1 00:00:00,080 --> 00:00:05,840 Speaker 1: M hm. This is Mesters in Business with very Results 2 00:00:05,920 --> 00:00:10,200 Speaker 1: on Bluebird Radio. This weekend. On the podcast, I have 3 00:00:10,320 --> 00:00:13,960 Speaker 1: an extra special guest, Jonathan Miller, returning Champion, returns for 4 00:00:14,120 --> 00:00:18,560 Speaker 1: his fourth appearance to talk about housing and all the 5 00:00:18,600 --> 00:00:22,279 Speaker 1: craziness that is going on. We discuss is housing in 6 00:00:22,320 --> 00:00:25,200 Speaker 1: a bubble? Are we looking at the death of cities? 7 00:00:25,239 --> 00:00:28,240 Speaker 1: What's going to happen with urban real estate from both 8 00:00:28,280 --> 00:00:33,960 Speaker 1: a residential and a commercial perspective, just everything involving real estate. 9 00:00:34,440 --> 00:00:37,720 Speaker 1: And we talk about something that you may not be 10 00:00:37,800 --> 00:00:40,880 Speaker 1: aware of, but as someone who runs one of the 11 00:00:41,000 --> 00:00:45,000 Speaker 1: larger real estate appraisal and data analytics firms, he's been 12 00:00:45,120 --> 00:00:50,200 Speaker 1: very influential in this space, discussing systemic racism that's built 13 00:00:50,200 --> 00:00:54,440 Speaker 1: into the real estate market, both from a realtor and 14 00:00:54,640 --> 00:00:59,480 Speaker 1: an appraisal basis. How a lot of the industry groups 15 00:01:00,080 --> 00:01:03,960 Speaker 1: are in his terms, like me. He said, they're they're white, 16 00:01:04,000 --> 00:01:08,080 Speaker 1: they're male, they're older. They have not been appealing to 17 00:01:08,760 --> 00:01:12,000 Speaker 1: a more diverse crowd. And a lot of people in 18 00:01:12,040 --> 00:01:16,360 Speaker 1: those industries are aging out. And so the why the 19 00:01:16,400 --> 00:01:19,920 Speaker 1: appraisal groups and why the real groups um have been 20 00:01:19,959 --> 00:01:25,560 Speaker 1: so far behind the curve that they're starting to be 21 00:01:25,640 --> 00:01:29,480 Speaker 1: subject to a whole lot of external pressure to become 22 00:01:29,640 --> 00:01:32,600 Speaker 1: more diverse, to to bring in more women, more people 23 00:01:32,600 --> 00:01:38,520 Speaker 1: of color onto the groups that oversee the industry, and 24 00:01:38,640 --> 00:01:42,240 Speaker 1: um Jonathan has been very influential in that space, has 25 00:01:42,240 --> 00:01:44,600 Speaker 1: applied a lot of pressure both to the appraisal group 26 00:01:44,640 --> 00:01:47,920 Speaker 1: and the real estate group and starting to see results. 27 00:01:48,040 --> 00:01:51,800 Speaker 1: More media have been covering the subject, and we we 28 00:01:51,800 --> 00:01:57,160 Speaker 1: actually discussed some crazy stories about African American families who 29 00:01:57,400 --> 00:02:00,320 Speaker 1: have learned that if you're gonna do a refined answer 30 00:02:00,320 --> 00:02:01,800 Speaker 1: of your home and you want or you want to 31 00:02:01,840 --> 00:02:04,480 Speaker 1: sell your home and get it appraised, take out all 32 00:02:04,480 --> 00:02:07,760 Speaker 1: the photos of your family, put in photos of a 33 00:02:07,840 --> 00:02:10,079 Speaker 1: white family, and have one of your friends or neighbor 34 00:02:10,160 --> 00:02:12,880 Speaker 1: meet the appraiser and pretend it's a wide owned home. 35 00:02:13,040 --> 00:02:17,200 Speaker 1: It could be worth more in the appraisal. Crazy stuff 36 00:02:17,639 --> 00:02:21,760 Speaker 1: that he's been very very critical of, and the media 37 00:02:21,840 --> 00:02:23,800 Speaker 1: is now just starting to pick up on it. There 38 00:02:23,800 --> 00:02:25,400 Speaker 1: have been a few stories in the New York Times, 39 00:02:25,400 --> 00:02:28,720 Speaker 1: in the Washington Post about this. Anyway, this is just 40 00:02:29,080 --> 00:02:32,320 Speaker 1: a fascinating conversation about real estate with one of the 41 00:02:32,360 --> 00:02:37,120 Speaker 1: most knowledgeable people about the industry. So, with no further ado, 42 00:02:37,680 --> 00:02:44,560 Speaker 1: my conversation with Jonathan Miller. This is Masters in Business 43 00:02:44,560 --> 00:02:50,200 Speaker 1: with Very Results on Bluebird Radio. HI. Extra special guests 44 00:02:50,200 --> 00:02:54,560 Speaker 1: this week is Jonathan Miller. This is our fourth interview 45 00:02:54,760 --> 00:03:00,760 Speaker 1: and the first let's call it post pandemic. Addition, Jonathan 46 00:03:00,840 --> 00:03:03,880 Speaker 1: is the founder and CEO of Miller Samuel, one of 47 00:03:03,919 --> 00:03:07,960 Speaker 1: the largest real estate data analytics firm. As well as 48 00:03:08,000 --> 00:03:11,440 Speaker 1: being an expert appraiser. In fact, he is the sort 49 00:03:11,480 --> 00:03:14,440 Speaker 1: after the go to appraiser for some of the most 50 00:03:14,440 --> 00:03:19,760 Speaker 1: expensive penthouses in New York City. Their data powers a 51 00:03:19,840 --> 00:03:24,919 Speaker 1: lot of the publication that many large brokerage firms used 52 00:03:24,960 --> 00:03:30,000 Speaker 1: for their own analysis and media presence. Jonathan Miller, Welcome 53 00:03:30,200 --> 00:03:33,919 Speaker 1: back to Bloomberg. It's great to be here, Barry, and Uh, 54 00:03:34,280 --> 00:03:36,840 Speaker 1: I feel like every time is a new adventure. So 55 00:03:37,440 --> 00:03:40,119 Speaker 1: the fourth time is can only be better. Right, So 56 00:03:40,400 --> 00:03:47,200 Speaker 1: let's start our adventure talking broadly about national housing. What 57 00:03:47,200 --> 00:03:51,320 Speaker 1: what is the state of the national residential real estate 58 00:03:51,360 --> 00:03:55,960 Speaker 1: market here in the US. Well, it depends on your perspective. Uh, 59 00:03:56,000 --> 00:03:59,560 Speaker 1: if you're a seller, it's a it's a it's a 60 00:03:59,680 --> 00:04:05,480 Speaker 1: robe US market. Uh, not quite a bubble, but it 61 00:04:05,720 --> 00:04:10,040 Speaker 1: is characterized by a chronic lack of supply across the 62 00:04:10,200 --> 00:04:16,800 Speaker 1: entire country. UH, combined with record low mortgage rates UM 63 00:04:16,839 --> 00:04:20,640 Speaker 1: a little bit of an uptick recently. But that is 64 00:04:20,720 --> 00:04:26,080 Speaker 1: creating this insatiable demand, and it's uh it is it 65 00:04:26,200 --> 00:04:29,680 Speaker 1: is a national condition. It is not you know, pockets 66 00:04:29,680 --> 00:04:34,160 Speaker 1: of the country. It's seemingly national and uh it certainly 67 00:04:34,160 --> 00:04:39,000 Speaker 1: doesn't seem sustainable. So it's interesting. It's interesting you're saying 68 00:04:39,040 --> 00:04:43,279 Speaker 1: it's created by these low mortgage rates, but we've had 69 00:04:43,480 --> 00:04:45,839 Speaker 1: very low mortgage rates for a couple of years now. 70 00:04:46,279 --> 00:04:50,240 Speaker 1: How much of this is driven by the pandemic. We 71 00:04:50,279 --> 00:04:53,880 Speaker 1: heard a ton of stories about, Hey, I just got 72 00:04:53,880 --> 00:04:56,320 Speaker 1: to get out of this tiny apartment with my family 73 00:04:57,279 --> 00:05:00,240 Speaker 1: anyone who could afford to buy a house did? Is 74 00:05:00,240 --> 00:05:03,840 Speaker 1: Is that still a driver here? Absolutely? So. The way 75 00:05:04,520 --> 00:05:07,560 Speaker 1: the way I've looked at the pandemic is it is 76 00:05:08,200 --> 00:05:12,440 Speaker 1: the great disruptor. You know, it has UH. It made Zoom, 77 00:05:12,960 --> 00:05:18,080 Speaker 1: the remote office technology, ubiquitous in twenty four hours. It 78 00:05:18,200 --> 00:05:22,320 Speaker 1: also UH caused a lot of people to sort of 79 00:05:22,760 --> 00:05:27,479 Speaker 1: think about their living conditions and fantasize about moving or 80 00:05:27,480 --> 00:05:31,880 Speaker 1: going somewhere. In many ways, it made things like the 81 00:05:35,000 --> 00:05:39,520 Speaker 1: federal law called the nickname the soft tax job cuts 82 00:05:39,520 --> 00:05:45,159 Speaker 1: and Recovery Act that really fueled a lot of a 83 00:05:45,200 --> 00:05:48,440 Speaker 1: good part of the migration to Florida. Um, there's been 84 00:05:48,480 --> 00:05:51,480 Speaker 1: a whole thing, bunch of things that have been triggered, 85 00:05:51,880 --> 00:05:55,159 Speaker 1: and I think it just was triggered by the pandemic 86 00:05:55,200 --> 00:05:59,120 Speaker 1: in terms of being over the top. And what's surprising, 87 00:05:59,720 --> 00:06:02,520 Speaker 1: it's rushing and a lot of our contract data we 88 00:06:02,640 --> 00:06:05,840 Speaker 1: cover about three dozen housing markets are Douglas Solomon real 89 00:06:05,920 --> 00:06:11,960 Speaker 1: Estate nationwide, and the contract activity is not slowing down. 90 00:06:12,120 --> 00:06:17,560 Speaker 1: In other words, um sales activity in many of the 91 00:06:17,600 --> 00:06:22,200 Speaker 1: markets we cover, like southern California and Florida are seeing 92 00:06:23,000 --> 00:06:27,880 Speaker 1: new signed contracts that are double last year's level or 93 00:06:28,040 --> 00:06:31,480 Speaker 1: more and um and we're starting to see you know 94 00:06:31,520 --> 00:06:34,479 Speaker 1: a lot of that surplus inventory that Florida was known 95 00:06:34,560 --> 00:06:39,840 Speaker 1: for be uh be roaded to not saying that there's 96 00:06:39,839 --> 00:06:44,479 Speaker 1: a dearth of supplied, but nowhere near the levels that 97 00:06:44,560 --> 00:06:47,080 Speaker 1: we saw a pre pandemic. So you could blame it 98 00:06:47,080 --> 00:06:51,039 Speaker 1: on the pandemic or you know, claim at the pandemic, 99 00:06:51,080 --> 00:06:54,440 Speaker 1: but I see the pandemic is more of a you know, 100 00:06:54,839 --> 00:06:58,760 Speaker 1: the disruptor that made these things, accelerated these phenomenon, So 101 00:06:58,800 --> 00:07:01,560 Speaker 1: why is there such a stage of houses for sale 102 00:07:01,600 --> 00:07:04,000 Speaker 1: and how long will it take for a supply to 103 00:07:04,040 --> 00:07:09,040 Speaker 1: catch up with this big demand. Well, uh so, I 104 00:07:09,080 --> 00:07:14,440 Speaker 1: think the question is how how much more will prices 105 00:07:14,600 --> 00:07:19,840 Speaker 1: rise before demand cools. We don't have this sort of 106 00:07:19,920 --> 00:07:24,760 Speaker 1: institutional credit meddleman that is enabling purchases. Credit conditions are 107 00:07:24,800 --> 00:07:29,040 Speaker 1: still sort of, you know, defaulting to more conservative than 108 00:07:29,080 --> 00:07:34,840 Speaker 1: the historical norm in terms of mortgage underwriting. I'm not saying, um, uh, 109 00:07:34,880 --> 00:07:37,840 Speaker 1: you know, we have We're not seeing liar loans, maybe 110 00:07:37,880 --> 00:07:40,320 Speaker 1: things like that on the margin, but generally we're seeing 111 00:07:40,920 --> 00:07:44,560 Speaker 1: you know, a little bit more conservative views taken by 112 00:07:44,800 --> 00:07:48,000 Speaker 1: mortgage lenders than we clearly saw in the housing bubble, 113 00:07:48,000 --> 00:07:50,200 Speaker 1: where you just had to have a pulse or tag 114 00:07:50,400 --> 00:07:54,080 Speaker 1: more a mirror to get a mortgage. We're not seeing that. 115 00:07:54,680 --> 00:07:59,240 Speaker 1: So at some point things are going to the demand 116 00:07:59,280 --> 00:08:02,600 Speaker 1: wal slope because of lack of affordability. One of the 117 00:08:02,640 --> 00:08:05,720 Speaker 1: big challenges I think over the last five or six 118 00:08:05,840 --> 00:08:09,440 Speaker 1: years that was way before COVID, is that inventory has 119 00:08:09,520 --> 00:08:12,800 Speaker 1: been chronically low for a long time. I mean basically 120 00:08:12,840 --> 00:08:16,200 Speaker 1: since the financial crisis, and one of the problems are 121 00:08:16,240 --> 00:08:18,360 Speaker 1: the reasons for that is that a lot of national 122 00:08:18,400 --> 00:08:22,920 Speaker 1: home builders have pivoted to luxury. You know, I think luxury, 123 00:08:23,720 --> 00:08:28,920 Speaker 1: high end home building was the norm in most urban 124 00:08:29,000 --> 00:08:32,840 Speaker 1: markets around the country, most suburban markets, like it was 125 00:08:32,880 --> 00:08:34,800 Speaker 1: all about that. And one of the drivers of that 126 00:08:35,800 --> 00:08:39,080 Speaker 1: has been, you know, land prices haven't had a chance 127 00:08:39,160 --> 00:08:43,079 Speaker 1: to reset after the financial crisis. Uh, you know, rates 128 00:08:43,080 --> 00:08:47,640 Speaker 1: plummeted to the floor after um, you know, the Lehman 129 00:08:47,760 --> 00:08:53,280 Speaker 1: moment and uh, you know, various other issues and really 130 00:08:53,360 --> 00:08:56,280 Speaker 1: fueled the frenzy which kept land prices high. So even 131 00:08:56,320 --> 00:09:02,000 Speaker 1: today we're just not seeing um, you know, that component change. 132 00:09:02,000 --> 00:09:04,959 Speaker 1: And now with lower mortgage rates and the surge of demand, 133 00:09:05,679 --> 00:09:10,440 Speaker 1: resources like labor and materials are off the chart, So 134 00:09:10,480 --> 00:09:13,480 Speaker 1: it's really difficult to build affordable housing. So I think, 135 00:09:14,440 --> 00:09:18,160 Speaker 1: you know, um, the outlook for that is not so 136 00:09:18,400 --> 00:09:24,920 Speaker 1: great if you're looking for housing activity to increase in 137 00:09:25,280 --> 00:09:28,480 Speaker 1: you know, very in a very large way. Um. And 138 00:09:28,520 --> 00:09:30,400 Speaker 1: I think and then on top of it, we have 139 00:09:31,280 --> 00:09:34,160 Speaker 1: a new layer of demand in the market, which is 140 00:09:35,000 --> 00:09:40,600 Speaker 1: investor homes, which are remnant of the foreclosure crisis about 141 00:09:40,600 --> 00:09:44,240 Speaker 1: a decade ago, where Wall Street came in like Blackstone 142 00:09:44,240 --> 00:09:48,360 Speaker 1: and other groups and bought a ton of foreclosure properties. 