Aaron Norris 3/31/1977-7/1/2022
Today’s show is a celebration and tribute to Aaron and how he lived his life. He was generous and always looking to help real estate investors. The Norris Group Real Estate Radio Show and Podcast is one of Aaron’s legacies to the real estate investment world and in large part created to help others.
On July 1, 2022, Aaron Michael Norris passed away from Stage 4 Intimal Sarcoma, a very rare form of cancer. After being diagnosed, he did exactly what Aaron did: he learned absolutely everything about it to give himself, his family, and his friends the best opportunity to spend as much time together as possible.
While fighting cancer, Aaron continued to live his life, going on trips with friends, supporting colleagues in the real estate world, and simply being the best person you could want to have around in any situation. He even created the Aaron Norris Creative Fund that lives on after him to help support Arts Programs in the Inland Empire.
He loved his life, he loved to give back, and he will continue to be loved and never forgotten.
Episode:
Narrator This is The Norris Group’s real estate investor radio show the award-winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever -changing real estate market hosted by author, investor, and hard money lender, Bruce Norris.
Joey Romero Hello, everyone. This is Joey with the Norris group. Thank you for joining us. We have a very special show for you today. As you know, on July 1 2022, the real estate industry lost icon Aaron Norris. Well, today is March 31 and today would have been Aaron’s 46th birthday. So, to celebrate Aaron, we put together a show of some Aaron’s old interviews, we wanted to take a walk down memory lane, and remember Aaron’s dynamic personality, his awesome interview skills and to look back on some of the fun times that Aaron provided for us. In this first clip, we look back at Aaron’s weekly real estate news videos. This one is from November of 2019. Let’s get started.
Aaron Norris Hey everybody, it’s Aaron Norris with the Norris Group. It’s Wednesday because it’s Thanksgiving tomorrow, so we’re going to be closed but when it comes to predictions for 2020 What are the things that you would like to never see again, that much more as we covered the biggest headlines in real estate. On the radio show and podcast we have John Aronson, the ADU expert, and there’s been a whole lot of talk because of all the bills that passed in October. So, John and I go through all the bills for the next two weeks, what changes, some things that we got excited about. And just a general update of the state of accessory dwelling units. You won’t want to miss that on the radio show and podcast. New home sales were strong last month having increased point 7% to 733,000 units. Home prices increased 3.2% year over year in September and improvement from August. Housing inventory has been in short supply for the past decade in large part because builders have struggled to overcome the scarcity and rising costs well, Zillow says a flood of homes will come on the market in the next 20 years as a silver tsunami of baby boomers leaving their homes at record levels in the coming years free up tons of inventory. Within two decades, more than a quarter of currently owner occupied homes will become available. What’s interesting about this is specific states like California, you’ve got it where owners aren’t leaving because they can’t afford to move at least in the same state they have to exit the state. So, they have to stay here because Proposition 13 sort of has them locked in. So it’s going to be really interesting to watch this and seniors because of technology, robotics, will they end up staying in their homes with robotics and wearables, allowing them to do more at where they currently live. We’ll have to wait and see. I don’t know if I agree with this prediction by Zillow. In the age of technology, Forbes says it may be time to revive the lost art of door knocking and cold calling. Technology allows us to market a property to 1000s and even millions of people in a click of a button, utilize algorithms and directly target very specific prospects deploying software that automates a lot of the process. That said it is important not to underestimate the power of traditional techniques. Plus technology can be integrated to make that even more effective. We have a lot of real estate investors that do nothing but things like door knock and cold calling. So there you go. The Federal Housing Finance Agency has raised maximum conforming loan limits for the fourth straight year. This means that mortgage rates that adhere to Fannie and Freddie maximum, minimums will have a new national maximum around 510,000 with a high cost areas at 765,000. Up on the screen, you’re gonna see comparisons of 2019 and 2020 here in some of the big counties in California. So overall, it’s about an average of 5% increase here in California, but in some areas that can make a lot of buying power. So, stay tuned, 2020 could be exciting. With everyone talking about predictions for the New Year Apartment Therapy gives us eight real home trends that hopefully don’t make a comeback in 2020. See if you agree, let’s see we’ve got ruffled toilet seat covers, especially when they match your window valances, you’ve got bathroom carpeting doesn’t even have to be shag any carpeting the bathroom. Just say no unless you really like growing mushrooms inside the house. plan overload a plaid pillow here and there may be good but maybe leave it off the walls. I don’t know. Etched shower doors, just no mirrored bathrooms. No, but I don’t know maybe smoke glass. I don’t know if I agree with that. Class blocks. I know you’ve been thinking what if we could use sweet lighting effects and glass blocks? I don’t know. This is another one. I don’t hate it. It could be cool. And then we’ve got carpet on the walls. Really, folks,? I don’t think I’ve ever seen carpet on the walls. That would be very extra. I don’t even think I’ve seen a 70s home with carpet on the wall. Personally, I’m really voting for the popcorn ceilings with glitter y’all. But I’d love to hear what trends you would like to see completely go away or never come back in 2020, we’ll put you on record.
