.
And in my first two years,
I did residential and my second two years I did commercial.
And then I moved to Los Angeles when I was 21.
And we've had our business out here
for the last 11 years
and you just never know who you're dealing with or what it might turn into.
So we never turn our nose up at anything no matter what the price point is.
And we service each of our clients in the same regard.
And I believe that's the best way of of running a business in any business
for that matter.
What did you see in 20, 21 that was much different than you'd seen previously?
A lack of sleep.
No, you know, in 20, 21 and look really going back to COVID.
You know, I remember when COVID hit
and it was around March time and I was sitting in my office
looking at a computer screen wondering if we were about to hit
a similar recession, wondering
if I was ever going to leave my house and sell a property ever again.
And I was terrified and didn't know where it would lead.
And there was so much unknown back then.
And then about six weeks later, it was like we came out of our house.
It was like there was like the world was still there.
And then, boom, it just took off.
So really, it incorporates 20, 20 as well as 20, 21.
You know, we've got these historic
interest rates at an all time low or extremely low.
Borrowing is is next to nothing for the buyers out there today.
Inventory is incredibly low.
But what's interesting through COVID is that buyers are
realizing things about themselves that they didn't even know
the way they lived, where their kids go to school, where they go to the gym.
Do they work from home?
Is the husband and wife going to have two separate offices?
Do you want more security? Do you want Gates?
Do you want a second home, a third hug?
The way we think has just changed so drastically
since COVID that it's created this crazy real estate market.
And then you think lack of inventory and low interest rates and all of that
has just created this pent up demand
and the market has gone absolutely insane.
So 20, 21 was a record breaking year for us
among many in our industry.
And I think coming into 20, 22 for as long as rates stay low,
I think we're going to see that trajectory stay the same and continue to rise.
We'll see what happens.
You guys probably track interest rates closer than I do, but it's
certainly going to be very interesting to see what unfolds.
And have you noticed a big change as far as that with like inflation as well?
Yeah, I mean the cost of living has gone bonkers.
We all know that inflation is at an all time high.
I think if you look at it overall, the dollar is shrinking.
The cost of goods and services are rising.
The country is in tremendous debt
and the Fed just can't raise interest rates too fast, too
quick, otherwise will end up in a similar recession as we did in 2008.
So I think it's going to be a very interesting ride.
The Fed have said they will raise rates three times, potentially up to five
by the end of the year.
And I
just hope everything holds that that's my my main hope here.
What what are some of the things that you saw, like
what priorities moved up based on your clientele?
Because you deal with a very high end clientele, even celebrity.
How did some of their priorities change?
You know, I think security was a big one right off the bat, you know.
You know, people look at, okay, I'm going to cancel my gym membership.
I'm not about to share the gym with 300 other people.
So it's having an at home gym.
A lot of parents weren't necessarily thinking,
oh, my kids are going to go back to school one day.
So toning certain areas of the house into a homeschooling area.
People weren't going to the office.
So you were seeing big bedrooms change into offices.
And now people are looking at homes with double space
for office, double space, the school.
Again, all the developers that are now building ground up
construction, they're now thinking of different.
They're thinking differently about how they're building houses.
You're starting to see these
as you again, those were once before there were options right?
Yes. Now they're actually things that they're actually doing
because they know that's where the market's shifted.
Absolutely.
Not only are they are they doing those things,
but people were converting bedrooms
to gyms, bedrooms to offices, movie theaters, to home school areas.
You saw everything in anything you could imagine.
And it was all in direct correlation to COVID.
And now things are getting better.
And I'm just beyond joy to see that things are getting better
and the numbers are going down.
But I think people are still thinking differently in terms of the way they live.
So as far as people moving and the shortage of supply,
why do you think all of a sudden there was a short supply of houses,
even though there was one before?
It seems like it's much more
pronounced now.
Yeah, it's it's a great question.
You know, I think people aren't necessarily
thinking about moving the ones that oh, they're not thinking about transitioning.
They're thinking about holding a lot of people
couldn't even afford to hold.
But the government put their mortgages on hold
and they didn't need to make those payments.
Therefore, they decided just to hold and not sell.
But I think the inventory is getting better
and the market is becoming more fluid in terms of transactions.