143 00:09:48,800 --> 00:09:52,520 Speaker 1: Everybody thought it was an in and out strategy and apparently, 144 00:09:52,880 --> 00:09:55,560 Speaker 1: you know, it's not, and we're probably going to see 145 00:09:55,600 --> 00:09:57,440 Speaker 1: more of that. It's a whole new segment of the 146 00:09:57,480 --> 00:10:01,480 Speaker 1: market that is going to end up competing with the 147 00:10:01,679 --> 00:10:05,640 Speaker 1: everyday you know, consumer HomeBuyer type. Yep, that's one of 148 00:10:05,679 --> 00:10:11,040 Speaker 1: the unintended consequences of making bond yields so low. Anything 149 00:10:11,080 --> 00:10:14,560 Speaker 1: that can be financially engineered to look like a bond yield, 150 00:10:14,559 --> 00:10:18,679 Speaker 1: and I would think middle class rental homes probably can 151 00:10:18,720 --> 00:10:21,640 Speaker 1: be massaged into that. That's an issue. But go on, 152 00:10:21,760 --> 00:10:23,920 Speaker 1: go on, No, I was just gonna say, on top 153 00:10:23,960 --> 00:10:26,120 Speaker 1: of that, like that, and now it's becoming a vehicle 154 00:10:26,280 --> 00:10:30,040 Speaker 1: like uh, you know, to you know, for a family 155 00:10:30,120 --> 00:10:32,800 Speaker 1: that wants to get their children into a better school district, 156 00:10:33,320 --> 00:10:35,079 Speaker 1: you know, but they can't afford to buy the house. 157 00:10:35,160 --> 00:10:37,800 Speaker 1: They're renting the house. You know, there's a lot of 158 00:10:38,559 --> 00:10:42,679 Speaker 1: um and and now with zoom and you know, this 159 00:10:42,840 --> 00:10:47,079 Speaker 1: sort of remote idea. I think the next big topic 160 00:10:47,240 --> 00:10:49,559 Speaker 1: is in housing is going to be you know, where 161 00:10:49,559 --> 00:10:52,360 Speaker 1: do you live? Uh? And I know that's a sort 162 00:10:52,400 --> 00:10:55,280 Speaker 1: of silly, open ended way to say it, but uh, 163 00:10:55,320 --> 00:10:57,440 Speaker 1: there's a lot of rethinking that's going to go on, 164 00:10:57,800 --> 00:11:00,080 Speaker 1: what human behavior is going to be like, you know, 165 00:11:00,160 --> 00:11:03,599 Speaker 1: in this next couple of years after hopefully the pandemic 166 00:11:04,720 --> 00:11:08,480 Speaker 1: is brought under control or eradicated or whatever the scenario is. 167 00:11:09,000 --> 00:11:12,960 Speaker 1: Because Zoom is the residual, it's still you know, it's 168 00:11:12,960 --> 00:11:18,199 Speaker 1: not going away, and it's implementation into housing has and 169 00:11:19,120 --> 00:11:22,920 Speaker 1: has an incredible has and will have an incredible impact 170 00:11:23,840 --> 00:11:27,720 Speaker 1: on rethinking the way we think about the relationship between 171 00:11:27,760 --> 00:11:30,600 Speaker 1: work and home. Yeah, that's kind of fascinating. You know, 172 00:11:30,679 --> 00:11:33,920 Speaker 1: my my wife and I who we know each other socially, 173 00:11:33,960 --> 00:11:38,040 Speaker 1: we know each other's wives. We early in the pandemic, 174 00:11:38,200 --> 00:11:40,000 Speaker 1: we would just get in the car and go for 175 00:11:40,080 --> 00:11:44,280 Speaker 1: a drive and look at different neighborhoods, including houses. We 176 00:11:44,640 --> 00:11:48,160 Speaker 1: so I've been in this house, I think September is 177 00:11:48,200 --> 00:11:54,040 Speaker 1: seven years, and we drove through neighborhoods that we had 178 00:11:54,120 --> 00:11:57,920 Speaker 1: looked at and really liked, but said, you know, that 179 00:11:58,000 --> 00:12:01,680 Speaker 1: commute is just it's just fifteen minutes too far to 180 00:12:01,760 --> 00:12:06,200 Speaker 1: do five days a week. Well, pre pandemic, I started 181 00:12:06,240 --> 00:12:08,800 Speaker 1: working from home on Fridays, so it became four days 182 00:12:08,800 --> 00:12:12,440 Speaker 1: a week. And post pandemic, I wonder how many people 183 00:12:13,000 --> 00:12:15,600 Speaker 1: are going to be going into the office two or 184 00:12:15,640 --> 00:12:19,199 Speaker 1: three days a week, which means those more distant I 185 00:12:19,240 --> 00:12:22,760 Speaker 1: don't want to call him suburbs, exerbs. The further writer 186 00:12:24,520 --> 00:12:27,920 Speaker 1: right that that next ring out that maybe it's it's 187 00:12:27,960 --> 00:12:30,920 Speaker 1: more than an hour commute, maybe it's a ninety minute commute. 188 00:12:31,480 --> 00:12:34,960 Speaker 1: Are people going to start looking at those as viable 189 00:12:35,040 --> 00:12:38,880 Speaker 1: options for the magnet cities like New York or DC 190 00:12:39,080 --> 00:12:43,160 Speaker 1: or San Francisco or Chicago or Miami or wherever is 191 00:12:43,360 --> 00:12:46,640 Speaker 1: the premium you're gonna pay for being thirty minutes from Manhattan, 192 00:12:47,400 --> 00:12:51,080 Speaker 1: gonna get arbitraged away, and you're gonna start seeing those 193 00:12:51,640 --> 00:12:55,600 Speaker 1: ninety minute commutes tick up and value. Absolutely, I think 194 00:12:55,600 --> 00:12:59,920 Speaker 1: it's already happening. We're seeing in these suburbs that bring 195 00:13:00,080 --> 00:13:04,120 Speaker 1: New York City, we're seeing a hotbed of activity as 196 00:13:04,160 --> 00:13:07,080 Speaker 1: you move further out, and part of that is affordability. 197 00:13:07,280 --> 00:13:10,440 Speaker 1: So uh, you know you can get more as you 198 00:13:10,800 --> 00:13:16,880 Speaker 1: you're further away, um from the city, because you know, 199 00:13:16,920 --> 00:13:18,440 Speaker 1: I think that. I think the way to think of 200 00:13:18,480 --> 00:13:21,880 Speaker 1: it is, uh, this is sort of a generic application. 201 00:13:22,080 --> 00:13:26,360 Speaker 1: Is you have right now, you have the big office 202 00:13:26,400 --> 00:13:31,000 Speaker 1: towers and in New York and likely most other cities 203 00:13:31,080 --> 00:13:36,840 Speaker 1: are empty and um and they will you know, fill 204 00:13:36,920 --> 00:13:41,720 Speaker 1: back up as everybody starting to feel safer, which with 205 00:13:41,840 --> 00:13:46,360 Speaker 1: the rapid vaccine adoption, that seems to be happening faster 206 00:13:46,520 --> 00:13:51,760 Speaker 1: than what everybody anticipated. Um. But you know, pre COVID, 207 00:13:51,960 --> 00:13:58,560 Speaker 1: about five of the workforce was remote and uh and 208 00:13:58,720 --> 00:14:00,079 Speaker 1: if you know, and there's a lot of talk of 209 00:14:00,160 --> 00:14:02,679 Speaker 1: that doubling or tripling or even more so it ends 210 00:14:02,760 --> 00:14:07,160 Speaker 1: up being ten or fIF um. You know, not a 211 00:14:07,240 --> 00:14:14,240 Speaker 1: huge increase relative to the total workforce. However, more than 212 00:14:16,000 --> 00:14:18,959 Speaker 1: of the remaining employees are going to be in this 213 00:14:19,600 --> 00:14:22,320 Speaker 1: in the fall into the scenario that you're just talking about, 214 00:14:22,360 --> 00:14:24,600 Speaker 1: where you know, maybe they worked five days a week, 215 00:14:24,600 --> 00:14:26,600 Speaker 1: now they work in the office. Now they work for 216 00:14:26,800 --> 00:14:28,600 Speaker 1: or three or two. And I think what you're gonna 217 00:14:28,640 --> 00:14:31,479 Speaker 1: end up seeing is you're going to see a tradeoff 218 00:14:31,600 --> 00:14:38,640 Speaker 1: of fewer commuter fewer miles traveled for commuting, but the 219 00:14:38,760 --> 00:14:41,680 Speaker 1: average length of a commute is going to be longer 220 00:14:42,160 --> 00:14:46,720 Speaker 1: and um. And in fact, one of the one of 221 00:14:46,760 --> 00:14:49,160 Speaker 1: the terms I've used to describe this, and I've made 222 00:14:49,200 --> 00:14:52,240 Speaker 1: great effort to get this into the urban dictionary, is 223 00:14:52,280 --> 00:14:55,760 Speaker 1: the term co primary that you know, we've seen housing 224 00:14:55,800 --> 00:15:00,200 Speaker 1: markets that we're seen as second home markets, like in 225 00:15:00,240 --> 00:15:03,480 Speaker 1: the New York metro area, there's the Hampton's or there's 226 00:15:03,680 --> 00:15:08,760 Speaker 1: upstate Connecticut, or there's the Hudson Valley. Where those markets 227 00:15:09,400 --> 00:15:13,080 Speaker 1: are you know, their vacations homes. That's where you've got 228 00:15:13,080 --> 00:15:17,400 Speaker 1: a vacation home, and now they're becoming a second primary 229 00:15:17,480 --> 00:15:23,040 Speaker 1: home because the consumer, uh you know, says, hey, I'd 230 00:15:23,040 --> 00:15:25,440 Speaker 1: love to be able to be out here and work 231 00:15:26,040 --> 00:15:28,400 Speaker 1: you know a good part of the week. Uh. We're 232 00:15:28,400 --> 00:15:31,240 Speaker 1: seeing the same phenomenon in Aspen, Colorado that I cover 233 00:15:31,640 --> 00:15:35,080 Speaker 1: other sort of you know, you think of vacation type markets. 234 00:15:35,120 --> 00:15:37,520 Speaker 1: You know, the question it would be asked, well, who 235 00:15:37,520 --> 00:15:40,480 Speaker 1: wouldn't want to live in Aspen, um even though they 236 00:15:40,520 --> 00:15:42,320 Speaker 1: have a big home in New York or a big 237 00:15:42,360 --> 00:15:46,440 Speaker 1: home in Florida or whatever. So you're seeing this recalibration 238 00:15:46,840 --> 00:15:49,840 Speaker 1: of I call it the tether between work at home. 239 00:15:50,000 --> 00:15:54,240 Speaker 1: The length has become you know, infinitely longer, and like 240 00:15:54,320 --> 00:15:56,440 Speaker 1: you said, there's going to be an arbitrage that goes 241 00:15:56,480 --> 00:15:59,760 Speaker 1: on in that relationship. So given all that and given 242 00:15:59,840 --> 00:16:04,000 Speaker 1: the rising prices, I mean obviously you make a ten 243 00:16:04,000 --> 00:16:07,200 Speaker 1: million dollar house, there's a ton of markup on everything. 244 00:16:07,880 --> 00:16:12,240 Speaker 1: But wouldn't you expect what's the meeting home price today 245 00:16:12,360 --> 00:16:14,400 Speaker 1: something like three fifty. I haven't kept up with rising 246 00:16:14,480 --> 00:16:17,920 Speaker 1: increases in the threes, right, But but now look at 247 00:16:18,000 --> 00:16:21,000 Speaker 1: depending on the region, look at the under a million, 248 00:16:21,040 --> 00:16:24,640 Speaker 1: but over half a million, that's like a solidly upper 249 00:16:24,720 --> 00:16:28,120 Speaker 1: middle class home in a lot of the countries. Wouldn't 250 00:16:28,120 --> 00:16:31,200 Speaker 1: you think there's a ton of demand for that. Wouldn't 251 00:16:31,240 --> 00:16:35,720 Speaker 1: that attract the builders to move into that space? Yes, 252 00:16:35,920 --> 00:16:41,240 Speaker 1: the problem is that land prices are are the problem 253 00:16:41,560 --> 00:16:47,040 Speaker 1: that that land, you know, as a factor in the equation. 254 00:16:47,160 --> 00:16:52,200 Speaker 1: So when you think about property appreciation, you know, if 255 00:16:52,200 --> 00:16:58,920 Speaker 1: you're absolutely thinking in pure wonky terms, what's actually appreciating 256 00:16:59,720 --> 00:17:03,600 Speaker 1: is the land in terms of housing prices rising. It's 257 00:17:03,680 --> 00:17:07,480 Speaker 1: not the improvements. The improvements depreciate. Now, of course, when 258 00:17:07,480 --> 00:17:09,600 Speaker 1: you renovate, the value of your home goes up, but 259 00:17:09,640 --> 00:17:13,200 Speaker 1: I'm just speaking in sort of general terms that the 260 00:17:13,359 --> 00:17:17,480 Speaker 1: appreciation is the cost of the land is really what's 261 00:17:17,560 --> 00:17:22,080 Speaker 1: driving higher home prices, and that's what builders are facing 262 00:17:22,200 --> 00:17:26,760 Speaker 1: our higher land costs, you know, aside from all the 263 00:17:26,800 --> 00:17:31,560 Speaker 1: other issues like lumber and uh and labor, etcetera. Um, 264 00:17:31,720 --> 00:17:34,840 Speaker 1: So it really is a challenge. I I don't know 265 00:17:34,960 --> 00:17:39,160 Speaker 1: how that gets resolved. The other thing is, um, there's 266 00:17:39,240 --> 00:17:43,359 Speaker 1: been uh, you know, tremendous hype. I know, specifically in 267 00:17:43,400 --> 00:17:47,600 Speaker 1: the markets that I cover, uh that there's been a 268 00:17:47,640 --> 00:17:53,240 Speaker 1: tremendous hype about the suburbs being more affordable. And so 269 00:17:53,400 --> 00:17:57,480 Speaker 1: that's part of this narrative. The cities are expensive, uh 270 00:17:57,520 --> 00:18:01,359 Speaker 1: you know, so the suburbs are cheaper. The problem is 271 00:18:01,880 --> 00:18:05,879 Speaker 1: that in the last couple of quarters, the you know, 272 00:18:05,920 --> 00:18:10,919 Speaker 1: the as we came out of the sort of lockdown period. UM, 273 00:18:11,080 --> 00:18:14,440 Speaker 1: we're seeing, like in New York Metro the suburban housing 274 00:18:14,480 --> 00:18:18,560 Speaker 1: markets that ring those markets, about a third of the 275 00:18:18,600 --> 00:18:22,479 Speaker 1: closings that occur in each quarter are sold above the 276 00:18:22,560 --> 00:18:26,119 Speaker 1: last asking price, meaning they went to bidding wars a 277 00:18:26,280 --> 00:18:30,199 Speaker 1: third of the market, right. So that that sort of 278 00:18:30,480 --> 00:18:33,119 Speaker 1: and and at the same time you're seeing weaker housing 279 00:18:33,160 --> 00:18:37,160 Speaker 1: prices in urban markets, um or not, you're not seeing 280 00:18:37,160 --> 00:18:40,679 Speaker 1: the same rate of growth. UM. That's been sort of 281 00:18:40,720 --> 00:18:43,200 Speaker 1: one of the patterns. So there's this been this equalization, 282 00:18:43,760 --> 00:18:49,760 Speaker 1: if you will, of of comparison. Quite fascinating. So let's 283 00:18:49,800 --> 00:18:55,879 Speaker 1: start with another really big question, which is this is 284 00:18:56,640 --> 00:19:01,040 Speaker 1: the end of cities true or false of. But let 285 00:19:01,040 --> 00:19:05,520 Speaker 1: me add a qualifier. The driver this narrative is just 286 00:19:06,119 --> 00:19:09,919 Speaker 1: it's it's, for lack of a a beoutter word, it's just dumb. Uh. 287 00:19:09,960 --> 00:19:13,120 Speaker 1: And And the reason why I say that is because 288 00:19:14,160 --> 00:19:21,560 Speaker 1: the the problem with the the problem with the way 289 00:19:21,600 --> 00:19:25,280 Speaker 1: this is thinking. And I'm I'm a little Manhattan centric, 290 00:19:25,400 --> 00:19:27,439 Speaker 1: So let me just tell it from that perspective and 291 00:19:27,480 --> 00:19:31,639 Speaker 1: then I'll sort of spill out to the US. Is that, uh, 292 00:19:31,920 --> 00:19:36,679 Speaker 1: you know, when we had this um the lockdown a 293 00:19:36,720 --> 00:19:40,200 Speaker 1: little over a year ago and everybody is hunkered down, 294 00:19:41,000 --> 00:19:46,960 Speaker 1: uh Manhattan. What there was this a sharp outbound migration 295 00:19:47,200 --> 00:19:51,360 Speaker 1: to the suburbs and uh, and the rental market collapse. 