Joey Romero Up next is Aaron’s interview with Kristy Cirtwill. In this clip you can really hear the joy that Aaron brought to the table. Aaron and Krsity talk about ADUs and Kristy’s journey.
Aaron Norris Everybody is Aaron Norris over at the Norris Group and today We are here with longtime real estate investor Kristy Cirtwill. She started in Toronto but made her way to Long Beach, California back in 2007, the perfect time to becoming a full time real estate investor. And since 2008, she has purchased over 250 homes and her specialty happens to be hoarder home. So today we’re going to talk about everything from ADUs to SB9 to hoarder homes. She currently flips tons of projects, she’s doing ADUs some really interesting things in like lot splits. And in her spare time she indoors outdoor activities playing her guitar, and of course good food and wine who doesn’t. And everybody wants to know, do you still have the 1979 Volkswagen bus?
Kristi Cirtwill Good memory. Yes, I do.
Aaron Norris Are you rocking it?
Kristi Cirtwill She’s, she’s a lot of work. Let’s just say that.
Aaron Norris I can only imagine. Well, let me set the stage with a few things that I think real estate investors should should know. I’d been presenting on ADUs now for I think three years and then SP nine for the last year. I think there’s some really cool opportunity. We’re getting close. I think SB9 is going to follow ADU and make it more investor friendly. But the National Association of Homebuilders came out and showed that new construction nationwide on average build of around $400,000, $100,000, almost 93,870 to be exact goes towards things like government and impact fees, which is crazy. So, you wonder why here in California with the starting price of land? What’s a, what’s a half an acre going for these days in LA Kristy?
Kristi Cirtwill Oh, gosh, yeah. Who knows? I’ve seen it anywhere from 400,000 upwards.
Aaron Norris Right. So, before you even construction, anything sticks and bricks, you’re already looking at, you know, four to 500,000 just in governmental fees and, and land costs, which is crazy. So, the state has just released within the last year, its new RHENA numbers, which stands for Regional Housing Needs Allocation. And the one reason that cities and counties might work with you is because they are, they are really adding teeth to these rules that if the cities and jurisdictions do not meet their goals in the next eight years or so, they’re going to start taking away specific funding, like CDBG funds. So, cities are, they’ve got to figure it out. And I’ll give you an example. Orange County has to build 183,000 through October 2029. It’s crazy. And the few planning people I know they’re like, it’s insane, like we would have to replicate the best years ever, every year leading up to that. So, it’s just really, really interesting to see this in the play. And then you can look, if you think the government’s doing a good job. My favorite go to is the watch the HHH fund that got passed in 2016, where the citizens of LA you are paying $1.2 billion, so the government could supposedly create 10,000 affordable units. And as October of 2021, there was only 1000 of those available and an average price of $579,000 per unit. I love it when Charlotte Sean says is the best California and spend more money on unaffordable housing than anywhere.
Kristi Cirtwill Yes.
