Episode Transcript
[00:00:00] Speaker A: Now let's get back to real estate and more with your host, Michael Hatfield.
[00:00:05] Speaker B: Welcome back.
[00:00:05] Speaker C: Before the break, we were talking with.
[00:00:07] Speaker A: Our special guest, Pat Vitucci, on retirement here, there and everywhere.
[00:00:13] Speaker D: You know, I was enjoying it so much.
[00:00:14] Speaker A: Let's get right back to it.
[00:00:16] Speaker C: You know, I had a guest the other day that was talking about how he and his wife had bought their first home, and then they ran into a recession. In other words, the market, the ocean that all the home values swim in had kind of come back. When I met you, I had just retired from the airline, and my son and my wife and I had built a spec home, and that's when I had met you. And then we run smack Dab into the 2008 through 2010 recession. And it was difficult because the home values had went down a lot. So this kind of adds to the point when the market is up, that is the time that you should sell your home, not really rest on your loyals and go out and enjoy the remainder of the years that the good Lord has given us.
[00:01:03] Speaker B: I've seen too many clients I've had for 30 years.
I call them echo depression babies.
Most of us grew up with parents who went through the Depression. And the frugality that we saw that they had to live by, we absorbed it because we didn't have a choice. They were stained by the Depression, and probably a good thing. They led very frugal, conservative lifestyles. And now I'm of the age where I'm an echo depression baby, and I had that element of being frugal.
But then you've got to sit back and say, wait a minute, I'm of this age. I've got maybe this many years left. I'm not taking it with me. We're going to leave my children with lots of money. That's not my ultimate goal. My goal is to enjoy what I have. And like it or not, they're going to end up with a lot of money.
I've had clients who are multimultimillionaires and will not spend a nickel to go out to take their wife out to a nice restaurant for dinner. So it's that moderation of life.
You can't save it all. You can't spend it all. You've got to have somewhere in the middle. Are you a spender? Are you a saver?
At this point in our life, you need to really relax and enjoy what you've worked for.
[00:02:38] Speaker C: Well, going back to the roots, you didn't come from a big financial, well being family. You were of a modest.
[00:02:49] Speaker B: I was a poor Italian kid.
[00:02:51] Speaker C: Yeah. And on a different coast, too.
[00:02:54] Speaker B: On the East Coast.
[00:02:55] Speaker C: Yeah, absolutely. And I had everything that I needed. I had a dad that was an automobile mechanic and a mom that was in real estate, and it was a real modest home. So you get this motivation and this drive, and then you work your tail off until you get a little bit of money put aside and you start thinking about retirement. And some folks, they don't look at all of the aspects for retirement. They don't look at the cost of living, where they're going to go. They just have to have a place to put their belongings. If they sell their home here. Maybe an alternate way of thinking about that should be sell when the market produces the most amount of proceeds, making sure that you have enough funds, because that's certainly a good way to go. And then select what you want according to cost of living, location, sense of community. To me, sense of community is everything. And even though you don't speak the language and you're in the country of Greece, you can find a few words and you can start talking, and the next thing you know, you have enough to communicate. And that, to me, as a former international airline captain, was the thing to do, and I enjoyed that so much. People just light up and have that community about you and you do the same thing. You walk into the room and you say, hey, I'm Pat. And everybody says, yeah, who's this guy with a pink shirt on?
And they like that. And so all of these factors go into your retirement and your thoughts that you do.
I just can't say enough about the folks that are sitting here in these homes that they've been in for 30, 40 years.
Go out and live life a little bit. Do the alternate approach. Maybe you don't have a place to put all of your belongings at the moment, but if the market is good and hot the way it is right now, sell your home at a great value, get the proceeds and then let that money work for you.
[00:04:48] Speaker B: Yeah. Cash flow is the very big issue.