296 00:19:51,520 --> 00:19:57,120 Speaker 1: We saw rental prices fall about depending on the segment. 297 00:19:57,720 --> 00:20:01,000 Speaker 1: We saw home sale prices not really they fall immediately, 298 00:20:01,040 --> 00:20:05,560 Speaker 1: but volume collapsed, uh, you know, falling more than and 299 00:20:05,600 --> 00:20:07,960 Speaker 1: a lot of the deals that closed during the lockdown, 300 00:20:07,960 --> 00:20:12,679 Speaker 1: we're just contracts that were virtually closed. Pan. You know, 301 00:20:12,800 --> 00:20:15,119 Speaker 1: maybe you could count on one hand maybe the number 302 00:20:15,119 --> 00:20:18,240 Speaker 1: of people in the market that actually bought something uh 303 00:20:18,400 --> 00:20:22,200 Speaker 1: site unseen and just did it virtually. And the narrative 304 00:20:22,359 --> 00:20:26,120 Speaker 1: was that what you know, it was people are fleeing 305 00:20:26,160 --> 00:20:29,080 Speaker 1: the narrative was fleeing the city and sort of air 306 00:20:29,160 --> 00:20:33,879 Speaker 1: quotes or exodus in air quotes um and the suburbs 307 00:20:33,880 --> 00:20:36,119 Speaker 1: were the beneficiary, and there was going to be this 308 00:20:36,200 --> 00:20:39,639 Speaker 1: sort of structural, permanent move to the cities, from the 309 00:20:39,680 --> 00:20:43,320 Speaker 1: cities to the suburbs. As it turned out, the narratives 310 00:20:43,320 --> 00:20:48,080 Speaker 1: should have uh not been city to suburban or urban 311 00:20:48,119 --> 00:20:51,000 Speaker 1: to suburban in New York Metro, it should have been 312 00:20:51,040 --> 00:20:56,760 Speaker 1: Manhattan to the outer boroughs and suburban because Manhattan was 313 00:20:56,880 --> 00:21:03,240 Speaker 1: really the laggard the burroughs like Brooklyn and Queen's. While 314 00:21:03,280 --> 00:21:07,480 Speaker 1: their rental market was pummeled, their purchase market was a frenzy. 315 00:21:07,640 --> 00:21:09,640 Speaker 1: It was they were acting just like the suburb's work. 316 00:21:10,320 --> 00:21:12,720 Speaker 1: And you know, what we saw initially was just this 317 00:21:13,040 --> 00:21:19,240 Speaker 1: massive um outpouring from the rental market. Rentald volume new 318 00:21:19,320 --> 00:21:23,440 Speaker 1: leasing activity fell between sevent on a month over month 319 00:21:23,480 --> 00:21:28,280 Speaker 1: basis in April. You know, it's just a collapse. And uh, 320 00:21:28,280 --> 00:21:31,439 Speaker 1: and that many of the the first time buyers in 321 00:21:31,480 --> 00:21:36,520 Speaker 1: the suburbs actually um came from the Manhattan rental market 322 00:21:36,600 --> 00:21:41,560 Speaker 1: because they're less um uh, they were less anchored to 323 00:21:41,600 --> 00:21:45,000 Speaker 1: the city. I always felt that many cities went about 324 00:21:45,040 --> 00:21:47,879 Speaker 1: two or three years beyond what I would call an 325 00:21:47,920 --> 00:21:53,000 Speaker 1: affordability threshold, and so they were much faster to leave 326 00:21:53,040 --> 00:21:55,840 Speaker 1: when they didn't feel safe and they didn't have public 327 00:21:55,880 --> 00:22:01,440 Speaker 1: transportation convenience without being concerned or culture oral activities. There 328 00:22:01,520 --> 00:22:05,560 Speaker 1: wasn't anchoring. But but the false assumption is that all 329 00:22:05,640 --> 00:22:10,240 Speaker 1: those people are going to be outside the city forever 330 00:22:10,760 --> 00:22:13,480 Speaker 1: um and there was just a pivot, and that is 331 00:22:13,520 --> 00:22:16,560 Speaker 1: not what happened. And in fact, uh, in the Latin 332 00:22:16,640 --> 00:22:20,520 Speaker 1: in the recent quarters, especially this first quarter, and as 333 00:22:20,560 --> 00:22:22,080 Speaker 1: we look at it in a monthly basis, if you 334 00:22:22,160 --> 00:22:24,320 Speaker 1: go into the spring market, which is sort of the 335 00:22:24,359 --> 00:22:29,560 Speaker 1: super Bowl or World Cup of every housing cycle. Uh, 336 00:22:29,600 --> 00:22:32,959 Speaker 1: I think that the conventional wisdom was, well, now that 337 00:22:33,040 --> 00:22:36,800 Speaker 1: the city Manhattan is starting to fare better, sales activity 338 00:22:36,880 --> 00:22:39,359 Speaker 1: is up the air of a year rental, the rents 339 00:22:39,359 --> 00:22:41,880 Speaker 1: are not falling, and they're falling a lot, but they're 340 00:22:41,920 --> 00:22:46,200 Speaker 1: not falling by nearly as much instead of they're following 341 00:22:46,400 --> 00:22:52,000 Speaker 1: you know, four month of a month rents are stabilizing. Uh. 342 00:22:52,240 --> 00:22:57,800 Speaker 1: And say you would think that Manhattan's signs of positive uh, 343 00:22:58,000 --> 00:23:01,080 Speaker 1: you know, improvement or you know already would last year, 344 00:23:01,720 --> 00:23:05,160 Speaker 1: would mean that the suburbs are you know, a dark 345 00:23:06,040 --> 00:23:09,760 Speaker 1: dystopian healthcape. You know that no one's there there and 346 00:23:09,800 --> 00:23:13,400 Speaker 1: that's not true that suburbs are thriving too. So externally, 347 00:23:13,440 --> 00:23:16,160 Speaker 1: I think there's a lot of this is just uh, 348 00:23:16,560 --> 00:23:20,639 Speaker 1: you know, mortgage rate driven that and and combined with 349 00:23:20,760 --> 00:23:25,080 Speaker 1: sort of fear of personal safety and and that's really 350 00:23:25,119 --> 00:23:27,639 Speaker 1: all it is. So the narrative of urban diserver and 351 00:23:27,680 --> 00:23:32,119 Speaker 1: I think has been really over overstated. On top of that, Uh, 352 00:23:32,160 --> 00:23:35,320 Speaker 1: there's a really good story or study that came out 353 00:23:35,320 --> 00:23:37,960 Speaker 1: of the FED that Cleveland FED using New York FED 354 00:23:38,080 --> 00:23:43,199 Speaker 1: data that basically showed that, UM, really the reason for 355 00:23:43,359 --> 00:23:48,760 Speaker 1: the light population in the cities or lighter is because 356 00:23:48,920 --> 00:23:53,479 Speaker 1: net migration involves two numbers, inbound and outbound, and the 357 00:23:53,520 --> 00:23:55,760 Speaker 1: inbound has been on hold. People aren't going to move 358 00:23:55,760 --> 00:23:58,720 Speaker 1: into an urban location if they don't feel safe. With 359 00:23:58,800 --> 00:24:03,879 Speaker 1: the vaccine adoption, we're seeing record new leasing activity in 360 00:24:04,040 --> 00:24:07,840 Speaker 1: the city. Uh every month since October is for its 361 00:24:07,840 --> 00:24:10,840 Speaker 1: respective month has been the highest on record. UM. So 362 00:24:10,920 --> 00:24:15,040 Speaker 1: there's a lot of churn. And that is it doesn't 363 00:24:15,080 --> 00:24:17,400 Speaker 1: mean we go back to where we were, We're still 364 00:24:17,440 --> 00:24:19,600 Speaker 1: at peak zoom. I think zoom is still going to 365 00:24:19,640 --> 00:24:23,960 Speaker 1: be a factor but by no means are the city's 366 00:24:24,119 --> 00:24:27,000 Speaker 1: far from over? Of course I'm biased. I love New York. 367 00:24:27,480 --> 00:24:29,880 Speaker 1: I love the city, and I was just sort of 368 00:24:30,600 --> 00:24:35,000 Speaker 1: scratching my head feeling. You know, listen, everybody's writing the 369 00:24:35,000 --> 00:24:38,360 Speaker 1: city offices it's over, and I just don't see that. 370 00:24:38,840 --> 00:24:41,080 Speaker 1: So let me see if I can reiterate a few 371 00:24:41,160 --> 00:24:44,439 Speaker 1: key points and ask a few follow up questions. My 372 00:24:44,560 --> 00:24:48,200 Speaker 1: view has always been, Hey, city states have been the 373 00:24:48,240 --> 00:24:54,080 Speaker 1: dominant form of culture, art, economic, business energy for two 374 00:24:54,160 --> 00:24:57,520 Speaker 1: thousand years. There's a reason for that. It's not going 375 00:24:57,560 --> 00:25:01,280 Speaker 1: to just disappear. That's said. You see some of the 376 00:25:01,359 --> 00:25:04,439 Speaker 1: crazy price of your cities like New York and San Francisco. 377 00:25:05,119 --> 00:25:09,080 Speaker 1: Are we looking at a potential price reset? And we 378 00:25:09,160 --> 00:25:13,320 Speaker 1: haven't talked about office space, but assuming that there is 379 00:25:13,359 --> 00:25:16,520 Speaker 1: an excess of office space, is that going to get 380 00:25:16,680 --> 00:25:19,800 Speaker 1: converted to residential? What? How do you see this playing 381 00:25:19,800 --> 00:25:22,720 Speaker 1: out over the next couple of years. Yeah, so those 382 00:25:22,760 --> 00:25:27,040 Speaker 1: are really good points I do see. Um. You know, 383 00:25:27,359 --> 00:25:30,159 Speaker 1: I think many people don't realize like the what I 384 00:25:30,240 --> 00:25:32,600 Speaker 1: call the i candy of real estate, you know, the 385 00:25:32,600 --> 00:25:36,679 Speaker 1: stuff that is the the uber luxury the billionaires row 386 00:25:36,800 --> 00:25:40,639 Speaker 1: Manhattan say, for example, Uh, you know that it's not 387 00:25:40,840 --> 00:25:44,320 Speaker 1: housing for mere mortals. I'd like to say, uh, I 388 00:25:44,359 --> 00:25:48,320 Speaker 1: think many people haven't realized that since two thousand sixteen 389 00:25:48,560 --> 00:25:53,399 Speaker 1: fifteen sixteen, which was the peak of the post lehman 390 00:25:54,359 --> 00:26:00,760 Speaker 1: um uber luxury development market, that prices and some buildings 391 00:26:01,280 --> 00:26:07,120 Speaker 1: are down. Like you look at a building like seven 392 00:26:07,920 --> 00:26:11,679 Speaker 1: on in you know, there were there were seven or 393 00:26:11,720 --> 00:26:17,680 Speaker 1: eight resales in two thousand twenty and the median decline 394 00:26:17,680 --> 00:26:21,680 Speaker 1: in price as a resale meaning the sponsor the developers 395 00:26:21,720 --> 00:26:25,280 Speaker 1: sold at two thousand fourteen and then resold and then 396 00:26:25,320 --> 00:26:28,200 Speaker 1: sold to you know, the person that bought from them 397 00:26:28,280 --> 00:26:35,160 Speaker 1: resold at some point in Uh, you had like one 398 00:26:35,200 --> 00:26:38,840 Speaker 1: sale it was eighteen percent below, five or six sales 399 00:26:38,880 --> 00:26:42,800 Speaker 1: that were below and one that was over below with 400 00:26:42,880 --> 00:26:46,840 Speaker 1: the the seller originally paid from the sponsor. That's quite 401 00:26:46,840 --> 00:26:53,720 Speaker 1: a reset already. And that was going into the pandemic, Jonathan, 402 00:26:54,440 --> 00:27:00,720 Speaker 1: what you're talking s um, you know in what we 403 00:27:00,760 --> 00:27:04,480 Speaker 1: would call a Manhattan Central business district and uh, and 404 00:27:04,560 --> 00:27:08,159 Speaker 1: so you know a lot of that reset had already 405 00:27:08,160 --> 00:27:13,679 Speaker 1: happened before h COVID, before the pandemic. So um, so 406 00:27:13,760 --> 00:27:17,080 Speaker 1: I don't I don't see that, you know, and that 407 00:27:17,160 --> 00:27:21,800 Speaker 1: was a market that was heavily uh invested in the 408 00:27:21,880 --> 00:27:26,359 Speaker 1: idea that there was a wide and deep market for 409 00:27:26,640 --> 00:27:31,520 Speaker 1: billionaires for mega you know, ten million up type units, 410 00:27:31,760 --> 00:27:34,760 Speaker 1: and as it turns out, there isn't There are a 411 00:27:34,760 --> 00:27:37,760 Speaker 1: lot of those buildings were not sold out a couple 412 00:27:37,760 --> 00:27:42,080 Speaker 1: of years ago. Did they ever sell through all the units? Know, 413 00:27:42,400 --> 00:27:45,480 Speaker 1: there's still like an aggregate, if you do a survey, 414 00:27:45,760 --> 00:27:49,520 Speaker 1: it's well over half the units aren't sold some you know, 415 00:27:49,560 --> 00:27:54,040 Speaker 1: the earlier in the earlier in the development boom post 416 00:27:54,160 --> 00:27:59,320 Speaker 1: financial crisis, they have higher sellouts than the more recent entries. 