Monday Morning Quarterback

At the southern edge of the Mojave Desert on an unusually warm Saturday in February, dozens of people mill throughout the living space of a 2,300-square-foot three-bed, two-bath house with a connected two-car garage. A couple gliding past the open kitchen marvel at the room’s “good natural lighting.” In the hallway outside the expansive main bedroom, a tall-bearded man compares the space to a “luxury Airbnb experience,” while two grade-school-age boys play with a light switch on the wall, flicking the ceiling fan on and off. “I’ve never seen a house like this,” one of them says, “but I like the shape of it.” The house has central heating and air conditioning, a natural gas fireplace and ample closet space. And yet, modern amenities aside, this is no normal home. Instead of resembling a box, the structure consists of a sequence of vaulted domes nestled together, like a lost cottage straight out of a “Dune” movie. The walls are curved and the ceilings are tall and arched. And the entire building is constructed with just a few materials: soil, water, sandbags, barbed wire, plaster and a bit of cement. But what’s most notable about this structure is something visitors can’t see: The house is capable of withstanding a colossal natural disaster, whether that be a tornado, hurricane, earthquake or fire. Welcome to “Earth One,” the piece de resistance at CalEarth, an educational campus and nonprofit organization in Hesperia that, for the last three decades, has championed a building style known as the “SuperAdobe.” In Los Angeles, such homes are not the norm now — but they could be. And according to natural building advocates, they may be the architectural solution for a more fireproof city. Once a month, CalEarth hosts an open house in which visitors can tour the campus’ myriad earthen structures, which range from emergency shelters that can be erected in a day to the fully permitted, large-scale Earth One home. Since the recent Los Angeles-area wildfires, interest in natural buildings has increased, particularly after a photo was shared on social media showing a backyard SuperAdobe that emerged from the Eaton Fire intact, even as the 1912 home in front of it fell victim to the flames. In other investor news, lets get under the hood…

Best Counties for Buying Single-Family Rentals in 2025. ATTOM property data released its Q1 2025 “Single-Family Rental Market” report, which ranks the best U.S. markets for buying single-family rental properties in 2025. The report analyzed single-family rental returns in 361 U.S. counties with sufficient rental and home-price data. The analysis for this report incorporated median rents and median home prices collected from ATTOM’s nationwide property database, as well as publicly recorded sales deed data. The report shows that the annual three-bedroom gross rental yield (annualized median gross rent income divided by median purchase price) among the 361 counties analyzed is projected to be 7.45 percent in 2025. That is down slightly from an average of 7.52 percent in those same markets during 2024. Yields are declining from 2024 to 2025 in nearly 60 percent of those counties after growing in a small majority from 2023 to 2024. Investment returns for landlords are slipping as home prices are going up faster than rents across slightly more than half the country. From 2024 to 2025, median single-family home prices rose more than median three-bedroom rents in 54 percent, of the markets analyzed. The gaps (usually more than three percentage points) pushed rental yields downward. That has happened even as the nation’s ongoing rise in home values around the country has made home ownership less affordable for average wage earners. Price spikes have helped push marginal home seekers out of the purchase market toward rentals, putting upward pressure on rents. But rising prices also have made it tougher for investors by boosting their buy-in costs. Counties with the highest potential annual gross rental yields on three-bedroom properties for 2025 are Suffolk County, NY, in the New York City metro area (18 percent); Atlantic County, NJ, in the Atlantic City area (16.8 percent); Jefferson County, AL, in the Birmingham area (13.6 percent); Mobile County, AL (12.9 percent) and Ector County, TX, in the Odessa area (12.5 percent). Aside from Suffolk County, the highest potential annual three-bedroom gross rental yields in 2025 among counties with a population of at least 1 million are in Wayne County (Detroit), MI (10.9 percent); Cuyahoga County (Cleveland), OH (10.1 percent); Allegheny County (Pittsburgh), PA (9.8 percent) and Cook County (Chicago), IL (9.2 percent).