What I've done in my career for 30 years is sit down with a single person or a couple, and on one eight and a half by eleven sheet of paper, I can pretty well define assets, liabilities, and what's a reasonable cash flow to drive from those numbers. It's easy to quantify with numbers, but we've talked about the emotion of retirement and the geography of retirement and health care and all those other issues. So it's easy to put the pencil to the paper and come up with, all right, here's your cash flow. Ten grand a month, whatever the number is, that rhythm tick is not difficult.
Then what do you do with the ten grand a month? And what can that buy you in Bay Area versus any other part of the world? And so that's kind of the equation that kind of drives and it kind of funnels down to what are some of the areas I can afford versus what are some of the areas I really enjoy, would enjoy potentially living in.
[00:06:01] Speaker C: When I first started flying, there's a little checklist that goes on in my mind all the time.
Amongst those other things that go on in my mind all of the time. It's number one, see your target clearly, which in this case would be good, suitable retirement elsewhere, with all of the items that you just talked about, the sense of community, the cost of living, and all of those important factors, health care, which we know is really important. So number one is see your target clearly.
[00:06:28] Speaker A: Number two is plan a checklist.
[00:06:30] Speaker C: Put those items down and say, I'm looking at this place over here, and where does it weigh each one of them, these points, where does this stack up as opposed to this other location? Number three is start executing on this. And number four, just evaluate as you go. Well, it works great for flying. In this case, for retirement. It would work just fabulous because you can say all to move to, I want to move to Montana, so I'm going to talk about CInSa community. I go up and I visit. Everybody is really friendly up there. It's in the middle of summer. There's a few bears looking around.
Anyway. It's just unbelievable. Well, again, we're going on here with my good friend and incredible guest, Pat Vitucci. Been in the business of financial planning for a number of years. World class traveler. He's done a lot of great things, and he's coached so many people in the right direction with their retirement. So as we go on, one thing that comes to mind to me is set those points out. If you go to look for a certain location and to do it, see your target, which would be retirement. Number two, plan your checklist. Number three, do each and every step on your checklist. And number four, evaluate as you go. It just occurs to me, like, if you look at one of these places, you can weigh how good each one of these are, the pros and cons, and it can really, really make a difference.
[00:07:57] Speaker B: Yeah, it's kind of a fun project. Michael, when you work for all those years, you kind of dream about retirement and you don't want to make retirement into a stressful horror show.
You could drive yourself a little wacky, and then all of a sudden your stress level gives you some health issues. So you want to do it in a very relaxed mode and you don't have to get it done by next weekend. So it's a very methodical planning process that between you as a realtor and me as a financial advisor, we've been working together with clients for many, many years. And it's that collective coaching. I don't know a lot about real estate. I know it's important element in a financial plan.
So your expertise with Nancy coaching on the real estate side, and then I include those numbers as part of the equation that kind of dictates what your cash flow is going to look like, really results in a very strategic, well thought out plan that can hopefully bring some favorable results.
[00:09:16] Speaker C: Yeah, I saw this one couple that actually, they didn't look at all of the aspects that we've talked about, the cost of lIving, including taxes, this and that, and they just looked at the sense of community, but more, it was more a sense of family. They followed one of their children north, and then pretty soon it wasn't the best thing. Then they followed another one of their children elsewhere. And it's kind of tough when you just say, well, this is the most important thing is family. So I'm going to do essentially what it takes to follow family. They don't look at the other ideas as where is the real estate market, how I'm going to make money after we've been there for a while.
It's a weight of all of those good things.
[00:10:00] Speaker B: Yeah. I've seen clients follow their children, and if their children are successful and they get transferred from, they move with their kids to Michigan, and then the kid gets promoted to Idaho, and they move to Idaho, and then the kid gets promoted again to Nevada.
That's hardly a plan to follow.
Yeah, you love your kids and you want to follow them, but visit them several, two or three or four times a year. I'm not sure if following them and buying real estate every time is a prudent thing to do.
[00:10:38] Speaker C: I've seen some of them do it. It's just an incredible way.
[00:10:41] Speaker A: So where would you move if you.
[00:10:43] Speaker C: Were going to retire? Everywhere. Where would be your top potential spots?