417 00:27:59,800 --> 00:28:04,760 Speaker 1: But it's an aggregate, it's about half uh So that's 418 00:28:04,800 --> 00:28:09,040 Speaker 1: not very successful. But on the you know, on the 419 00:28:09,080 --> 00:28:12,119 Speaker 1: flip side, for the developers themselves, many of them broke 420 00:28:12,160 --> 00:28:17,000 Speaker 1: even our construction costs at sales um and so they 421 00:28:17,040 --> 00:28:21,000 Speaker 1: can hold these things for years. But it's you know, 422 00:28:21,400 --> 00:28:24,240 Speaker 1: it had a limited sort of lifespan, and that is 423 00:28:24,280 --> 00:28:28,520 Speaker 1: not that it's like you're driving down the highway, um, 424 00:28:28,560 --> 00:28:32,439 Speaker 1: you know, at eighty miles an hour, and then you 425 00:28:32,480 --> 00:28:35,480 Speaker 1: get off the exit and the exit speed is forty five. 426 00:28:35,560 --> 00:28:38,440 Speaker 1: It feels like you're going five or ten miles an hour, 427 00:28:38,760 --> 00:28:42,000 Speaker 1: And I think that's the danger in looking at sort 428 00:28:42,000 --> 00:28:46,040 Speaker 1: of uber luxury. I see it as a circuit side 429 00:28:46,040 --> 00:28:49,320 Speaker 1: show and not the real, you know, the real issue, 430 00:28:49,400 --> 00:28:53,120 Speaker 1: which is it's very difficult to build affordability. Affordable housing 431 00:28:53,160 --> 00:28:56,120 Speaker 1: in New York is very complicated and in any urban market, 432 00:28:56,160 --> 00:29:00,240 Speaker 1: and that's a challenge that's been around, you know, for 433 00:29:00,240 --> 00:29:05,600 Speaker 1: for centuries. Let's stick with the topic of urban apartments 434 00:29:05,640 --> 00:29:08,920 Speaker 1: that are for sale. So I'm hearing you break this 435 00:29:09,000 --> 00:29:14,200 Speaker 1: into a couple of different strata. Affordable housing, which if 436 00:29:14,240 --> 00:29:18,760 Speaker 1: anyone's been around Manhattan and and full disclosure, our offices 437 00:29:18,760 --> 00:29:22,360 Speaker 1: are like half a dozen blocks apart in in Midtown 438 00:29:22,440 --> 00:29:28,000 Speaker 1: near um Brian Park. Um affordable housing has pretty much 439 00:29:28,040 --> 00:29:31,520 Speaker 1: been pushed out of Manhattan to the outer borrows. There's some, 440 00:29:32,200 --> 00:29:35,920 Speaker 1: but it's becoming fewer and further between. Then there's sort 441 00:29:35,960 --> 00:29:40,120 Speaker 1: of mid priced housing. And I'm hearing you really differentiate 442 00:29:40,280 --> 00:29:44,160 Speaker 1: between what I think of as luxury housing, which is 443 00:29:44,880 --> 00:29:48,800 Speaker 1: a nice apartment on Central Park West or somewhere on 444 00:29:48,840 --> 00:29:52,840 Speaker 1: the Upper east Side with the balcony, versus these crazy 445 00:29:53,040 --> 00:29:57,560 Speaker 1: uber billionaire housing and and those are two different strata. 446 00:29:58,000 --> 00:30:02,080 Speaker 1: How are they managing in terms of sales and how 447 00:30:02,120 --> 00:30:06,240 Speaker 1: important is that too urban centers like New York or 448 00:30:06,280 --> 00:30:09,560 Speaker 1: Chicago or San Francisco and Miami and and down the 449 00:30:09,600 --> 00:30:12,760 Speaker 1: line is this is this a side show or is 450 00:30:12,800 --> 00:30:16,560 Speaker 1: this really a key part of the real estate market there. Well, 451 00:30:16,680 --> 00:30:21,080 Speaker 1: the the circus side charm referring to is this sort 452 00:30:21,120 --> 00:30:24,960 Speaker 1: of uber luxury category, which you know really starts at 453 00:30:25,080 --> 00:30:28,880 Speaker 1: five million and up. The first wave of new development 454 00:30:28,960 --> 00:30:31,160 Speaker 1: of financial crisis was ten million and up and then 455 00:30:31,200 --> 00:30:34,080 Speaker 1: they realized, you know, that was too much, and so 456 00:30:34,520 --> 00:30:36,560 Speaker 1: split the units in a half or whatever. And you're 457 00:30:36,560 --> 00:30:40,120 Speaker 1: starting to see uh, you know, well you're not starting. 458 00:30:40,120 --> 00:30:45,240 Speaker 1: You've been seeing you know, very slow adoption and large repricing, 459 00:30:45,720 --> 00:30:50,200 Speaker 1: significant repricing from two thousand fourteen fifteen highs the balance 460 00:30:50,280 --> 00:30:54,520 Speaker 1: of the market um new development is being snapped up. 461 00:30:55,000 --> 00:31:01,080 Speaker 1: The lower you go in price, the faster are absorbed. 462 00:31:01,160 --> 00:31:04,520 Speaker 1: So the challenges how do you create something that's affordable 463 00:31:04,560 --> 00:31:08,200 Speaker 1: because the demand is there, it's just there's just not 464 00:31:08,520 --> 00:31:10,880 Speaker 1: enough of it. And that's the problem. The way we 465 00:31:11,320 --> 00:31:14,480 Speaker 1: sort of prime, you know, the sort of you know, 466 00:31:14,560 --> 00:31:19,560 Speaker 1: the optimum new development pricing UM for like a modest 467 00:31:19,600 --> 00:31:22,560 Speaker 1: two bedroom, uh, you know, it's really going to be 468 00:31:23,240 --> 00:31:26,760 Speaker 1: you know, two to four million dollars when really the 469 00:31:26,800 --> 00:31:30,600 Speaker 1: market demand is more like one to three. So sort 470 00:31:30,600 --> 00:31:34,120 Speaker 1: of there's not quite a match because it's been driven 471 00:31:34,160 --> 00:31:37,040 Speaker 1: by land prices. Land prices, you know, have been you know, 472 00:31:37,240 --> 00:31:41,320 Speaker 1: historically mountain land prices have always been very high. But 473 00:31:41,360 --> 00:31:43,920 Speaker 1: it's also very complicated and difficult to build in New 474 00:31:44,000 --> 00:31:46,800 Speaker 1: York and it it takes a person you know, with 475 00:31:47,000 --> 00:31:50,880 Speaker 1: pretty much you know, insatiable drive to develop to do it, 476 00:31:51,160 --> 00:31:54,080 Speaker 1: and you know, the rewards can be very high. Just 477 00:31:54,120 --> 00:31:57,600 Speaker 1: a side note, you know, uh, you know, language and 478 00:31:57,760 --> 00:32:01,520 Speaker 1: how things are articulated as everything. In the nineteen fifties, 479 00:32:01,600 --> 00:32:04,959 Speaker 1: the term luxury meant that you had an elevator and 480 00:32:05,040 --> 00:32:09,480 Speaker 1: maybe had a doorman, like, you know, like that was luxury. 481 00:32:09,680 --> 00:32:13,720 Speaker 1: You know, Today, luxury, you know is I mean, I 482 00:32:13,800 --> 00:32:16,480 Speaker 1: defined luxury in any housing market I cover as a 483 00:32:16,560 --> 00:32:20,240 Speaker 1: top ten percent of transactions by price. I don't. I 484 00:32:20,280 --> 00:32:23,840 Speaker 1: do it in an objective way, not a sort of um, 485 00:32:23,880 --> 00:32:28,479 Speaker 1: you know, a subjective way. But that market, you know, 486 00:32:28,880 --> 00:32:31,600 Speaker 1: often behaves very different than the balance of the market. 487 00:32:31,640 --> 00:32:34,000 Speaker 1: And you know, the market is very segmented. And I 488 00:32:34,080 --> 00:32:36,680 Speaker 1: think when we look at real estate and talk about affordability, 489 00:32:37,720 --> 00:32:39,720 Speaker 1: we tend to sort of look to the very high 490 00:32:39,840 --> 00:32:42,640 Speaker 1: end as sort of a reason. But you know, when 491 00:32:42,680 --> 00:32:45,440 Speaker 1: you have a one bedroom apartment in Manhattan, sort of 492 00:32:45,440 --> 00:32:50,120 Speaker 1: an average one bedroom in a modest building sell for 493 00:32:50,200 --> 00:32:54,280 Speaker 1: a million five, right as sort of an average. You 494 00:32:54,280 --> 00:32:57,360 Speaker 1: know that's that's a big number. But but it does 495 00:32:57,480 --> 00:32:59,880 Speaker 1: have an elevator, right, I mean, so it's worth have 496 00:32:59,920 --> 00:33:02,640 Speaker 1: an elevator, and does have a doorman, and and you 497 00:33:02,680 --> 00:33:04,920 Speaker 1: can it does have a you have a bathroom in 498 00:33:04,960 --> 00:33:08,920 Speaker 1: your apartment. You know, you definitely have the basics. There's 499 00:33:08,960 --> 00:33:11,760 Speaker 1: no doubt that top ten is different than the rest 500 00:33:11,800 --> 00:33:14,320 Speaker 1: of the market. And you and I had a conversation 501 00:33:14,360 --> 00:33:17,920 Speaker 1: a long time ago where we discussed mortgage rates are 502 00:33:18,000 --> 00:33:22,680 Speaker 1: just not relevant to that market segment right until the pandemic. 503 00:33:23,000 --> 00:33:27,160 Speaker 1: So I'm exaggery a little bit when I say that. So, 504 00:33:27,160 --> 00:33:32,040 Speaker 1: so the way to think of Manhattan inaggregate, all the 505 00:33:32,080 --> 00:33:37,520 Speaker 1: sales transactions are in any given year, we have got 506 00:33:37,560 --> 00:33:42,920 Speaker 1: seven years of data are about cash, meaning that they 507 00:33:42,960 --> 00:33:45,400 Speaker 1: bring cash to the closing. Now, they could have gotten 508 00:33:45,440 --> 00:33:49,480 Speaker 1: financing in Ireland and brought the cash over, but you know, 509 00:33:49,520 --> 00:33:53,120 Speaker 1: we mostly see that it's mostly no. So I don't 510 00:33:53,120 --> 00:33:56,080 Speaker 1: know if we discussed a buddy lives on Central Park West, 511 00:33:56,800 --> 00:33:58,920 Speaker 1: and he was trying to do a refinance of his 512 00:33:59,040 --> 00:34:04,360 Speaker 1: mortgage and he found it incredibly problematic, and and he 513 00:34:04,520 --> 00:34:08,400 Speaker 1: was working his way through. This is when rates first collapsed, 514 00:34:08,880 --> 00:34:10,960 Speaker 1: and he went to the head of the co op board, 515 00:34:11,160 --> 00:34:14,560 Speaker 1: was a buddy his, and said, hey, what what's the problem. 516 00:34:14,840 --> 00:34:16,400 Speaker 1: Why are you guys having such a hard time with 517 00:34:16,440 --> 00:34:20,239 Speaker 1: all this paperwork? And the guy paused and said, I 518 00:34:20,239 --> 00:34:23,120 Speaker 1: won't mention his name, but he said, you're the only 519 00:34:23,160 --> 00:34:28,040 Speaker 1: person in the whole building that has mortgage. The entire building, 520 00:34:28,160 --> 00:34:32,200 Speaker 1: not too far from the Dakota, everybody was a cash buyer. 521 00:34:32,360 --> 00:34:36,480 Speaker 1: Just to give you a sense of wealth at that level, 522 00:34:36,960 --> 00:34:40,640 Speaker 1: nobody is borrowing for their primary residence there. How much 523 00:34:40,719 --> 00:34:44,160 Speaker 1: is twelve million? Alright? Alright, you check right exactly, and 524 00:34:44,200 --> 00:34:46,759 Speaker 1: it's not there, right, And they have multiple residences. So 525 00:34:46,840 --> 00:34:49,680 Speaker 1: the way to think of it is when he before 526 00:34:49,719 --> 00:34:55,359 Speaker 1: the pandemic, you split cash fires the market, and there 527 00:34:55,440 --> 00:35:01,920 Speaker 1: they scale by price. So the more reliant users on 528 00:35:02,440 --> 00:35:05,200 Speaker 1: financing tend to be at the lower end of the 529 00:35:05,440 --> 00:35:09,320 Speaker 1: price spectrum. So when you talk about under a million dollars, 530 00:35:09,840 --> 00:35:19,000 Speaker 1: you know roughly of those buyers rely on a I'm sorry, 531 00:35:19,400 --> 00:35:23,399 Speaker 1: pay cast get a mortgage. On average, as you move 532 00:35:23,520 --> 00:35:26,680 Speaker 1: to say the upper end, like north of five million, 533 00:35:27,239 --> 00:35:33,279 Speaker 1: it's around eight, pay cash and get financing. But I 534 00:35:33,320 --> 00:35:39,160 Speaker 1: would argue that they get financing, don't do it for 535 00:35:39,239 --> 00:35:43,040 Speaker 1: the purchase. They do it because their financial planner said 536 00:35:43,080 --> 00:35:46,719 Speaker 1: they can get a deduction. Um. And what has happened 537 00:35:47,040 --> 00:35:50,120 Speaker 1: post pandemic, and I think this is a temporary blip, 538 00:35:50,640 --> 00:35:53,000 Speaker 1: is that the numbers have shifted a little bit, and 539 00:35:53,080 --> 00:35:57,600 Speaker 1: that even you know, instead of eight people paying cash 540 00:35:57,600 --> 00:36:02,839 Speaker 1: at the top, it's like seventy dropped about ten. Just 541 00:36:02,920 --> 00:36:06,399 Speaker 1: because rates are so low, how could you not take 542 00:36:06,440 --> 00:36:09,160 Speaker 1: advantage of them at that you know, even at that 543 00:36:09,280 --> 00:36:13,120 Speaker 1: price point. Um. And because the market has been so 544 00:36:13,120 --> 00:36:15,279 Speaker 1: soft at the top that you don't need that to 545 00:36:15,400 --> 00:36:19,600 Speaker 1: differentiate you from other buyers like you did five six 546 00:36:19,680 --> 00:36:22,560 Speaker 1: years ago. Um, you know, by paying cash and having 547 00:36:22,640 --> 00:36:26,879 Speaker 1: a mortgage or mortgage contingency. We're starting to see we're 548 00:36:26,920 --> 00:36:32,480 Speaker 1: starting to see um uh you know, uh, well, we're 549 00:36:32,520 --> 00:36:38,759 Speaker 1: continuing to see um bidding wars. Even during the pandemic, 550 00:36:38,840 --> 00:36:41,960 Speaker 1: we saw bidding wars at about about three and a 551 00:36:42,000 --> 00:36:46,560 Speaker 1: half percent of the Manhattan transactions, which seems like a lot, 552 00:36:46,600 --> 00:36:50,120 Speaker 1: But in two thousand and fifteen it was much like 553 00:36:50,160 --> 00:36:53,839 Speaker 1: the suburbs are today. Um. But we are seeing some 554 00:36:53,960 --> 00:36:57,880 Speaker 1: upward price pressure now and some of the segments um 555 00:36:57,960 --> 00:37:02,160 Speaker 1: that are that are you know, we're starting to see 556 00:37:02,760 --> 00:37:07,440 Speaker 1: a little bit more intensity because inventory, which was bloated 557 00:37:07,800 --> 00:37:11,080 Speaker 1: during the lockdown, has come down and it's just about 558 00:37:11,320 --> 00:37:14,680 Speaker 1: ten twelve percent above the long term norm. So we're 559 00:37:14,680 --> 00:37:18,759 Speaker 1: not really dealing with the market that's just lousy with inventory. 560 00:37:18,840 --> 00:37:21,600 Speaker 1: It's really tightening up a bit. So I have two 561 00:37:21,680 --> 00:37:26,799 Speaker 1: last questions related to cities, and the first is we 562 00:37:26,840 --> 00:37:29,919 Speaker 1: started talking about office space. Let me let me ask 563 00:37:30,000 --> 00:37:32,400 Speaker 1: that question in a different way. Would you be a 564 00:37:32,400 --> 00:37:35,640 Speaker 1: buyer of commercial real estate in the city. Have those 565 00:37:35,680 --> 00:37:42,520 Speaker 1: prices fallen enough that doing conversions are financially attractive, including 566 00:37:42,640 --> 00:37:48,040 Speaker 1: to those pension funds and institutional investors that are looking 567 00:37:48,040 --> 00:37:52,759 Speaker 1: at real estate, or has that reconfiguration has that reset 568 00:37:53,239 --> 00:37:57,759 Speaker 1: not taken place yet? So? Uh So, when you think 569 00:37:57,800 --> 00:38:01,760 Speaker 1: about a real estate trends action or real estate market 570 00:38:01,960 --> 00:38:04,719 Speaker 1: and how you get to the point where prices are 571 00:38:04,840 --> 00:38:08,760 Speaker 1: much lower, uh there's always a step missing in this process. 