Aaron Norris Imagine if they would have taken that $1.2 billion given it to investors to do ADUs how crazy crazy crazy Well, let’s start at the beginning wince when you have a conversation with about an ADU? How do you describe it to the layperson?
Kristi Cirtwill Well, I guess a better term is just saying a back house you know house in the rear of your property that is an additional living space for somebody either an extended family member or you know, a renter to help you out with mortgage payment.
Aaron Norris And, and there’s also something called a Junior Accessory Dwelling Unit, which is just a converted garage, right? Pretty much
Kristi Cirtwill yeah, so it has to be converted existing space. So if your garage is attached, generally they’ll let you convert that and call it a junior ADU. But when you start getting into junior ADUs, you have to live in one of the units you have to live on the property technically.
Aaron Norris 09:07s all technically wink.
Kristi Cirtwill Well, you know what? I actually talked to a planner of a city last week and he’s like, Yeah, I mean, you should intend the keyword being intend. But there’s no way that they have to enforce it.
Aaron Norris I was gonna say who is enforcing it? Well, I think the place where investors are going to run amok are neighbors, neighbors are truly freaking out if you let’s real quick because it comes up triplex sizing. Can you describe that?
Kristi Cirtwill Sure. Well, I’ll back up and when I first started building ADUs and 2018 back then you were supposed to live in either the main house or the adu Well, I didn’t know that rule. And I was building five at the same time. And I started getting all these letters halfway through construction saying oh, by the way, you have to sign and notarize and record this document saying you’re gonna live in one of them, way way they did away with that rule. So you can actually be building an ADU on a rental property now and have both units rented. But now as you know, with SB 9, you can technically have up to four units on an R1 zone property. Now doesn’t always make sense to do that.
Aaron Norris Now I read the law, and it says that you can split the lot. But the city does not allow have to allow you to build an ADU. So, that’s going to be very city specific. Have you already talked to certain cities? And they’re cool with it? Like, yes, let’s build it. We’d love that.
Kristi Cirtwill Yeah. And as a matter of fact, two different planners, Long Beach and Lakewood. I’ve talked to both and they’re pretty open about it. Some cities don’t really have I mean, it’s just like, when at us were first pass, the cities are like, what is this? So, you kind of just default to the state. So, I’m sure as the months go on each city will develop their own plans, or set of rules. But as of right now, most of them are just defaulting to what state put in place, which is technically, it doesn’t matter what size the I mean, there’s some discretion you have to use there, but you can technically split a lot, or you don’t even need to split it. You can have main house, then what they’re calling a second unit, a second house and then adu. And then JADU. So that’s four units.
Aaron Norris Yeah. Okay.
Kristi Cirtwill Four units on one, one single, it has to be zoned R1 to do that.
Aaron Norris Interesting. So, if you could technically, if they got really fancy, you could do a lot split and do three units on each property.
Kristi Cirtwill If it would fit it.
Aaron Norris Yeah, That. But you know, cram, Lord, the idea of, you know, design being really important. You don’t want to create a piece of junk that people want to live in or where it takes an hour to park I mean, I think investors we really have to learn to play nice, and we’re going to be our own worst enemy. When it comes to this. I think cities and counties are gonna want to work with us. I’ve been on housing commissions of not what not having the conversation about, you’re never going to do this on your own. You need investors to come to the table, because right now, SB 9 was really written with the homeowner in mind, but how many homeowners can stomach the construction process in today’s market?
Joey Romero One of Aaron’s favorite things to do was researching things for Main Street investors. And there was nothing that Aaron loved better than going to trade shows and getting the inside scoop for all of you. Here’s Aaron and Rose Quint from the National Association of Homebuilders talking about the things that builders were putting into homes.
Aaron Norris Let’s get into your presentation because it covers three different it covers data from the census, the NH, the National Association of Homebuilders builder survey, and then the preference survey is really aimed more at the consumer what they’re wanting, which is always interesting to me, because it doesn’t always translate to what’s actually being built. So it’s sort of forward looking at what they’re wanting, and probably will end up on the desk of the builders. But let’s start at the US Census, it was really interesting to see that home size, once again, is up year over year. And the last time we’ve seen these sizes of homes was before the downturn. So, is this a predictor of we’re going to have a downturn homes are getting McMansion sized or what’s going on?