Lumber Prices Continue to Grow and Lead Building Materials. Prices for inputs to new residential construction (excluding capital investment, labor, and imports) were up 0.5% in February according to the most recent Producer Price Index (PPI) report published by the U.S. Bureau of Labor Statistics. The Producer Price Index measures prices that domestic producers receive for their goods and services. This differs from the Consumer Price Index which measures what consumers pay and includes both domestic products as well as imports. The inputs to the New Residential Construction Price Index grew 0.7% from February of last year. The index can be broken into two components: the goods component increased 1.2% over the year, while services decreased 0.1%. For comparison, the Total Final Demand Index (which measures all goods and services across our economy) increased 3.2% over the year, with final demand with respect to goods up 1.7% and final demand for services up 3.9% over the year. The goods component has a larger importance to the Total Residential Construction Inputs Price Index, representing around 60%. For the month, the price of input goods to new residential construction was up 0.6% in February. The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring goods less energy inputs. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index. Among materials used in residential construction, lumber and wood products ranks 3rd in terms of importance for the Inputs to New Residential Construction Index. Nonmetallic mineral products and metal products rank 1st and 2nd, respectively. The top lumber and wood products include general millwork, prefabricated structural members, not-edge worked softwood lumber, softwood veneer/plywood and hardwood veneer/plywood. Prices for these wood commodities experienced little growth for most of 2024. Currently, softwood lumber prices were 11.7% higher compared to one year ago while on a monthly basis, prices rose 3.0%. This marks the fourth straight month where yearly price growth was above 10% for softwood lumber.

How TikTok Is Changing the Building Trades. When you’re standing in your bathroom panicking over a flooded toilet, it seems impossible to find a plumber. When you’re calling contractors all over town for a kitchen renovation, it feels like it’s going to require a magical quest involving three riddles and a wise old witch to book one you can trust. So where do you turn—Angi? WRONG! Your group chat of local parents? WRONG! God forbid you even try your town’s Facebook group. In fact, get it wrong, and you’ve basically paid somebody to wreck your house. Well, there’s another avenue for homeowners in need of assistance—or at least a way to learn a bit about what tradespeople do: TikTok, where plumbers, home inspectors, welders, and electricians are sharing glimpses into their work and building pretty big followings doing it. They offer an educational, behind-the-scenes look for a generation of homeowners that missed out on shop class and home ec and never got into This Old House but now really want to understand when a leak constitutes an emergency and what red flags to catch on a home inspection. @theplumbersplunger is the work of 27-year-old David Williams, who’s based in New Braunfels, Texas, and covers the San Antonio area. After working for other companies as a journeyman plumber, he recently launched his own plumbing business—thanks in no small part to the platform he’s built on TikTok and elsewhere over the last few years. @theblondewelder lives in British Columbia, Canada, and shares her ironworking and welding with her many followers. Williams got his start when a friend from high school asked him about the photos and videos he was sharing on Snapchat while working. His friend said he followed people online posting similar things publicly to TikTok and YouTube and suggested Williams start. "So I looked into it and saw how well some of the channels were doing," he says. He started with TikTok because he’d heard that was the easiest place to build an audience, then gradually expanded to Instagram, YouTube, and Facebook. There’s some skepticism within the trades as well. Williams has talked to older company owners who are against providing free repair tips, on the theory that it’s essentially giving the store away; his counterpoint is that there’s already plenty of info out there about how to do the simple things—and for the more complex tasks, there’s no video that’ll save a DIYer from the unpleasant surprises they might find.