572 00:38:08,840 --> 00:38:10,920 Speaker 1: And we're in the middle of this step. And I'll explain. 573 00:38:11,520 --> 00:38:14,840 Speaker 1: So think of it this way. There's an external event 574 00:38:15,239 --> 00:38:20,040 Speaker 1: and sales activity plummets because of whatever you know, think 575 00:38:20,040 --> 00:38:24,520 Speaker 1: of COVID, right, So so transaction activity plummets, whether it's 576 00:38:24,600 --> 00:38:29,040 Speaker 1: leasing or you know, office building purchases, it plummets. So 577 00:38:29,080 --> 00:38:32,919 Speaker 1: what happens right after that inventory kicks up a lot, right, 578 00:38:33,360 --> 00:38:37,759 Speaker 1: you know, supply and demand going opposite directions. And so 579 00:38:37,800 --> 00:38:42,000 Speaker 1: the next assumption, the next step is that prices fall 580 00:38:42,520 --> 00:38:46,040 Speaker 1: except for the part where the seller has to capitulate 581 00:38:46,040 --> 00:38:49,000 Speaker 1: to market conditions, and that takes a couple of years. 582 00:38:49,360 --> 00:38:51,920 Speaker 1: It's like to think of a you know, a seller 583 00:38:52,200 --> 00:38:56,200 Speaker 1: in you know, your neighborhood and they wildly you know, 584 00:38:56,640 --> 00:39:00,279 Speaker 1: you know, they they the market plunges, you know, the 585 00:39:00,320 --> 00:39:03,080 Speaker 1: factory closes, that supports all the jobs in the town, 586 00:39:03,920 --> 00:39:07,239 Speaker 1: and they don't reset their price because for you know, 587 00:39:07,320 --> 00:39:09,640 Speaker 1: they've had this built an idea for a long time. 588 00:39:09,680 --> 00:39:15,520 Speaker 1: And I think that's what's happening with commercial landlords where um, 589 00:39:15,560 --> 00:39:18,680 Speaker 1: you know, where there's gonna be an aftermath that's going 590 00:39:18,719 --> 00:39:21,520 Speaker 1: to be different. Um. The problem right now is that 591 00:39:21,600 --> 00:39:24,279 Speaker 1: it's and there's a lot of funds, there's a lot 592 00:39:24,320 --> 00:39:28,040 Speaker 1: of money being raised to sort of scavenge, you know, 593 00:39:28,120 --> 00:39:32,560 Speaker 1: the dead carcasses. But I think that's a multi year 594 00:39:32,600 --> 00:39:35,160 Speaker 1: process down the road. And the reason for that is 595 00:39:35,239 --> 00:39:38,399 Speaker 1: because it takes a while for the landlords to capitulate. 596 00:39:38,719 --> 00:39:40,640 Speaker 1: Other thing is, you know they had they're locked in 597 00:39:40,719 --> 00:39:43,839 Speaker 1: with tenants you know that might have five years left 598 00:39:43,880 --> 00:39:46,960 Speaker 1: at a full you know, you know pre COVID sort 599 00:39:46,960 --> 00:39:49,640 Speaker 1: of rate. Uh. And so I think this is going 600 00:39:49,680 --> 00:39:52,280 Speaker 1: to play out in sort of slow motion, is my guess. 601 00:39:53,160 --> 00:39:57,799 Speaker 1: One thing I'll say about remote work and you know, 602 00:39:57,920 --> 00:40:01,600 Speaker 1: right now, I like to say we're at peaks zoom. Um. 603 00:40:01,680 --> 00:40:04,480 Speaker 1: And so this is not how it's gonna be for 604 00:40:04,520 --> 00:40:06,400 Speaker 1: our office workers. But it's not going to be the 605 00:40:06,440 --> 00:40:08,520 Speaker 1: way it was pre COVID. It's going to be somewhere 606 00:40:08,520 --> 00:40:12,080 Speaker 1: in between. And we're trying to figure out where that is. Um, 607 00:40:12,120 --> 00:40:14,960 Speaker 1: the same goes as landlords. You know that that uh 608 00:40:15,320 --> 00:40:21,160 Speaker 1: you know office space. Um. We've proved that remote working 609 00:40:22,080 --> 00:40:26,160 Speaker 1: actually works, but it's not optimal. It's very difficult to 610 00:40:26,960 --> 00:40:30,480 Speaker 1: you know, train new people, uh, you know, to create 611 00:40:30,520 --> 00:40:33,920 Speaker 1: office culture. You know. So it's it's it works, but 612 00:40:34,000 --> 00:40:38,800 Speaker 1: it's not perfect. Uh. And after COVID, like I said earlier, 613 00:40:40,160 --> 00:40:42,920 Speaker 1: it's still here. As an option. So we're going to 614 00:40:42,960 --> 00:40:46,759 Speaker 1: see downsizing and we're going to you know, but we're 615 00:40:46,800 --> 00:40:48,880 Speaker 1: also going to see at the lower rents are going 616 00:40:48,920 --> 00:40:53,280 Speaker 1: to see an influx. I call it a youth renaissance UM. 617 00:40:53,320 --> 00:40:55,880 Speaker 1: And that's what I'm kind of excited about about, you know, 618 00:40:55,920 --> 00:40:59,719 Speaker 1: for cities is you know, one of the challenges of 619 00:41:00,520 --> 00:41:04,160 Speaker 1: the urban of urban markets was, you know, the whole 620 00:41:04,280 --> 00:41:09,400 Speaker 1: new urbanism trend. You know, walkability, you know your your local, 621 00:41:09,920 --> 00:41:12,239 Speaker 1: you know you're you live through or four blocks from 622 00:41:12,239 --> 00:41:15,600 Speaker 1: your officer. It's easy rite on public transportation, grocery and 623 00:41:15,680 --> 00:41:17,560 Speaker 1: any shopping is went in like a two or three 624 00:41:17,560 --> 00:41:22,160 Speaker 1: block radius. The problem is is that, uh, as development 625 00:41:22,200 --> 00:41:26,560 Speaker 1: expanded in cities across the country, their creative class, the 626 00:41:26,640 --> 00:41:31,879 Speaker 1: working working class were completely squeezed out. And so we're 627 00:41:32,080 --> 00:41:34,000 Speaker 1: you know a lot of office workers where they had 628 00:41:34,000 --> 00:41:36,040 Speaker 1: to live in the suburbs and then sort of commute 629 00:41:36,080 --> 00:41:41,520 Speaker 1: in UM. And so what's happening now with rents down 630 00:41:41,640 --> 00:41:46,359 Speaker 1: sharply and sales to a lesser degree because they're down 631 00:41:46,440 --> 00:41:50,919 Speaker 1: modestly in terms of pricing, UM, you're already seeing we've 632 00:41:50,920 --> 00:41:54,880 Speaker 1: been seeing record inbound or we've been seeing record new 633 00:41:54,960 --> 00:41:58,600 Speaker 1: leasing activity like the highest sense of financial crisis for 634 00:41:58,760 --> 00:42:01,680 Speaker 1: like the last five or six months. But prices are 635 00:42:01,680 --> 00:42:06,160 Speaker 1: still falling, and that's pulling in a whole new sort 636 00:42:06,160 --> 00:42:11,040 Speaker 1: of demographic. Uh that I think we'll have profound implications 637 00:42:11,520 --> 00:42:14,880 Speaker 1: for the rejuvenation of the city sort of you know, 638 00:42:14,880 --> 00:42:18,160 Speaker 1: I'm calling it like a youth renaissance, and that applies 639 00:42:18,200 --> 00:42:21,360 Speaker 1: to companies, uh, companies that wouldn't be able to afford 640 00:42:21,440 --> 00:42:24,480 Speaker 1: class A office space now that people left, you know, 641 00:42:24,520 --> 00:42:28,480 Speaker 1: holding the bag. Here are landlords who have enjoyed a 642 00:42:28,680 --> 00:42:34,000 Speaker 1: tremendous advantage for a long time. But I think, you know, 643 00:42:34,080 --> 00:42:36,680 Speaker 1: for the mid for the short and mid term, I 644 00:42:36,719 --> 00:42:38,759 Speaker 1: think that you know, it's going to be a very 645 00:42:38,880 --> 00:42:41,960 Speaker 1: challenging world for them, to say the very least. I 646 00:42:42,040 --> 00:42:45,120 Speaker 1: was kind of surprised we were in the city this weekend. 647 00:42:45,120 --> 00:42:49,360 Speaker 1: On Saturday, I actually took my wife and her sister 648 00:42:49,480 --> 00:42:53,040 Speaker 1: down to a renovation hardware which is down in the 649 00:42:53,080 --> 00:42:56,319 Speaker 1: mid packing district. Um. Of course, my sister in law 650 00:42:56,440 --> 00:42:58,759 Speaker 1: wanted to play a dining room table, but wanted to 651 00:42:58,800 --> 00:43:02,319 Speaker 1: see it first, And I was shocked about a number 652 00:43:02,320 --> 00:43:04,000 Speaker 1: of things. First, I was shocked that I was able 653 00:43:04,000 --> 00:43:06,239 Speaker 1: to pull up and get a parking space half a 654 00:43:06,239 --> 00:43:11,400 Speaker 1: block away, which was unheard of. And then second, um, 655 00:43:11,440 --> 00:43:16,840 Speaker 1: I try to get lunch reservations. Like days before, everything 656 00:43:16,880 --> 00:43:20,160 Speaker 1: in the neighborhood with outdoor seating fully booked up, which 657 00:43:20,200 --> 00:43:23,719 Speaker 1: is a positive economic sign. And then when we were leaving, 658 00:43:24,520 --> 00:43:28,360 Speaker 1: I was shocked at how parts of the village in 659 00:43:28,520 --> 00:43:33,080 Speaker 1: Soho were just Now Saturday was beautiful out but it 660 00:43:33,160 --> 00:43:35,840 Speaker 1: was just jam packed with people. It was it was 661 00:43:35,880 --> 00:43:39,760 Speaker 1: a party going on, mostly young people out and about, 662 00:43:40,320 --> 00:43:45,320 Speaker 1: mostly masked. That's a whole another discussion. But the town 663 00:43:45,520 --> 00:43:50,120 Speaker 1: was a ghost town and downtown was just full bore. 664 00:43:51,000 --> 00:43:56,239 Speaker 1: Is that a residential versus office comparison? Because I didn't 665 00:43:56,280 --> 00:43:59,239 Speaker 1: know how how else to read into it. When you 666 00:43:59,239 --> 00:44:01,040 Speaker 1: come through the Ton One, you make you way down 667 00:44:01,040 --> 00:44:04,000 Speaker 1: to the you know, the meatpacking district on the lower 668 00:44:04,080 --> 00:44:07,520 Speaker 1: West Side, you pass through three or four different types 669 00:44:07,600 --> 00:44:13,440 Speaker 1: of neighborhoods, and granted Midtown is usually quiet on the weekends, 670 00:44:13,440 --> 00:44:18,760 Speaker 1: but this was really quiet, especially Soho was just banging. 671 00:44:18,800 --> 00:44:21,960 Speaker 1: It was amazing, right, So so I look at this 672 00:44:22,160 --> 00:44:25,200 Speaker 1: as the way I describe what you just said was 673 00:44:25,960 --> 00:44:31,160 Speaker 1: Manhattan and cities in general have an optics problem. And 674 00:44:31,560 --> 00:44:35,799 Speaker 1: so when you think about like a story on Manhattan 675 00:44:35,920 --> 00:44:40,960 Speaker 1: or San Francisco or you know Chicago. Uh, you know, 676 00:44:41,000 --> 00:44:45,160 Speaker 1: the center business district. The camera pans over the vacant, 677 00:44:45,280 --> 00:44:49,160 Speaker 1: boarded up retail and piles of garbage, and you say, wow, 678 00:44:49,520 --> 00:44:54,359 Speaker 1: you know this is this represents Manhattan or Chicago or 679 00:44:54,920 --> 00:44:56,840 Speaker 1: and then you go to like the Upper East Side 680 00:44:56,960 --> 00:45:02,480 Speaker 1: or you know another number of all the residential neighborhoods. 681 00:45:03,080 --> 00:45:07,040 Speaker 1: They're vibrant. It's not normal. You know, everybody's wearing a mask, 682 00:45:07,960 --> 00:45:10,360 Speaker 1: but there's a lot of activity, a lot of outdoor 683 00:45:10,400 --> 00:45:14,600 Speaker 1: dining in the nice weather, and it it just it's encouraging, 684 00:45:14,719 --> 00:45:20,799 Speaker 1: but it's it's a it's a complete opposite visualization of 685 00:45:20,840 --> 00:45:24,160 Speaker 1: what you're seeing in the central business districts. And um, 686 00:45:24,360 --> 00:45:27,640 Speaker 1: and I think that changes over time is more and 687 00:45:27,680 --> 00:45:30,480 Speaker 1: more people come in. I think the big sort of 688 00:45:30,560 --> 00:45:33,960 Speaker 1: pivot point is going to end up being around September, 689 00:45:34,040 --> 00:45:37,160 Speaker 1: but maybe earlier, because that seems to be when Corporate 690 00:45:37,160 --> 00:45:41,880 Speaker 1: America is talking about calling their employees back. Uh. You know, 691 00:45:41,960 --> 00:45:44,560 Speaker 1: and I think this is a function of the acceleration 692 00:45:44,600 --> 00:45:47,920 Speaker 1: of vaccine adoption. Um. You know that that seems to 693 00:45:47,920 --> 00:45:52,040 Speaker 1: be the default answer, but you started to hear some 694 00:45:52,120 --> 00:45:55,280 Speaker 1: financial firms talk about I think it was Credit Sweez 695 00:45:55,360 --> 00:45:58,760 Speaker 1: and SAP and UM. I think it was JP Morgan 696 00:45:58,920 --> 00:46:02,920 Speaker 1: or Bank of America where talking about July June may 697 00:46:03,640 --> 00:46:07,080 Speaker 1: as really starting to ramp it up. And two things 698 00:46:07,160 --> 00:46:11,160 Speaker 1: happen when that happens in the context of central business 699 00:46:11,160 --> 00:46:17,080 Speaker 1: districts like you know, Wall Street or Midtown. Is that, uh, 700 00:46:17,320 --> 00:46:23,600 Speaker 1: you immediately send oxygen to street level retail, which you know, 701 00:46:23,840 --> 00:46:28,040 Speaker 1: thousands and thousands of office workers are not in that 702 00:46:28,520 --> 00:46:30,879 Speaker 1: locale and all of a sudden they are. So that's 703 00:46:30,880 --> 00:46:35,120 Speaker 1: gonna that I think they'll be rapid deployment or resurgence 704 00:46:36,040 --> 00:46:39,520 Speaker 1: in retail. I'm not saying it goes back to pre pandemic, 705 00:46:39,600 --> 00:46:44,239 Speaker 1: but it's improved dramatically and a fairly fast clip. And 706 00:46:44,239 --> 00:46:46,319 Speaker 1: then the other thing is I think that you know, 707 00:46:46,480 --> 00:46:50,960 Speaker 1: the rental markets in the central business districts are going 708 00:46:51,040 --> 00:46:55,000 Speaker 1: to boom um in the short term as this callback 709 00:46:55,120 --> 00:47:00,600 Speaker 1: happens um uh, which then sort of rings up the 710 00:47:00,719 --> 00:47:03,880 Speaker 1: sort of aggregate numbers of you know, the various markets 711 00:47:03,920 --> 00:47:07,560 Speaker 1: that we cover in terms of you know, real estate activity. 