But again, with these low interest rates, most of these sellers say, okay, well,
I can sell my home today.
What am I going to buy?
And then they're in this big catch 22, I'm going to get this big number
for my house. It's probably going to sell 20% overall.
It's going to go into multiples.
I'm going to get 15 offers, but what am I going to buy?
And if you're talking to a family, I mean, it's it's a big question.
You know, we just sold our home and bought a new one, and my wife just wouldn't
let me put our current home in escrow until we found a new one.
So it is that catch 22, by the way.
Smart wife, you know.
Yes, yes, yes.
It's let's let's find a hope for our family.
Before you left, let's the one you're in.
I think that's kind of the issue I found that, you know, to your point,
people are looking for all these things, but prices are going up.
They have a lot of equity, but they're not really making lateral moves.
Here, are they?
They're stretching again.
Is that would that be accurate?
That's very much stretching again.
It goes back to low interest rates.
People are scared that they're going to get hiked up.
So if I'm a guy who can borrow $5 million, let's just say for argument's sake,
I'm going to borrow that full 5 million right now
because my debt on a ten year interest only I'm going to borrow in the twos.
Well, at the end of the year from now,
maybe it's in the threes, maybe it's in the fours.
So people are definitely trying to capitalize on the low interest rates.
So for those people, you know, we get this question all the time, right?
I'm waiting for the crash and waiting to buy for the crash or for the adjustment.
What do you tell them?
You know, I got a client who's been waiting for the crash now for nine years.
Yeah, it's it's it's really interesting.
You know, it's like we don't have a crystal ball nobody does.
It's whether you're buying crypto, whether you're buying
or whether you're buying real estate.
Nobody has the crystal ball, right?
We all look at the same fundamentals.
We're all listening to the same analysts, experts, professionals.
I often say to people, certainly when they're looking for their family.
So I'm not referring to investment.
I'm looking to family home, which is also an investment.
You have to look at the next 20, 30 years.
And then if I go back to 2008 when we had the economic subprime crisis,
most people that lost their homes back in 2008 had very toxic debt.
So the way I see it is
if you can buy a home now, even if you're going to pay 10% over
what you think it might be worth a 20% over what you might think it's worth
if you're holding it for the next ten, 15, 20 years and you have great debt
and you can weather a storm no matter what happens.
Buy now and hold because sales and real estate, it's all cyclical.
We go up, we go down, we go through market cycles
and as long as you can buy hold
and you're not going to end up giving the keys back to the bank,
put your family first.
And don't think about the crash because you're never going to time it, right?
And when it does crash, you're probably not going to want to buy then either,
because then you're going to be trying to find the bottom of the market and it's
just a bad cycle and you can't time anything perfectly.
I'd love to hear where you think things are heading
so people can kind of wrap their head around that.
So as long as you don't hold me to it now.
So I'm a very, very half full glass kind of guy, my glass is always half full.
So I'm a realist, but I'm always very optimistic
so if I were to give you my $0.02, I think we're going to see the rates rise
three times between now and the end of the year.
I reckon we see a three quarter of a point raise between now and again.
The end of 20, 22.
I think inventory will become a little more available as the year goes on.
I think that if we see rates go up, we hope that we see
prices come down a little so that it somewhat evens out.
I don't want to see the market keep going up.
I want to see the market levels.
I think we're already starting to see that.
And I just want, you know, the market to continue to remain steady
by the end of this year.
I think we're going to see again rates up probably around that point inventory
more available.
But I do believe the buyer demand will remain in place and I do believe
the market will remain strong and what's the what's the best way
people can reach you if they're interested in getting more information?
Absolutely.
James, at the agency, our ecom is my email you're welcome to reach out via email.
I would also love comments, feedback and thoughts on read the blueprint outcome.
We're very passionate about it.
It's definitely a passion project that we put a lot of time into.
We're going to continue to do so.
We've heard nothing but great things so far,
so I'm hoping that we're putting out great content to the people to read
and hope you guys enjoy it and feel free to reach out any time.
Well, we will for sure.
We come out there every summer and so we'll reach out then
it's been a pleasure talking with you both and thank you so, so much for having me.
For sure, James, thanks.