National Rental Assistance Program Running Out Of Cash. A $5 billion pot of federal money set aside to help people on the verge of homelessness pay their rent is running out of cash. And no one has a plan to keep the roughly 60,000 renters, more than 15,000 of them in California from losing their housing after the last dollar is spent. News of the imminent expiration of the “Emergency Housing Voucher” program came in a March 6 letter the U.S. Department of Housing and Urban Development sent to local public housing authorities, the agencies that administer federal rental housing assistance programs. A final payment this spring may allow some agencies to keep their emergency programs running into 2026, the letter reads. But housing authorities were advised to move forward with “the expectation that no additional funding from HUD will be forthcoming.” For the housing authority staff who received the letter, it remains unclear whether the program is winding down simply because it has run out of funds on its own accord or whether it represents a policy shift from the Trump administration, which has been on an aggressive and often uncoordinated cost cutting tear across the federal bureaucracy. The program was modeled after the much larger and well-known “Housing Choice Voucher” program. Also known as “Section 8,” that long-standing program pays at least 70% of the rent for anyone earning under a certain income and lucky enough to secure one of its scarce vouchers. The Emergency Housing Voucher program is more narrowly targeted at those in most dire need: people currently living on the street or in shelters, those just on the verge of homelessness and anyone fleeing domestic violence or human trafficking. “This could very well lead to thousands of additional people becoming homeless in California,” says Alex Visotzky, senior policy fellow, the National Alliance To End Homelessness.

Scott Turner. Turner is the new Secretary of Housing and Urban Development. Turner is best Known for his NFL career. His government experience is limited to being elected to the State House in Texas from 2013–17, and then led a council under Ben Carson at HUD to promote “Opportunity Zones.” Potential conflicts of interest: Steering federal dollars to a personal network of developers and politicians. Turner is the kind of photogenic, charismatic showman who gets handed microphones and jobs in public speaking — a natural segue from a career as a professional athlete. Between seasons playing in the NFL, Turner interned for California representative Duncan Hunter, and in 2013, he won a seat in the Texas State House. In 2019, the first Trump administration made him the face of its Opportunity Zones program, which offered tax breaks for developers who built in areas that were deemed distressed (officially, his title was executive director of the White House Opportunity and Revitalization Council). When Trump lost in 2020, Turner floated through a series of other front-man roles: assistant pastor in a Dallas megachurch, “chief inspiration officer” for a software company, and “chief visionary officer” for the multifamily developer JPI. Turner told the Dallas Business Journal that his focus at JPI was on affordable-housing projects that could win tax breaks if local governments were onboard and that his background meant he had “great relationships” with those local politicians. When the president-elect announced Turner’s appointment, he cited his record getting “over $50 Billion Dollars in Private Investment!” for Opportunity Zones. But researchers found that the incentives rarely got to the small businesses the program was intended to help, and journalists found developers were getting the breaks to build in areas that weren’t exactly distressed, including a slice of Fifth Avenue. Politico reports that Turner is expected to carry out the administration’s plans to slash the HUD budget, cut fair-housing rules, and gut affordable-housing programs. Ben Carson wanted to achieve some of that at HUD during the last Trump administration, but he was stymied by Congress. But this administration has both House and Senate on its side and may have an easier time getting their approval.

Top 10 Metros with Biggest Percentage Increases in Home Flipping Profits. According to ATTOM’s Year-End 2024 “U.S. House-Flipping Report,” 297,885 single-family homes and condos were flipped by investors nationwide in 2024, reflecting a 7.7% decline from 322,782 in 2023 and a 32.4% drop from the recent peak of nearly 441,000 in 2022. As highlighted in the report, the number of investor-flipped homes decreased, with the share of flips in total home sales dropping from 8.1% in 2023 to 7.6% in 2024. But ATTOM’s latest home flipping analysis reveals one small potential silver lining for the home-flipping industry in 2024; a modest uptick in profits and profit margins on typical buy-renovate-resell projects. However, margins still hovered near their lowest levels of the past decade, as investors continued to face challenges capitalizing on the broader housing market boom. The report states that in 2024, the average gross profit on a typical home flip across the U.S. rose to $72,000 (calculated as the difference between the median resale price and the original purchase price paid by investors). That marks an increase from $67,846 in 2023 and represents a 29.6% return on investment based on the initial acquisition cost. The latest home flipping report also states that the latest nationwide return on investment (before factoring in mortgage interest, property taxes, renovation costs, and other holding expenses) rose to 29.6% in 2024, up from 28.6% in 2023 and 29.4% in 2022. Still, it remained just over half of the 54.2% peak recorded in 2016, the highest point in the past decade. The flipping report notes that among metro areas with populations of 1 million or more, the largest year-over-year gains in profit margins on median-priced home flips in 2024 were seen in Cleveland, OH, where ROI jumped from 39.2% in 2023 to 72% in 2024. Other notable increases included Buffalo, NY (from 83.9% to 109.1%), Rochester, NY (from 60.2% to 71.5%), St. Louis, MO (from 34% to 45.1%), and Memphis, TN (from 58.2% to 66.7%). Among those MSA’s with a population of 200,000 or more and 100 or more home flips in 2024, those with the highest annual percentage point increases in home flipping returns include:

#10 – Bellingham, WA

#9 – Mobile, AL

#8 – Springfield, IL

#7 – Spokane, WA

#6 – Charlottesville, VA

#5 – Buffalo, NY

#4 – Erie, PA

#3 – Santa Maria, CA

#2 – Cleveland, OH

#1 – Ocala, FL

Forget SAT Tutors And AP Classes: Buying This House Can Apparently Get Your Kid Into Harvard. “Every previous owner’s children have gone on to Harvard or Stanford, paving the way for even greater achievements,” the listing reads. Poor Felicity Huffman: she went to jail for 14 days, after admitting she paid to have her daughter’s SAT responses altered (to ensure admission to a desirable undergraduate program). And now it turns out that she could’ve just bought one specific house in California. I mention this because the real estate team marketing a five bedroom, 3.5 bathroom property in Palo Alto is cashing in on the achievements of the previous owners’ children, when marketing the house to potential buyers. “Every owner’s children have gone on to Harvard or Stanford, paving the way for even greater achievements,” the listing from the Wen Guo Real Estate Group read. “Now it is ready to pass on its extraordinary energy to the next family.” The listing (complete with photos of Stanford diplomas and a Harvard acceptance letter) quickly went viral on social media. Just one day later, real estate sites listed the property as pending contract, with all erstwhile elite college allusions removed from the property description. Even without its educational pedigree, however, the property was still desirable: the listing boasts a “spa-like bath,” a wet bar, and a balcony. The $4,888,000 house is 2,722 square feet on a 7,048 square foot lot. “The formal foyer opens to a light-filled living room with vaulted ceilings and a cozy fireplace. A formal dining area and convenient powder room provide the perfect setting for gatherings,” the listing reads. “A chef’s dream, the gourmet kitchen boasts custom cabinetry, high-end appliances, and an oversized 11 foot island anchoring the space with warmth & sophistication.” All that space for cooking and entertaining would certainly be useful when throwing graduation parties (assuming the property’s academic mojo carries over to the next buyer).

###em. Our special guest for April will be the legendary educator Bill Tan. Bill is a master at structuring deals that are otherwise impossible. During this presentation, Bill will show us how to be creative in your financing. So if you have a deal, bring them on Thursday night and watch Bill give you ideas on structuring. Thursday night, April 10, 2025, 6:30 to 9:30 pm, Iman Cultural Center, 3376 Motor Avenue, Culver City, CA 90034. Free admission. RSVP: ###a href="https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fclick-1..." target="_blank">www.LARealEstateInvestors.com.

Vendors Expo Returns! Our world-famous "Vendors Expo" returns in 2025, on Thursday night, April 10, 2025. The Vendor Expo opens starting at 6:30 pm. We'll have 30+ of the finest vendors featuring real estate products and services you will want to utilize as a successful investor. Our Vendor Expo will be held at the Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Culver City CA. FREE Admission. Please RSVP at our website, LARealEstateInvestors.com.

This Week. Investors will continue to look for additional information about tariff policies. For economic reports, the ISM national manufacturing sector index will be released tomorrow (Tuesday) and the services sector index on Thursday. The Trade Deficit also will come out on Thursday. The key Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation are always closely watched.

Weekly Changes:

10-Year Treasuries: Rose 005 bps

Dow Jones Average: Rose 100 points

NASDAQ: Fell 00 points

Calendar:

Tuesday (4/1): ISM Manufacuring

Thursday (4/3): ISM Services

Friday (4/4): Employment

For further information, comments, and questions:

Lloyd Segal

President

Los Angeles County Real Estate Investors Association, LLC

Lloyd@LARealEstateInvestors.com

310-792-6404