712 00:47:07,760 --> 00:47:11,839 Speaker 1: And I think that's and so I look at as 713 00:47:11,880 --> 00:47:16,000 Speaker 1: this sort of you know, gradual process as opposed to 714 00:47:16,080 --> 00:47:18,200 Speaker 1: some sort of light switch. But I think the closest 715 00:47:18,239 --> 00:47:21,280 Speaker 1: we get to a light switch is when corporate America 716 00:47:21,560 --> 00:47:25,680 Speaker 1: feels safe enough or their employees feel safe enough to 717 00:47:26,200 --> 00:47:31,160 Speaker 1: start calling people back on mass recognizing that it's not 718 00:47:31,200 --> 00:47:34,279 Speaker 1: going to be everybody, but it's going to be dramatically 719 00:47:34,280 --> 00:47:37,359 Speaker 1: more than we are seeing right now. And I think 720 00:47:37,400 --> 00:47:39,840 Speaker 1: people when they think about remote working, they sort of 721 00:47:39,920 --> 00:47:43,680 Speaker 1: stereotype it as you're sitting in your suburban house and 722 00:47:43,760 --> 00:47:48,279 Speaker 1: you're working remotely with your colleagues, you know who may 723 00:47:48,400 --> 00:47:51,440 Speaker 1: or may not be in the office in midtown, for example. 724 00:47:52,000 --> 00:47:54,520 Speaker 1: But I gotta tell you a lot of the remote 725 00:47:54,760 --> 00:47:57,440 Speaker 1: work that's going to happen, I think it's going to 726 00:47:57,600 --> 00:48:03,160 Speaker 1: happen uh in um in the city itself. Just because 727 00:48:03,760 --> 00:48:07,120 Speaker 1: someone say works at home, wants to work at home 728 00:48:07,160 --> 00:48:08,799 Speaker 1: for a couple of days a week. Well, they may 729 00:48:08,880 --> 00:48:11,680 Speaker 1: live in you know, Washington Heights to the Upper East 730 00:48:11,680 --> 00:48:15,680 Speaker 1: Side or soho, and they're still doing that. So it's 731 00:48:15,719 --> 00:48:21,920 Speaker 1: not working. Remote shouldn't be sort of pigeonholed as suburbs 732 00:48:22,200 --> 00:48:27,839 Speaker 1: into sort of you know cities. Um, it's it's it's 733 00:48:27,880 --> 00:48:32,800 Speaker 1: everywhere into you know where these companies are located. Very interesting. 734 00:48:32,840 --> 00:48:36,920 Speaker 1: So last question on the segment on cities, when do 735 00:48:37,080 --> 00:48:39,120 Speaker 1: you go back to the office and when do you 736 00:48:39,200 --> 00:48:43,480 Speaker 1: have your staff come back? So right now our staff 737 00:48:43,719 --> 00:48:51,000 Speaker 1: is already h you know, I'd say we're about back, 738 00:48:52,280 --> 00:48:54,440 Speaker 1: but alternating, we have a schedule so we don't have 739 00:48:54,480 --> 00:48:57,400 Speaker 1: too many people in at the same time. You know, 740 00:48:57,440 --> 00:49:00,880 Speaker 1: we have some people that live within walking distance, I 741 00:49:00,880 --> 00:49:03,359 Speaker 1: don't want to They love their spouse, but they don't 742 00:49:03,400 --> 00:49:06,080 Speaker 1: want to sit in their one bedroom apartment, whether they're 743 00:49:06,080 --> 00:49:08,239 Speaker 1: both working all day or they have small kids and 744 00:49:08,239 --> 00:49:12,640 Speaker 1: they alternate or whatever. Um, So that's uh so that's 745 00:49:12,680 --> 00:49:17,600 Speaker 1: already happening. I'm very anxious to get back in personally, 746 00:49:18,600 --> 00:49:21,000 Speaker 1: but I'm gonna start it slow. I live in Connecticut 747 00:49:21,080 --> 00:49:24,480 Speaker 1: and I'm a commuter, and I've had Yesterday was the 748 00:49:24,560 --> 00:49:28,719 Speaker 1: two week anniversary of my second COVID shot, So I 749 00:49:28,760 --> 00:49:32,279 Speaker 1: feel much better about coming in as well, you know, 750 00:49:32,280 --> 00:49:35,320 Speaker 1: and I'm anxious to. So starting in May, I'm probably 751 00:49:35,320 --> 00:49:37,520 Speaker 1: gonna come in one or two days a week as 752 00:49:37,560 --> 00:49:42,640 Speaker 1: a regular schedule. And and before the pandemic, for the 753 00:49:42,719 --> 00:49:45,920 Speaker 1: last like twelve or thirteen years, I was only coming 754 00:49:45,960 --> 00:49:48,080 Speaker 1: in three days a week. I was working at home. 755 00:49:48,200 --> 00:49:52,240 Speaker 1: I was already working at home on Mondays and Fridays. UM, 756 00:49:52,280 --> 00:49:54,600 Speaker 1: and so now you know, I end up coming in 757 00:49:55,400 --> 00:49:58,840 Speaker 1: two days a week. That's sort of probably the maybe 758 00:49:58,840 --> 00:50:02,359 Speaker 1: stay at home one day than I normally would. We're 759 00:50:02,400 --> 00:50:05,759 Speaker 1: going to take mass transit, gonna take mass mass transient, 760 00:50:06,440 --> 00:50:11,279 Speaker 1: mass transit, you know where the masks try to stay 761 00:50:11,320 --> 00:50:14,399 Speaker 1: away from IM and still be even though I've had 762 00:50:14,440 --> 00:50:19,480 Speaker 1: the had both doses, I'm still going to be very cognizant. 763 00:50:19,760 --> 00:50:23,560 Speaker 1: First of all, Um, you know, there's still risk uh 764 00:50:24,239 --> 00:50:28,320 Speaker 1: and and there's still a lot unknown. Um, But I 765 00:50:29,520 --> 00:50:31,560 Speaker 1: want to start going back in and I'm just going 766 00:50:31,640 --> 00:50:35,400 Speaker 1: to be very um prudent about it. Uh. And I 767 00:50:35,440 --> 00:50:37,399 Speaker 1: think most of my staff feels the same way. We're 768 00:50:37,440 --> 00:50:40,520 Speaker 1: probably not going to have everybody in for you know, 769 00:50:40,600 --> 00:50:44,320 Speaker 1: probably not till the fall. And and what we found 770 00:50:44,440 --> 00:50:48,880 Speaker 1: is that the remote really works. But the big, big, 771 00:50:49,000 --> 00:50:51,960 Speaker 1: big challenge of it, and where it doesn't work, where 772 00:50:51,960 --> 00:50:56,680 Speaker 1: it fails is mentorship. You know, we're really busy, we 773 00:50:56,760 --> 00:51:00,000 Speaker 1: anticipate being very busy for the next couple of years. 774 00:51:00,280 --> 00:51:04,560 Speaker 1: Were desperately trying to hire people and um, but you 775 00:51:04,600 --> 00:51:08,120 Speaker 1: can't train them remotely. You can't, you know, they're not 776 00:51:08,200 --> 00:51:11,400 Speaker 1: immersed in the office and overhearing you know, all the 777 00:51:11,440 --> 00:51:16,359 Speaker 1: problems solving with valuation questions. So it's really, uh, it's 778 00:51:16,400 --> 00:51:19,600 Speaker 1: really a dilemma that we face, but you know, safety 779 00:51:19,600 --> 00:51:23,880 Speaker 1: always comes first. Quite fascinating. Let's talk a little bit 780 00:51:23,920 --> 00:51:27,760 Speaker 1: about something you've been writing about for a long time. 781 00:51:28,760 --> 00:51:33,160 Speaker 1: And there are two key issues here I wanna touch on. 782 00:51:33,160 --> 00:51:38,560 Speaker 1: One is racial prejudice in the housing market. And then 783 00:51:38,640 --> 00:51:43,440 Speaker 1: more specifically, the topic you've been writing about is issues 784 00:51:43,680 --> 00:51:49,440 Speaker 1: of racial inequality and lack of diversity within the housing 785 00:51:49,640 --> 00:51:53,719 Speaker 1: industry itself. You've been a pretty vocal critic of your 786 00:51:53,719 --> 00:51:56,520 Speaker 1: own industry when it comes to this. Tell us what's 787 00:51:56,560 --> 00:52:01,560 Speaker 1: wrong with the housing industry? So, yeah, if you if 788 00:52:01,600 --> 00:52:05,520 Speaker 1: you think back to the nineteen thirties and think about 789 00:52:07,880 --> 00:52:12,240 Speaker 1: the federal government and the redlining that was prevalent um 790 00:52:12,280 --> 00:52:18,280 Speaker 1: and the deed restrictions covenants that uh, we're in place 791 00:52:18,719 --> 00:52:24,880 Speaker 1: for housing in housing markets throughout the United States. I know, 792 00:52:24,920 --> 00:52:28,000 Speaker 1: the Northeast, you know where I've grown up and live 793 00:52:28,080 --> 00:52:31,880 Speaker 1: as live now. Uh, you know big part of the 794 00:52:32,000 --> 00:52:37,800 Speaker 1: history of housing and how housing markets grew and were shaped, 795 00:52:38,719 --> 00:52:43,200 Speaker 1: and so one of the things that is extremely obvious 796 00:52:43,239 --> 00:52:48,919 Speaker 1: in my own appraisal profession is that we are an 797 00:52:48,960 --> 00:52:52,759 Speaker 1: aging professional of middle aged white males. UM. That is 798 00:52:52,800 --> 00:52:56,760 Speaker 1: what we are. And the reason we are is because 799 00:52:57,200 --> 00:53:04,120 Speaker 1: the leadership in our industry is UM UH sort of 800 00:53:04,160 --> 00:53:08,959 Speaker 1: sets the tone and and so giving an example, UH, 801 00:53:09,080 --> 00:53:14,080 Speaker 1: to be a license or certified appraiser, UH, you have 802 00:53:14,239 --> 00:53:20,880 Speaker 1: to follow standards called use PATH United US Professional Praisal 803 00:53:20,880 --> 00:53:25,200 Speaker 1: Practice Standards of Professional Praisal Practice. It's called us PAP 804 00:53:25,400 --> 00:53:28,080 Speaker 1: and and the problem with use PAP is that the 805 00:53:28,200 --> 00:53:34,360 Speaker 1: organization that administers it or or sets its basically sets 806 00:53:34,400 --> 00:53:41,640 Speaker 1: the you know, sets the criteria for entering into the profession. 807 00:53:41,800 --> 00:53:46,320 Speaker 1: You know, what's how to behave. UH. They have technical 808 00:53:46,360 --> 00:53:48,720 Speaker 1: boards for specific things and one of them is called 809 00:53:48,760 --> 00:53:53,320 Speaker 1: the a QB and the Appraisal Qualifications Board. And from 810 00:53:53,400 --> 00:53:59,840 Speaker 1: this organization's founding because appraisers weren't licensed, UM became the 811 00:54:00,080 --> 00:54:05,720 Speaker 1: licensing UH. Licensing requirements really started in the early nineties 812 00:54:05,760 --> 00:54:12,239 Speaker 1: with FI RHEA and UH and and really are UH. 813 00:54:12,880 --> 00:54:16,760 Speaker 1: There's been no change. So, for example, the a QB 814 00:54:17,360 --> 00:54:24,000 Speaker 1: has not had a minority member until this year, and 815 00:54:24,040 --> 00:54:27,520 Speaker 1: only because of external pressure from myself and others that 816 00:54:27,560 --> 00:54:31,920 Speaker 1: have been writing about this. They literally set these these 817 00:54:32,040 --> 00:54:37,759 Speaker 1: standards for entry into the profession, which is anemic, has 818 00:54:37,760 --> 00:54:40,600 Speaker 1: been anemic for the last twenty years. Uh, and so 819 00:54:40,719 --> 00:54:43,759 Speaker 1: we're aging out. And the reason for that is I 820 00:54:43,800 --> 00:54:47,279 Speaker 1: think it's just blindness that they don't realize. So they 821 00:54:47,320 --> 00:54:52,879 Speaker 1: set up a diversity committee and white guy yeah, which 822 00:54:52,960 --> 00:54:56,279 Speaker 1: is insane, and that what that tells you is they 823 00:54:56,320 --> 00:54:59,680 Speaker 1: can't see it. Right. Um. I think there's been a 824 00:54:59,680 --> 00:55:04,560 Speaker 1: lot of sort of um, there's been I believe it's 825 00:55:04,719 --> 00:55:09,000 Speaker 1: three stories that are being recycled over and over nationwide 826 00:55:09,000 --> 00:55:14,360 Speaker 1: about you have you know, um a an African American 827 00:55:14,400 --> 00:55:18,560 Speaker 1: couple refinancing their house or some example like this. There 828 00:55:18,640 --> 00:55:22,279 Speaker 1: was one in the story made described in Florida, a 829 00:55:22,320 --> 00:55:24,759 Speaker 1: northern California. I forget where the other one was, but 830 00:55:24,800 --> 00:55:27,200 Speaker 1: it's all the same sort of idea where where the 831 00:55:27,200 --> 00:55:30,640 Speaker 1: appraiser comes in and they appraise it for X, and 832 00:55:30,680 --> 00:55:37,040 Speaker 1: then the the homeowner you know, has their their non 833 00:55:37,120 --> 00:55:41,319 Speaker 1: minority uh neighbor come in and act like they're the 834 00:55:41,680 --> 00:55:44,040 Speaker 1: you know, the occupant, and they take down all sort 835 00:55:44,040 --> 00:55:48,440 Speaker 1: of personal photos and then magically the home appraises for 836 00:55:48,680 --> 00:55:52,239 Speaker 1: more and they're able to get their mortgage etcetera. You know, 837 00:55:52,680 --> 00:55:55,759 Speaker 1: because you know that you know, and it's sort of 838 00:55:55,880 --> 00:55:59,200 Speaker 1: you know, uh, you're you're basically saying, look, you know, 839 00:55:59,320 --> 00:56:06,360 Speaker 1: this was a prejudiced outlook on the value and UM. 840 00:56:06,400 --> 00:56:09,480 Speaker 1: And I think in a lot of those cases, you know, 841 00:56:09,560 --> 00:56:11,719 Speaker 1: and who knows, I'm sure this is one of those 842 00:56:11,719 --> 00:56:14,400 Speaker 1: things that happens a lot. It certainly happens in the 843 00:56:14,440 --> 00:56:18,840 Speaker 1: brokerage industry. There was just a big Newsday UM story 844 00:56:19,440 --> 00:56:23,080 Speaker 1: last year. UM, you know, sort of an undercover type story. 845 00:56:23,200 --> 00:56:27,000 Speaker 1: So it is prevalent. It's prevalent in I would suspect 846 00:56:27,000 --> 00:56:32,239 Speaker 1: every industry, uh, because systematic racism is is here. It's 847 00:56:32,400 --> 00:56:34,720 Speaker 1: you know, it's it's here. It's just one of the 848 00:56:34,760 --> 00:56:40,000 Speaker 1: things that society is sort of grappling with. UM. But unfortunately, uh, 849 00:56:40,320 --> 00:56:43,239 Speaker 1: you know, it's it's in my industry. It's a big thing. 