Rose Quint Now, builders are adjusting builders are doing what they do, they’re adjusting to the demands of the marketplace, they’re adjusting to the demands of their buyers. So, if I can take you back to after the Great Recession, so ’08 or nine, the size and the amenities in homes, you know, they sank real low after the great the great recession. And then for a number of years, the homes got bigger roughly between 2010 and 2015. The homes got bigger, they got there, it was more likely that they came with four more bedrooms or three or more full bathrooms. And that was during the period of time when underwriting was really tight. If you remember those days is really tight. And then only people that have super fantastic fabulous credit history and employment history could even get a loan. And so the houses that got built during the that period reflected the type of buyers that were standing in the game.
Aaron Norris Yep.
Rose Quint That sort of peaked in 2015. And then underwriting and underwriting became a lot more reasonable for some homebuyers reenter the market, younger buyers reenter the market, and for a number of years from like 2016 to 2020. We saw all those trends reverse and the average size began to come down. It was less likely that they had you know giant number of bedrooms or bathrooms or a garage for three cars or more those characteristics declined for a period of about four or five years. And then yes, then 2020 came COVID arrived in all of our lives. The world ended as we knew it, and builders had to adapt quickly to the demands of their marketplace.
Aaron Norris Home is now where we live, work, play, educate. Yeah.
Rose Quint And it change everything, how we exercise, how we work, how we study how we pray, how we socialize, everything, everything was changed and how we exercise definitely. And so, so yes. So, there is now a new pivot point that we see it in the data from the Census Bureau from 2021. Where we see again, sites rising again. So, it bottomed out. In 2020. We see the average size of new homes in 21, rising to a little over 2500 square feet again, and also, you know, the share of new homeless with all those amenities, four more bedrooms, three plus four bathrooms, all those things rising again. Again, why? Because builders are responding. They’re, they’re adapting and they’re responding to the preferences brought about by COVID-19. in very general terms, what are those people want more square footage? For the reasons you just mentioned? Right Aaron? We want to do the home. We just need to function differently in the home. We want more out of the home.
Aaron Norris Yeah, it was interesting to see the patio has consistently been rising since the bench 2010. So I’m assuming when they say patio, that means outdoor living space in the backyard, or does it matter?
Rose Quint It could be on the side of the house too.
Aaron Norris Okay.
Rose Quint Yeah, it could be on the side of just have to have a concrete or, you know, a solid surface outside of the house. And it’s been rising for over a decade. Yeah. So this desirability for patio is not new.
Aaron Norris Very cool.
Rose Quint COVID did not come in and invent the popularity of patios, but it certainly accelerated. Because and I’ll tell you why. Buyers now more than ever, really, really, really want to spend time outdoors in the safety and the privacy of their own homes. And a patio is just perfect to do that.
Aaron Norris No, I totally understand. So, it’s really great that the I, you know, I didn’t know until I started looking at your report that the US census was the ones collecting that data as well. I thought it was the NAHB. So it was good. And we’ve got some history on it. So it’s very interesting to follow. So good. Okay, we’ve got more space.
Rose Quint We analyze it though.
Aaron Norris The what?
Rose Quint We analyze it, though.
Aaron Norris All right. Well, let’s jump into the builders survey. This is work that you guys have actually done. And can we talk about how many people take this and what the goal of the survey is?