[00:10:48] Speaker B: Well, I'm a beach guy. I love the beach. I get into a whole level of comfort and relaxation on the beach. So Hawai is kind of my favorite spot.
[00:11:02] Speaker C: You like to watch those turtles surf don't you?
[00:11:03] Speaker B: Those turtles are incredible. My wife is a mountain girl. She is great skier. She grew up in Reno, so she loves skiing. So we spend a fair amount of time up in the Sierras, and so she gets to exercise her great skiing. I'm kind of an average to below average skier. I started late in life. She started when she was three or four years old. So it's that blend of mountain life and beach life that we kind of balance out. We kind of satisfy each other's needs.
I'm a warm weather guy. She loves the cold, and I've grown to not tolerate it a lot better somehow. Cold in the SierRas is a whole lot better than cold on the East coast where I grew up. You just can't get warm with that damp, cold back east. I said damp, cold back east.
[00:12:01] Speaker C: Yeah, I thought I heard a bad word there.
[00:12:02] Speaker B: But it's cleared up. But, yeah, Sierras are beautiful as well.
[00:12:08] Speaker C: Well, we were up there visiting Pat and his bride one time, and we went for a walk, which at our vintage, we have to do things like that. We have to stay in shape. We have to exercise. If you're in cold environment, you have to find alternate ways to do it. And for me, I'm with you that it's much easier to get that exercise. You need to keep everything working that needs to be working. And I remember we were taking that walk and Pat kept looking around, looking around for the bears because there were bears visiting everywhere. And you got to look out for the bears no matter where you are.
[00:12:42] Speaker B: The mountains are beautiful. So living in the western part of the country is blessed with mountains. We're blessed with ocean. And how do you beat that combo?
[00:12:54] Speaker C: Now, I have a question. A lot of wise men have said, if you have your health, you have everything. If you don't have your health, you don't have much. So what are your thoughts on that, Pat?
[00:13:06] Speaker B: Well, I think you touched on it. Exercise is one of those things that I never really like to do. You and I work out a fair amount and we commit to 1 hour at the gym and we kind of buddy up and help each other out. And I watch the clock the entire hour because I hate exercising. I hate lifting weights. But at our age, if you don't stay healthy, and God knows what's in store for us tomorrow. So we take every day as a blessing. But health care is now one of those, more of a preventative issues that it's always top of mind. When you're working, you try and squeeze in a run here or an exercise there. But when you retire, it becomes more of a priority. And getting your annual physical, we know all that's important. You're doing all your diagnostic testing.
So it becomes much more top of mind when you get to when we're on the back ninE, as we say.
[00:14:23] Speaker C: You'Re on the back nine. I'm going to live about another hundred years.
[00:14:26] Speaker B: Well, yeah, that's true.
[00:14:28] Speaker C: Well, Patucci, I have to tell you, I've had a wonderful time this morning being with you and talking about real estate and more, as well as talking about retirement and some thoughts and ideas on how a person can move into that retirement mode and enjoy the rest of their years. And I have to tell you, some spots international seem to have a lot of draw, which I didn't quite realize as much as I do now because of the cost of living and of course, the sense of community with some of those communities abroad.
[00:15:02] Speaker A: A special thanks for my friend Pat Matucci for being on the show today and providing some insight into retirement here, there, or perhaps everywhere. Last week my partner Nancy and I were discussing how the practice of real estate used to be a few decades ago as to how it is now where much information is presented on the Internet. Sometimes new clients will take information they derive from the internet. As advice taken further, this information may come into conflict with what the real estate professional is telling them. Way back when my mother practiced real estate, there was no Internet nor instantaneous availability of data at everyone's fingertips. There was people talking with people. Clients would go into the local real estate office and meet their agent, then review listings of homes humorously. These home listings arrived at the real estate office by Us mail, then placed and kept in a black and white multi ring binder. There were no office printers at the time. Agents and clients would discuss everything, schools, properties, how things were done, how the contract, which was like a long one page document, and topics from A to Z. Instantaneous availability of Internet data, whether or not the data is accurate, satisfies the anxious reader of today's desire for immediate answers. Today, online data must be carefully vetted for use, to rule out issues of obsolescence, incorrect opinions of writErs, biased information, or for just being plain wrong. One must note that advice derived from the Internet is not likely to have a client's best interest at heart. Experienced agents occasionally find their professional abilities put into question by new clients who believe what they've read is as valuable as the guidance provided by their real estate professional. An experienced agent has significant credentials through the benefit of continuing Education Day to day current practice, years of experience, and importantly, the incredibly valuable factor of intuition. Sometimes what a client has read can be unhelpful and counterproductive to a client's objective. The Internet, subliminally, at times, can make folks think they are real estate experts. I recorded Nancy and my discussion from last week, a talk that touches more on the subject of Internet media. Let's take a listen.
