Last week, Jason Oppenheim shared his excitement with Inman over the new, juicy season of Selling the OC, which hit Netflix last Wednesday.
But as a business owner, the broker and president of The Oppenheim Group also keeps a close pulse on current events and had plenty of thoughts to share on that front.
Inman reviewed highlights from the latest headlines with Oppenheim, and got his take on everything from the Trump administration’s proposed 50-year mortgage to the latest industry lawsuits to private listing networks and more.
What follows is a version of that conversation, edited for brevity and clarity.
What do you think about the idea of a 50-year mortgage, something the Trump administration floated recently?
It’s a massive value to the consumer, if it’s fixed. I would argue the best thing about residential real estate is the fixed-rate mortgage. If I had to point to one reason why I encourage people to buy real estate, I’d say the number one reason is long-term fixed-rate mortgages. So if you’re going to positively affect the number one and best reason to buy real estate, then that’s massive.
A 50-year mortgage does two things: It gives you certainty, and if you have a mortgage that’s fixed, [as an investor,] your rent is going to go up almost every year for the next 50 years, so that’s just going to become more and more profitable. And then, two, it lowers your monthly costs.
On a 50-year mortgage, you should be able to be making money on Day One, if you rent that house out. And in fact, it would also make it less expensive to own than rent, which right now it’s less expensive to rent than own, even on a 30-year [fixed-rate mortgage]. So if that product becomes available, it will make it less expensive to own than rent.
And then I would be all for it. In fact, I would be jealous because I have 30-year loans, and I would totally have preferred a 50-year loan.
So you think that that’s something that if it were to come to fruition, would probably catch on with consumers then, too?
Oh, 100 percent. I don’t know why it wouldn’t. The longer the loan, the better, objectively. The longer that someone’s willing to just not have to not require you to pay it back, the better. And the more valuable to the consumer. That literally would be massive.
I’m not sure there’s one single thing I can think of that would actually benefit real estate more than a 50-year mortgage. I think it would just depend on the difference in interest rates between a 30- and a 50-year [loan], that’s when it would come down to. If it’s a higher interest rate, you’d have to do the math. But I generally like it.
While it’s not nearly as valuable in a high-interest-rate environment, it provides more access to homeownership because it will make it easier to qualify for a mortgage. Also, presumably, you could refinance out of the 50-year mortgage rate once you had more equity in the property due to appreciation, loan repayment or if your income increases. Objectively, it’s a positive option as the more products available to prospective homebuyers, the better.
I also see nothing wrong with never completely paying off a mortgage; that’s a psychological goal and not necessarily a financial one. The real question is whether it’s less expensive to own than rent under the mortgage, and whether you can make more money in other avenues than the rate of interest that you are paying the bank.
Transitioning to a different hot topic, what do you think of all these lawsuits Zillow is facing? Does this pose a threat to them, or is this something that they don’t need to worry about as a large corporation?
No, I think they do need to worry about it, and it is certainly a threat. I also think it’s concerning how easily people can bring lawsuits against [anyone] … even the antitrust cases against NAR, it’s actually somewhat concerning to me, because I think that if you don’t succeed and achieve an award that is at least 40 percent of what it is that you are suing for, you should have to pay the other side’s attorney’s fees. I firmly believe that would be an appropriate deterrent to either frivolous lawsuits or lawsuits that are seeking inordinate and unjustifiable sums of money, because there’s no limit to what you can ask.
People are just going out and suing for billions of dollars all the time. In many cases, it just bears no resemblance to the actual damages. I think that would actually fix litigation if we did that. The problem is, you’d have all the lawyers being against it because they make all this money … So it makes you a little bit more realistic in your demand, [provides a] little bit more association with the actual damages … And then, you wouldn’t see all these essentially existential lawsuits.
Just thinking about portals in general, there have been some key private listing networks that have popped up recently. Do you think that the typical real estate portal today, including Zillow or Realtor.com, do they face any sort of existential threat because of these other alternatives that clients are potentially turning to?
Yes, but not because of these existing third-party alternatives, but because of Compass. If Compass can win, and when I say ‘Compass,’ I mean Compass-Anywhere, if they are able to create private, off-market listing portals, which are not accessible to all agents and all buyers, not only does that take residential real estate a huge step back, it takes it closer to commercial real estate, which, in many ways, is a nightmare for the consumer.
Not only does it take us back to the Dark Ages for residential real estate, but that poses an existential threat, in many ways, [to] Zillow and all these kinds of platforms that rely on MLS syndication.
Right.
So it could be for Redfin, Trulia — you name the portal, and they face an existential threat. If Compass is able to take this huge step back in real estate and make things private and not accessible, not to mention it just creates massive inefficiencies where information is no longer as accessible to buyers and to agents, that’s just a huge lack of transparency, and no market benefits from a lack of transparency.
Now, the market brokers, the movers and shakers of the market, they can benefit because they hoard the information. So they can essentially benefit from that information, but the consumer doesn’t benefit.
You can see even in the art market now, you’re able to look up a lot more. It used to be a much darker and less transparent marketplace, where you didn’t even know what other similar items sold for … Now you can go look at the last 20 sales over the last 10 years on all auction sites. There are sites that actually accumulate all this information. So that’s better for the consumer, obviously. You can see what the value of the art is. You’re not relying on some mysterious broker with some inaccessible and private information portal to tell you what it’s worth. I mean, that’s terrible. It’s a huge step back.
What else have you been following lately?
We’ve seen the Fed lower interest rates twice. It seems like they’ll do it again in December, but it hasn’t really had much of an effect on mortgage rates — some, but not as much as we’d like to see.
We really need the Fed to lower interest rates. I think that’s the most important thing for this economy, and also for real estate to start moving again. I’m not sure it will have a significant effect on prices one way or the other, but it will, I think, increase supply and demand, and therefore, deal flow, which I think we desperately need.
I think it will also allow, to the extent that we want more affordable housing and more building and more development in general, which I think everyone agrees is good … We need lower interest rates. The numbers don’t work for people to build right now … We’re probably an entire 100 basis points away from a healthy real estate market.
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