Rose Quint So, yeah, so we keep on, your listeners may have heard of this NAHB that’s a monthly survey of single family builders across the country, called the housing market index, the NAHB WellsFargo housing market index to be completely correct. And that survey produces what’s the best indicator of the housing market in available out there called the HMI in which builders tell us how they feel their sentiments about the home sells. And that number has a very good correlation with house you start. So it’s a very popular number among analysts and government regulators, etc. But anyway, in that same survey every month, we include a set of questions that deal with something that’s very a very hot topic for the industry, something that we really need an answer for that only we have access to builders and therefore can find it. And so a lot of a lot of people try to turn to us. We’re interested in finding out information about the homebuilding industry. And we do it for certain purposes, sometimes that deal with research that I present our ideas. So for example, late every year, I asked builders across the country about the feature, they’re the feature they’re most likely to include in the typical home, they build that that next year that you’re starting. So we did we did that for 2022. And I have a list the most likely features that builders will include and that’s the that’s the operative word here they will include it in the typical home they bill so these are not options. These are things that they will include in the typical home they build this year. We give them a scale, why not not likely that I will included five very likely so the highest the higher the average trading, the more likely so at the very top you have a walking cloth and in the primary bedroom for example, very you can almost be guaranteed sure that that’s happening in the typical home this year. Similarly in laundry room, very, very likely. And a great room those are the top three most likely teachers coming to the typical home this year. How do you like those?
Aaron Norris I was really surprised to see very high up on the list this year. It seemed like more energy efficiency, whether it was windows or energy star appliances, more automation, low water things that a lot of different efficiency things made the list our buyers really caring about that?
Rose Quint Yes, yes. So, builders understand that the typical buyer is looking for a house that is green and green in a sense. And for buyers. Let me, let me explain that for buyers That means an energy efficient home. That’s what green means to homebuyers is the energy efficient house. And so they will include it from the server We know that the typical home in 2022 will have low E windows for example, and it will have Energy Star windows and Energy Star appliances, and it will use efficient lighting. Those are balls that use less energy than your conditional gold. So yes, and water conserving toilets, as you mentioned. So yes, the builders again are reacting to the demand so their buyers.
Joey Romero In our final tip, we feature the first radio show that we ever did after Bruce had moved to Florida.
Bruce Norris Hi, thanks for joining us. My name is Bruce Norris. And today our special guest is Aaron Norris. There he is! Aaron, how you doing?
Aaron Norris I’m good. And this is the very first show that we are taping with you in Florida.
Bruce Norris That’s right. I am, I am sitting in what will be my office surrounded by boxes that have not yet been unpacked. So, it’s definitely, it’s definitely new feeling. But I’m, I’m actually really excited to be here. Alex Serato is the builder that you know, I’ve used in California for many years, and he’s building homes very successfully here, we’ve got something like 20 thousand going on in most of the homes when they’re done or pending in a day. So, I’m excited about what we’ve got going on here. So, they stepped in and painted the, painted the home that we moved into. And so now after we all have to do is get get these boxes put away and feel like it’s, feel like it’s home.
Aaron Norris You know, you’ve been talking about moving to Florida forever. I think it was one of those moments where we’re like, yeah, he is always saying he’s moving to Florida. And then July you guys said ‘we’re moving’. You went to Florida. Very typical to Dad fashion. He puts a home in escrow while he’s there. And then within a month he’s gone. It’s, It was the craziest thing I ever saw. Let’s, let’s cover the power of goals. I think you taught me the power of goals at a very young age and I just shined it on. I think you, I remember you give me a book while I was there in New York City and like Dad, I’m gonna be a Broadway guy and I don’t need this gold stuff.
Joey Romero I’m a star.
Aaron Norris Exactly. And, and was funny as I wrote down, I use something called the full focus planner. I’ve been using it for years and it’s completely changed my life. I had no idea I was so obsessed with checking things off and then magical but one of the goals was that I was going to start a third hustles so the Norris group, my rentals and then I wanted to challenge I wanted something just on the side so, so.
Joey Romero Herbalife, Herbalife was out of the…
Aaron Norris Herbalife was out of the question correct. No Cutco knives, yeah, that’s not my scene.
Joey Romero That’s gonna do it for the show. Thank you for taking this bittersweet trip down memory lane with us. Happy Birthday My brother. Happy heavenly birthday, Aaron Norris.
Narrator For more information on hard money, loans and upcoming events with The Norris Group, check out thenorrisgroup.com. For information on passive investing with trust deeds, visit tngtrustdeeds.com.
Aaron Norris The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669. For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.