[00:17:39] Speaker E: Good morning. I'm Nancy Hatfield, and I'm here with my partner, Michael Hatfield. And this is the Michael Hatfield Real estate and more Show. Michael, you were recently talking about an.
[00:17:51] Speaker C: Yes, yes. I was thinking about how large of a slice of one's financial portfolio that.
[00:17:59] Speaker D: Real estate holdings make up the value of their home and so forth, and realize in housing markets, to a degree.
[00:18:05] Speaker C: We are long for the ride.
[00:18:08] Speaker D: Something happened the other day when we were showing property that took me back to a time I was with the airline, and we had this one airplane that had this carryover item, as we called it, an item that was pesky, but it was deemed not something that would be enough to ground the airplane. Those airplanes are very complex, by the way. So we'd taken this one airplane and went from one destination and to one airport to the next airport, and we had mechanics on both sides, and they could not solve it. And then finally, the company had set up this master guru, brain mechanic to meet the airplane once we got it to New York. So we pull into New York, and up comes this guy. He was kind of not real much in presence and kind of sloppy, so to speak, and not well dressed, but smart as a whip. And he was talking about how much money, because he did not work for the company, that they had called him out to satisfy this problem that we had with this jet. So he was there. He depowered the system, did a couple of little things, and in ten minutes, he'd solved the problems. And as he's leaving, he was saying the amount of money that he had made to solve that problem.
It's kind of like that in real estate, because it wasn't the amount of time, but it was all of that 40 years of experience that that master mechanic had dealing with these airplanes that made him so good and, quite frankly, worth the money. It wasn't about the hour that it took him to solve the problem and how much money he made for that. It was that it took all of those years to get him to the point where he could solve that problem. And just recently, we were out with a buyer tour with clients, new clients, and we showed them several homes, and they had this one that they were very interested in until they started becoming the professional and knowing what was wrong with this house and what it was going to sell for on the market. So that intuition kind of became secondary to them. You recall what I'm talking about? And what do you think, Nance?
[00:20:29] Speaker E: Well, sometimes people think that they know more than maybe they do working with a professional. And it's kind of like the airline industry, which we've had a lot of years of watching and experiencing together.
And when you're on an airplane, you are along for the ride. And when it comes to real estate, it is important that people work with somebody they like, they trust, they believe in, they believe in their experience, their intuition. And all of those factors go into working with that agent who's representing them to get the property either they want or the property they have to sell.
[00:21:10] Speaker D: There's quite an environment in the backside. I totally agree with you. It was interesting to me when we were at a social gathering and I was talking with this renowned doctor, he was dermatology surgeon, really great guy. And I said, since we've been at this real estate business, it seems like I'm the guy that carries out the trash and I'm no more important than that. And why do you think that is? And he responded to me, he said that to get a real estate license, it doesn't take much, but in order to have the knowledge, the experience of actual, the practice, it takes a lot of work, it takes a lot of time and effort in order to be any good at what you do. Same thing with surgery. And I said, yeah, but when you put on an airline uniform and you have four bars sitting on there, people don't question you the way that they do in real estate. And he laughed and he said, yeah, I can see that I have the advantage to being a surgeon.
[00:22:15] Speaker E: Right. I remember that conversation. Quite interesting.