850 00:56:43,280 --> 00:56:47,600 Speaker 1: And there's nothing that is it's all lip service. It's 851 00:56:47,640 --> 00:56:50,800 Speaker 1: all just I call it like checking the box. Okay, 852 00:56:50,880 --> 00:56:54,200 Speaker 1: we have a diversity committee, check that box. But there's 853 00:56:54,239 --> 00:56:57,040 Speaker 1: nothing inherently different. It's the same people that have been 854 00:56:57,040 --> 00:57:00,960 Speaker 1: in charge for all over three decades and they just 855 00:57:01,080 --> 00:57:05,120 Speaker 1: realized now it's a problem only because outsiders are telling 856 00:57:05,160 --> 00:57:07,960 Speaker 1: him it's a problem. We have the same issues with 857 00:57:09,000 --> 00:57:13,440 Speaker 1: our largest trade group, the Appraisal Institute, where uh, you know, 858 00:57:13,640 --> 00:57:18,960 Speaker 1: a handful of women and no minority representatives. Uh, you 859 00:57:19,000 --> 00:57:23,560 Speaker 1: know as senior executives. Uh. It's just an inherent, systematic, 860 00:57:24,240 --> 00:57:31,520 Speaker 1: systemic problem. Um. But it's being blamed on the local appraisers. Um, 861 00:57:31,880 --> 00:57:34,000 Speaker 1: you know, as like that's the reason. And I think 862 00:57:34,040 --> 00:57:36,400 Speaker 1: it's more top down. It's you know, the people that 863 00:57:36,440 --> 00:57:39,720 Speaker 1: are attracting people to the profession and people that are 864 00:57:40,040 --> 00:57:43,000 Speaker 1: setting the standards for entry. I think I think one 865 00:57:43,000 --> 00:57:46,439 Speaker 1: of the biggest problems in the our industry is that 866 00:57:47,400 --> 00:57:51,880 Speaker 1: unlike being an accountant, until you have two years of 867 00:57:51,920 --> 00:57:56,720 Speaker 1: experience full time, you can't be licensed, can't be certified. 868 00:57:57,160 --> 00:57:59,919 Speaker 1: So it's can you see the catch twenty two had 869 00:58:00,280 --> 00:58:05,360 Speaker 1: license are certified unless that person is like a family friend. 870 00:58:05,920 --> 00:58:08,960 Speaker 1: Because on the economic side, since the financial crisis and 871 00:58:09,040 --> 00:58:13,520 Speaker 1: thanks to dot frank UM, in order to remove moral 872 00:58:13,640 --> 00:58:20,320 Speaker 1: hazard from mortgage lending, a lot of the appraisal functions, 873 00:58:20,400 --> 00:58:24,080 Speaker 1: like the ordering of appraisals, the reviewing of appraisals has 874 00:58:24,120 --> 00:58:32,760 Speaker 1: been shifted to giant third party UM institutions who take 875 00:58:32,800 --> 00:58:36,000 Speaker 1: half the fee. So so you know, you on your 876 00:58:36,000 --> 00:58:42,360 Speaker 1: mortgage application, take pay X dollars and don't realize that 877 00:58:42,560 --> 00:58:50,080 Speaker 1: fift that dollar goes to a third party company that 878 00:58:50,200 --> 00:58:52,720 Speaker 1: all they do is make sure your license in your state, 879 00:58:53,640 --> 00:58:58,120 Speaker 1: make sure that you're compliant with whatever regulations are, and 880 00:58:58,240 --> 00:59:01,920 Speaker 1: that's it. So you're gonna you can't attract new people 881 00:59:02,000 --> 00:59:06,960 Speaker 1: in because the compensation has you know, fallen through the floor. 882 00:59:07,520 --> 00:59:10,440 Speaker 1: And then the regulations that we have are created by 883 00:59:10,440 --> 00:59:14,440 Speaker 1: people that are completely immune to what the challenges are. 884 00:59:15,120 --> 00:59:17,920 Speaker 1: And so we're really at a crossroads where a lot 885 00:59:18,000 --> 00:59:20,840 Speaker 1: of this stuff is being pointed out in public, but 886 00:59:21,000 --> 00:59:24,160 Speaker 1: it's you know, it's been built in for a century. 887 00:59:24,520 --> 00:59:27,800 Speaker 1: There nearly a cential over a century, but in specifically 888 00:59:27,800 --> 00:59:32,960 Speaker 1: the housing uh and there's no sort of proactive response. 889 00:59:33,040 --> 00:59:36,040 Speaker 1: So people like myself and others have been very vocal 890 00:59:36,080 --> 00:59:39,920 Speaker 1: about it, naming names, you know, you know, feeding the 891 00:59:39,960 --> 00:59:43,080 Speaker 1: public intel about what's going on to try to affect 892 00:59:43,440 --> 00:59:46,480 Speaker 1: some sort of change, to bring more diversity and more 893 00:59:46,560 --> 00:59:51,000 Speaker 1: people into uh different you know, real estate industries. And 894 00:59:51,040 --> 00:59:54,920 Speaker 1: that's been my passion for quite a while. So it's 895 00:59:54,920 --> 00:59:59,640 Speaker 1: funny you mentioned most people who who are in the suburbs, 896 01:00:00,120 --> 01:00:04,360 Speaker 1: you don't realize most white families probably don't realize how 897 01:00:04,440 --> 01:00:10,520 Speaker 1: systemic it is. And and the moment when I realized 898 01:00:11,120 --> 01:00:15,080 Speaker 1: I was reading one of the biographies of Robert Moses, 899 01:00:15,920 --> 01:00:18,840 Speaker 1: where and who Robert Moses was a famous builder who 900 01:00:18,960 --> 01:00:22,480 Speaker 1: who had done parks and beach are just you know, 901 01:00:22,800 --> 01:00:26,720 Speaker 1: all over New York State. His fingerprints are everywhere, highways 902 01:00:26,760 --> 01:00:31,880 Speaker 1: and bridges and just endless infrastructure projects. And in the 903 01:00:31,920 --> 01:00:34,920 Speaker 1: New York area there are highways and parkways and what 904 01:00:35,040 --> 01:00:38,360 Speaker 1: separates them is the parkways or cars only you can't 905 01:00:38,360 --> 01:00:41,880 Speaker 1: have trucks on it. And they have these beautiful stone 906 01:00:42,880 --> 01:00:45,960 Speaker 1: archway UM. I know that some of these are in Connecticut, 907 01:00:46,000 --> 01:00:52,640 Speaker 1: also in Westchester, these archway overpasses, and I just thought 908 01:00:52,680 --> 01:00:55,160 Speaker 1: they were pretty. It was only reading one of his 909 01:00:55,200 --> 01:00:59,840 Speaker 1: biographies that I learned that these were designed to keep 910 01:01:00,080 --> 01:01:07,480 Speaker 1: buses from the city from going to the suburban parks, beaches, etcetera, 911 01:01:08,360 --> 01:01:10,480 Speaker 1: which at the time were all white. And I had 912 01:01:10,520 --> 01:01:14,600 Speaker 1: no idea it was literally a physical impediment to keep 913 01:01:14,760 --> 01:01:18,160 Speaker 1: urban dwellers out. It was. It was a sort of 914 01:01:18,200 --> 01:01:22,560 Speaker 1: shocking moment when I learned that you've criticized the National 915 01:01:22,600 --> 01:01:26,280 Speaker 1: Appraiser Board UM and I've read some stuff about the 916 01:01:26,360 --> 01:01:29,880 Speaker 1: National Association of Realtors. What what's going on with these 917 01:01:29,920 --> 01:01:34,360 Speaker 1: big umbrella organizations. Aside from just the total lack of 918 01:01:34,400 --> 01:01:39,760 Speaker 1: diversity in their membership right right, they're definitely challenging the 919 01:01:40,120 --> 01:01:43,720 Speaker 1: It's you know interesting the story just told. Uh that 920 01:01:43,840 --> 01:01:46,240 Speaker 1: was in The Power Broker by Robert Carroll. That's the 921 01:01:46,280 --> 01:01:50,520 Speaker 1: book I was thinking. And that is the first book 922 01:01:50,560 --> 01:01:54,680 Speaker 1: I've read when I moved to Manhattan, and uh, and 923 01:01:54,720 --> 01:01:57,160 Speaker 1: I just felt like I had to know how the 924 01:01:57,200 --> 01:02:00,360 Speaker 1: city was built. And it was a spectacular read. Highly 925 01:02:00,400 --> 01:02:05,720 Speaker 1: recommend it. Um. You know, I think, uh, in when 926 01:02:05,800 --> 01:02:10,240 Speaker 1: you think about the real estate world, the real estate community, 927 01:02:10,720 --> 01:02:15,280 Speaker 1: they're still um these trades. You know, you have to 928 01:02:15,320 --> 01:02:19,240 Speaker 1: remember that these are trade groups, so they're doing everything 929 01:02:20,320 --> 01:02:25,920 Speaker 1: to help their members sell more, you know. And and 930 01:02:26,000 --> 01:02:29,280 Speaker 1: so I think when we look at nar National Association 931 01:02:29,320 --> 01:02:33,160 Speaker 1: of Realtors, they have I believe they spend I I thought, 932 01:02:33,240 --> 01:02:36,360 Speaker 1: I read this recently that they have the highest like 933 01:02:37,080 --> 01:02:41,520 Speaker 1: spend per lobbyists in Washington or one of the top people. 934 01:02:42,320 --> 01:02:44,960 Speaker 1: And you know, their whole thing is to make real 935 01:02:45,040 --> 01:02:52,200 Speaker 1: estate transactions easier and faster. Um. I you know, when 936 01:02:52,280 --> 01:02:55,120 Speaker 1: we saw it when we this News Day story on 937 01:02:55,240 --> 01:02:59,400 Speaker 1: Long Island, I would imagine that's the default everywhere that's 938 01:02:59,400 --> 01:03:03,560 Speaker 1: not Long Island is not, you know, an outlier UM, 939 01:03:03,960 --> 01:03:08,800 Speaker 1: and there's there's just not a lot of insider discussion 940 01:03:09,520 --> 01:03:12,320 Speaker 1: about how to fix this, just like there isn't in 941 01:03:12,520 --> 01:03:16,000 Speaker 1: the real estate appraisal community, which is a tiny sliver 942 01:03:16,920 --> 01:03:21,560 Speaker 1: UM my profession has about seventy five thousand credentialed members 943 01:03:21,560 --> 01:03:25,640 Speaker 1: across the US. Uh NAR has like a million, four million, 944 01:03:25,800 --> 01:03:31,520 Speaker 1: five members. I believe UM dramatically bigger, tremendous lobbying power, 945 01:03:31,960 --> 01:03:37,040 Speaker 1: and they do have an appraisal UH sort of subset 946 01:03:37,760 --> 01:03:40,240 Speaker 1: within the organization that has done some really good work, 947 01:03:40,360 --> 01:03:44,920 Speaker 1: but still the problem remains not nationally UM UH. And 948 01:03:45,320 --> 01:03:50,440 Speaker 1: you know, it's really interesting. There was a study that 949 01:03:50,840 --> 01:03:55,520 Speaker 1: was done by the Brookings Institute Institute like two or 950 01:03:55,560 --> 01:03:57,920 Speaker 1: three years ago that was part of a court testimony, 951 01:03:58,280 --> 01:04:04,040 Speaker 1: a quirk systimony rarestional testimony in Washington, which basically said 952 01:04:04,880 --> 01:04:10,240 Speaker 1: that UM appraisers like it didn't understand what appraisers do. 953 01:04:10,400 --> 01:04:12,520 Speaker 1: And I think this is one of the big biggest 954 01:04:12,600 --> 01:04:16,360 Speaker 1: challenges in valuation is everybody really knows what a real 955 01:04:16,440 --> 01:04:18,720 Speaker 1: estate agent does. But they don't know what a real 956 01:04:18,800 --> 01:04:21,959 Speaker 1: estate appraiser does and that and that makes us sort 957 01:04:22,000 --> 01:04:24,880 Speaker 1: of you know, we get blamed for a lot of things. 958 01:04:24,960 --> 01:04:26,960 Speaker 1: And one of the blame, and we were seeing this 959 01:04:27,080 --> 01:04:31,520 Speaker 1: in a lot of articles in the public, is that, um, 960 01:04:32,040 --> 01:04:36,360 Speaker 1: we're the ones that set pricing in a in an 961 01:04:36,560 --> 01:04:40,880 Speaker 1: in a neighborhood or a city. Um. And the problem 962 01:04:41,040 --> 01:04:44,520 Speaker 1: is is that our profession is really a profession of observers, 963 01:04:45,240 --> 01:04:48,400 Speaker 1: and we create opinions for a living, so certainly vulnerable 964 01:04:48,880 --> 01:04:52,160 Speaker 1: to prejudice in that regard. But our our goal is 965 01:04:52,240 --> 01:04:57,320 Speaker 1: not to set markets. Our charge from learning institutions that 966 01:04:57,360 --> 01:05:01,720 Speaker 1: we do appraisals for is to give a market value 967 01:05:01,760 --> 01:05:04,080 Speaker 1: opinion on what the property would sell for if it's 968 01:05:04,080 --> 01:05:07,640 Speaker 1: sold for today, you know what what is it? And um, 969 01:05:07,880 --> 01:05:11,080 Speaker 1: we don't say, you know, we don't make a neighborhood 970 01:05:11,200 --> 01:05:16,560 Speaker 1: lower priced, because there's what we're literally using sales from 971 01:05:16,600 --> 01:05:20,560 Speaker 1: the neighborhood. So maybe it perpetuates the problem, but the 972 01:05:20,800 --> 01:05:24,640 Speaker 1: larger problems and there's this really miss a big misunderstanding 973 01:05:24,720 --> 01:05:27,680 Speaker 1: about you know, the role that we play and other 974 01:05:27,760 --> 01:05:31,200 Speaker 1: people play, um in the industry. And I'm telling you, 975 01:05:31,440 --> 01:05:33,040 Speaker 1: you know, there's a long way to go, and it 976 01:05:33,120 --> 01:05:37,840 Speaker 1: needs to happen quickly because it's long overdue. Right. That's 977 01:05:37,840 --> 01:05:42,320 Speaker 1: funny you mentioned that. The one accusation is you're you're 978 01:05:42,360 --> 01:05:46,320 Speaker 1: helping to hold prices down during the financial you're leading 979 01:05:46,400 --> 01:05:50,040 Speaker 1: up to it. Anyway, the criticism of appraisers were, well, 980 01:05:50,080 --> 01:05:53,480 Speaker 1: they're using comparable so if a neighborhood is becoming a 981 01:05:53,560 --> 01:05:56,680 Speaker 1: bubble in price, well they're doing is saying, look, all 982 01:05:56,720 --> 01:06:00,200 Speaker 1: these other comparable sold for crazy prices, so therefore you 983 01:06:00,240 --> 01:06:02,960 Speaker 1: could give them a mortgage for this crazy price. Right, 984 01:06:03,040 --> 01:06:05,440 Speaker 1: I mean you know that, and you're absolutely right. And 985 01:06:05,800 --> 01:06:10,040 Speaker 1: this is part of the problem is that we're not forecasters. 986 01:06:10,360 --> 01:06:14,200 Speaker 1: We're not predicting the future. We're saying, here's something that's 987 01:06:14,200 --> 01:06:18,760 Speaker 1: sold yesterday for this price. Uh, three way bidding war. 988 01:06:19,680 --> 01:06:23,640 Speaker 1: So what is the collateral work today? The offset to 989 01:06:23,800 --> 01:06:26,800 Speaker 1: that is the credit profile of the consumer. That's by 990 01:06:26,920 --> 01:06:30,400 Speaker 1: which we have nothing to do with. UM. If we 991 01:06:30,560 --> 01:06:34,120 Speaker 1: were in the forecasting business. Uh, and there is a 992 01:06:34,600 --> 01:06:39,360 Speaker 1: more liability attached to our UM. You know what we're 993 01:06:39,400 --> 01:06:42,840 Speaker 1: writing about then, UM, you know, the costs of an 994 01:06:42,880 --> 01:06:45,840 Speaker 1: appraisal would be you know, five top four or five 995 01:06:45,880 --> 01:06:48,560 Speaker 1: times what it is now. Which i'd gladly, I'd love that, 996 01:06:49,760 --> 01:06:53,800 Speaker 1: but that is not what the mortgage sort of machine wants. 