The buzz is that home prices are going up.
[00:22:23] Speaker D: What do you think about that in the Bay Area? It is in my view, and only my view, I think it's likely. Mortgage rates are multi decade highs, home prices are up, but yet we still are getting bidding wars on homes. Homes that have show a lot of promise to families that want that type of residence. We're seeing a lot of biding wars happening, a lot of activity. But yet, as you said, home prices are up now. Mortgage rates are multidecade highs. I think it's likely going higher. And the one reason that I say that is because of the fact that the housing inventory has been decreasing year over year.
In July, it fell by 6.4% from the prior year, while at the same time, note new home listings, which are for homes that appearing on the market for the first time, fell by 21% from the same period the year before.
[00:23:30] Speaker E: That's quite a dramatic decrease.
[00:23:34] Speaker D: Yes, it does indicate what our level of housing inventory is, and it indicates that we could have an increase in home values going forward here in the area. You know, interestingly, Nance, in other areas of the country, they don't have appreciation like we do.
This is kind of a norm here in the San Francisco Bay Area to buy a home for X and then ten years later be able to realize a significant gain. So, yes, with all of the factors that I'm seeing now, barring anything happening that is outside the parameters of the housing market in the Bay Area, I see housing values going higher.
[00:24:22] Speaker E: Was something I read recently that said something like four out of ten homes were sold above the list price as of, like, the middle of June or something. And then in 2018, back to 2018, only one third of homes were sold for over the list price. And it's interesting, when we work with first time home buyers, sometimes they wonder, well, there's a list price, but can we go a lot under that? And often that's not the case if they really want to be successful at buying a particular home. So that's a hard thing to learn about when you're trying to buy a house and you're spending a lot of money, especially in this immediate area. In the Bay Area, for sure, it.
[00:25:10] Speaker D: Doesn'T seem to make a lot of sense to run a race if you're not going to win it. And just being part of making an offer, I mean, it's an exhausting process to make a really good offer on a house. But why get in the race if, you know, for right at the beginning, you're not going to win it.
[00:25:30] Speaker E: Michael, I was reading recently that mortgage application submissions saw a decrease of like 3% during the end of July. And why do you think that might be?
[00:25:44] Speaker C: So?
[00:25:45] Speaker D: Many of our buyers today are young folks of millennial age, we use that term, and they're hyper focused on interest rates, mortgage interest rates, and the affordability of a loan that may be attached to it. So as the interest rates have been successively increasing to their multidecades, high amount that we have right now, but still not really all that high, they have less desirability to go out and buy a home. So they put it on pause and just don't make a submission for a loan until they have a home in their sights that they can't live without.
[00:26:24] Speaker E: Yep. Understand.
[00:26:28] Speaker D: You'Ve been listening to real estate.
[00:26:30] Speaker C: And more on KGO the spread.
[00:26:33] Speaker D: We appreciate you tuning in today and look forward to next week when we can once again take a look at our Bay Area housing markets and the human element that surrounds those housing markets.
[00:26:46] Speaker F: The views and opinions expressed are based on current economic and market conditions and are subject to change. Information on the show provided for illustrator purposes only and does not constitute professional or legal advice. Information from sources deemed reliable, but accuracy and completeness not guaranteed. Michael Hatfield and the Michael Hatfield Remax team have no liability for information discussed on the show. Consult with qualified professionals prior to taking action.
[00:27:15] Speaker E: We at the Michael Hatfield Remax team enjoy representing our valued clients. If you or someone you know is interested in buying or selling and wishes to schedule a complimentary appointment with the Michael Hatfield Remax team, call us at 925-32-2775 that's 925-32-2775 or go to our website, michaelhatfieldhomes.com.
[00:27:38] Speaker A: I'm Michael Hatfield. Thank you for listening today. Join us next Saturday at 09:00 a.m. For the next real estate and more when we again sharpen our focus on house the market.
[00:27:50] Speaker E: Join us next Saturday morning at nine and have a wonderful week. Best wishes and blessings to you.
Dr. E. 1493.