997 01:06:53,920 --> 01:06:59,520 Speaker 1: They want cost to be nominal UM. And in fact, 998 01:07:00,720 --> 01:07:05,600 Speaker 1: during this sanchial, during this pandemic, the g s S, 999 01:07:05,680 --> 01:07:11,320 Speaker 1: which arguably you know, have about mortgage flow through their hands, 1000 01:07:12,280 --> 01:07:18,000 Speaker 1: UM about something like seventy something per cent of mortgages 1001 01:07:18,120 --> 01:07:21,760 Speaker 1: that were issued during the pandemic did not have an appraisal. 1002 01:07:22,480 --> 01:07:25,919 Speaker 1: They were they were just you know, they ran their 1003 01:07:26,200 --> 01:07:30,880 Speaker 1: sort of their own estimate UM against their own you know, 1004 01:07:30,960 --> 01:07:35,400 Speaker 1: there's there's estimate would be the consumer facing a b 1005 01:07:35,600 --> 01:07:39,840 Speaker 1: M or automated valuation model UM and they're running their 1006 01:07:39,880 --> 01:07:41,960 Speaker 1: own so you know, that could be a nice little 1007 01:07:42,480 --> 01:07:48,400 Speaker 1: mortgage challenge down the road. But UM, but what's really interesting, 1008 01:07:48,480 --> 01:07:50,760 Speaker 1: and this is something that's off topic, but when we 1009 01:07:50,840 --> 01:07:55,240 Speaker 1: think about estimates or a b M S and their accuracy, 1010 01:07:56,240 --> 01:07:59,080 Speaker 1: if you ask most consumers, and I find this amazing, 1011 01:07:59,640 --> 01:08:05,320 Speaker 1: you know, this estimate has a median accuracy rate of five. Okay, 1012 01:08:05,720 --> 01:08:08,919 Speaker 1: so when you really think about they here five and like, wow, 1013 01:08:09,040 --> 01:08:13,400 Speaker 1: within five, UM, that's that's amazing, Except for when you 1014 01:08:13,440 --> 01:08:16,840 Speaker 1: actually read what they're saying. That means that the median 1015 01:08:16,880 --> 01:08:20,160 Speaker 1: accuracy that means fifty percent of the time it's within 1016 01:08:20,320 --> 01:08:25,439 Speaker 1: five and of the time it's not. It's pretty wide. 1017 01:08:25,479 --> 01:08:28,800 Speaker 1: And that's basically the A B M world that is uh, 1018 01:08:29,000 --> 01:08:33,439 Speaker 1: you know, the idea of automation UM so you know, 1019 01:08:33,520 --> 01:08:36,160 Speaker 1: which is something that we're sort of migrating towards over time, 1020 01:08:36,800 --> 01:08:41,479 Speaker 1: quite fascinating. So point blank, our our home prices in 1021 01:08:41,560 --> 01:08:45,840 Speaker 1: a bubble now, I don't think so. And the reason 1022 01:08:46,000 --> 01:08:50,160 Speaker 1: is we don't have that help we got from the 1023 01:08:51,439 --> 01:08:54,920 Speaker 1: mortgage industry in terms of when you don't qualify for 1024 01:08:55,040 --> 01:08:59,040 Speaker 1: a loan, you can't get one, and M one of 1025 01:08:59,080 --> 01:09:04,760 Speaker 1: the things if you look macro mortgage volume is in 1026 01:09:04,880 --> 01:09:08,439 Speaker 1: the US has in terms of like the average loan 1027 01:09:08,560 --> 01:09:13,679 Speaker 1: amount has not kept pace with home prices. So actually 1028 01:09:13,840 --> 01:09:18,720 Speaker 1: we're not as we're becoming less leveraged, even though you know, 1029 01:09:18,760 --> 01:09:21,360 Speaker 1: there's a tremendous amount of sales activity and prices are 1030 01:09:21,479 --> 01:09:25,720 Speaker 1: ramping up um as opposed to Canada, which it's the opposite, 1031 01:09:25,880 --> 01:09:30,960 Speaker 1: which we're seeing mortgage volume rise faster than uh it's 1032 01:09:31,000 --> 01:09:34,439 Speaker 1: associated housing volume. So you know, maybe this go around 1033 01:09:34,479 --> 01:09:36,280 Speaker 1: they're going to have the problem that we did that 1034 01:09:36,400 --> 01:09:39,720 Speaker 1: they didn't have in our housing bubble um and so 1035 01:09:39,880 --> 01:09:44,759 Speaker 1: I and I think the one thing that's good to remember, 1036 01:09:45,080 --> 01:09:50,000 Speaker 1: and something I just I've discussed before is that mortgage 1037 01:09:50,120 --> 01:09:56,120 Speaker 1: underwriting is not normal. It is tighter. You know, if 1038 01:09:56,160 --> 01:10:01,639 Speaker 1: you go prior to the housing bubble era and then 1039 01:10:01,920 --> 01:10:05,080 Speaker 1: and then go thirty years prior to that and use 1040 01:10:05,160 --> 01:10:08,880 Speaker 1: that as the standard, we're tighter than that era. So 1041 01:10:10,160 --> 01:10:12,599 Speaker 1: I feel very good about that. We deal with lenders 1042 01:10:12,640 --> 01:10:17,000 Speaker 1: all the time. Uh, and there's you know, there's a 1043 01:10:17,080 --> 01:10:21,960 Speaker 1: lot of seriousness applied to marketing and in fact, uh, 1044 01:10:22,439 --> 01:10:26,280 Speaker 1: you you definitely are seeing lenders could be lending more, 1045 01:10:27,439 --> 01:10:31,000 Speaker 1: but they are not. Uh, they are not on the 1046 01:10:31,160 --> 01:10:34,800 Speaker 1: same page because as they were in the past, because 1047 01:10:34,840 --> 01:10:37,800 Speaker 1: they're they're worried about the future and the future risk. 1048 01:10:38,200 --> 01:10:40,640 Speaker 1: And I think that's really encouraging because to me, it 1049 01:10:40,760 --> 01:10:44,080 Speaker 1: suggests you know, and you know, we we we know 1050 01:10:44,240 --> 01:10:48,519 Speaker 1: that each new each time it's different. But um that 1051 01:10:49,120 --> 01:10:52,200 Speaker 1: that I it doesn't seem like we have a mortgage 1052 01:10:52,840 --> 01:10:56,760 Speaker 1: or a banking crisis, you know, laying at our doorstep. 1053 01:10:56,840 --> 01:11:00,840 Speaker 1: That's obvious. Uh. And and you know, I think that 1054 01:11:01,520 --> 01:11:04,120 Speaker 1: at some point we're going to see you know, home 1055 01:11:04,400 --> 01:11:09,439 Speaker 1: sales activity dissipate simply because you know, financing is going 1056 01:11:09,479 --> 01:11:12,679 Speaker 1: to become a problem. So this is a crazy new 1057 01:11:12,800 --> 01:11:16,000 Speaker 1: era where in order to get a mortgage you have 1058 01:11:16,080 --> 01:11:19,840 Speaker 1: to qualify for one, have an income abated history and 1059 01:11:20,520 --> 01:11:24,439 Speaker 1: a down payment. Um. So obviously it's different than it 1060 01:11:24,640 --> 01:11:28,439 Speaker 1: was in oh, five, six seven. But the flip side 1061 01:11:28,479 --> 01:11:33,080 Speaker 1: of that is how much of this is interest rates driven? 1062 01:11:33,320 --> 01:11:36,560 Speaker 1: And what happens if rates start to tick up and 1063 01:11:36,720 --> 01:11:40,840 Speaker 1: what else might cool off this market? Yeah, I you 1064 01:11:40,880 --> 01:11:44,200 Speaker 1: know it's funny. I I always hate the blame or 1065 01:11:44,360 --> 01:11:49,320 Speaker 1: the driver on low mortgage rates just because you know, 1066 01:11:49,520 --> 01:11:52,240 Speaker 1: rates have been falling for over thirty years, and housing 1067 01:11:52,360 --> 01:11:54,880 Speaker 1: prices have gone up and down, and volume has gone 1068 01:11:54,960 --> 01:11:57,080 Speaker 1: up and down to the psycho, So there's lots of 1069 01:11:57,160 --> 01:12:00,519 Speaker 1: other factors and mortgage rates people that sort of track 1070 01:12:00,600 --> 01:12:03,519 Speaker 1: it and live and die by it. Um, you know 1071 01:12:03,560 --> 01:12:06,000 Speaker 1: they missed a lot of the color. You know. You 1072 01:12:06,040 --> 01:12:10,040 Speaker 1: know that sort of results in the pricing, uh decision 1073 01:12:10,120 --> 01:12:15,479 Speaker 1: that buyers ultimately make. But it is UM, I just 1074 01:12:15,560 --> 01:12:19,439 Speaker 1: think you can't go wrong when you when you have 1075 01:12:20,400 --> 01:12:24,719 Speaker 1: lenders sort of leaning away from risk when it comes 1076 01:12:24,800 --> 01:12:29,200 Speaker 1: down to this. So I'm not I'm just not that. UM, 1077 01:12:30,120 --> 01:12:32,559 Speaker 1: I'm just not that concerned about it. I think things 1078 01:12:32,600 --> 01:12:35,360 Speaker 1: will cool off activity when we hit a certain level. 1079 01:12:36,280 --> 01:12:40,479 Speaker 1: I've read that about people that have a mortgage in 1080 01:12:40,560 --> 01:12:44,680 Speaker 1: the US have a rate that's four or less and 1081 01:12:45,640 --> 01:12:51,000 Speaker 1: uh and so I uh and this actually came from uh, 1082 01:12:51,240 --> 01:12:54,960 Speaker 1: my friend Ivy's element its element and social uh and 1083 01:12:55,360 --> 01:12:59,680 Speaker 1: the uh. So I start thinking of if we top 1084 01:13:01,360 --> 01:13:03,920 Speaker 1: you know, that's when we starts seeing like an off 1085 01:13:03,960 --> 01:13:06,760 Speaker 1: switch being flipped or you know, for the sort of 1086 01:13:06,920 --> 01:13:11,080 Speaker 1: extra activity that we've been in the market's been enjoying. Um, 1087 01:13:11,800 --> 01:13:15,000 Speaker 1: you know, with the rate dra um. But that's amazing, 1088 01:13:15,560 --> 01:13:18,920 Speaker 1: it's it's it's kind of shocking that that many people have, 1089 01:13:19,560 --> 01:13:22,840 Speaker 1: you know, are that low. So when we bought this house, 1090 01:13:23,120 --> 01:13:25,759 Speaker 1: and I want to say, it was so it's about 1091 01:13:25,800 --> 01:13:28,160 Speaker 1: seven I know it's fourteen. It's about seven years ago. 1092 01:13:28,760 --> 01:13:31,080 Speaker 1: People thought I was crazy when I said I'm going 1093 01:13:31,120 --> 01:13:35,320 Speaker 1: to do the variable mortgage, even though it was at 1094 01:13:35,400 --> 01:13:39,240 Speaker 1: the low low rate of three point seven five. And 1095 01:13:39,360 --> 01:13:44,719 Speaker 1: it's since slipped just under three percent. And I'm interest 1096 01:13:44,800 --> 01:13:47,080 Speaker 1: about the point where I'm ready to say, okay, let's 1097 01:13:47,120 --> 01:13:52,200 Speaker 1: convert this to a to a to a fixed rate mortgage. 1098 01:13:52,240 --> 01:13:55,120 Speaker 1: But I remember having people say to me, you're doing 1099 01:13:55,160 --> 01:13:57,760 Speaker 1: a variable at three seven five, I'm like, well, as 1100 01:13:57,800 --> 01:14:02,880 Speaker 1: soon as you can show me signs that rates are right, Well, 1101 01:14:03,280 --> 01:14:05,920 Speaker 1: that happens all the way down to zero. And you know, 1102 01:14:06,439 --> 01:14:09,000 Speaker 1: even if it ticked up, there's a hundred and fifty 1103 01:14:09,000 --> 01:14:11,680 Speaker 1: basis point limit and you could always convert it to 1104 01:14:12,040 --> 01:14:14,360 Speaker 1: to fix back then. But I didn't think I was 1105 01:14:14,439 --> 01:14:19,360 Speaker 1: taking a big chance with that. Um the And and 1106 01:14:19,520 --> 01:14:24,600 Speaker 1: what I've noticed is I've seen increased solicitations now for 1107 01:14:25,439 --> 01:14:30,840 Speaker 1: refinancial mortgage. Those are taking it in right absolutely, and uh, 1108 01:14:31,000 --> 01:14:34,720 Speaker 1: you know it's interesting because there's a lot made and 1109 01:14:34,840 --> 01:14:36,880 Speaker 1: I don't quite know the answer this, but there's a 1110 01:14:37,000 --> 01:14:39,280 Speaker 1: lot made on you know. One of the points you 1111 01:14:39,320 --> 01:14:42,519 Speaker 1: brought up is, you know, you know what's inventory? Like 1112 01:14:42,760 --> 01:14:44,479 Speaker 1: is it? You know why we have so little of it? 1113 01:14:45,000 --> 01:14:47,280 Speaker 1: And one of the reasons I don't know if I 1114 01:14:47,680 --> 01:14:49,800 Speaker 1: and I'm sure there's a study, I've never seen one, 1115 01:14:49,920 --> 01:14:54,760 Speaker 1: but you know, one of the reasons now for low 1116 01:14:54,840 --> 01:14:57,280 Speaker 1: inventory is people don't want to give up their low rate. 1117 01:14:57,960 --> 01:15:00,240 Speaker 1: You know that they're not quite and and I I 1118 01:15:01,640 --> 01:15:04,560 Speaker 1: don't know, I hear that kind of you know, it 1119 01:15:04,760 --> 01:15:09,479 Speaker 1: sounds it sounds logical until you really think about it, 1120 01:15:09,840 --> 01:15:14,760 Speaker 1: and I I quite quite there. Yet You're can roll 1121 01:15:14,800 --> 01:15:16,920 Speaker 1: out of a three percent to a three point five 1122 01:15:16,960 --> 01:15:19,320 Speaker 1: percent that's gonna affect you moving, So you're not going 1123 01:15:19,360 --> 01:15:23,000 Speaker 1: to move because it made no sense another bedroom or whatever. 1124 01:15:23,120 --> 01:15:26,080 Speaker 1: But that's used. That logic has used a lot, and 1125 01:15:26,240 --> 01:15:29,519 Speaker 1: I I need to be better educated about it because 1126 01:15:29,720 --> 01:15:33,519 Speaker 1: I'm not buying it. So you men mentioned the z estimate, 1127 01:15:33,680 --> 01:15:37,080 Speaker 1: which is the Zilo estimate. But there's now a whole 1128 01:15:37,120 --> 01:15:40,880 Speaker 1: new world of eye buyers and open Doors and even 1129 01:15:41,000 --> 01:15:46,560 Speaker 1: Zillo that had gone from mirror apps to facilitate transactions 1130 01:15:46,600 --> 01:15:50,000 Speaker 1: to actually becoming buyers. Tell us what's going on in 1131 01:15:50,120 --> 01:15:53,280 Speaker 1: that world? You you were involved with one of those 1132 01:15:53,280 --> 01:15:56,760 Speaker 1: apps some time ago, weren't you? Yeah? I was. I 1133 01:15:56,960 --> 01:16:00,840 Speaker 1: was on the Truly Industry Advisory Board a year before 1134 01:16:00,880 --> 01:16:03,680 Speaker 1: they had or before they had a website, UM, and 1135 01:16:03,800 --> 01:16:06,320 Speaker 1: they came out a year after a Zello and then 1136 01:16:06,960 --> 01:16:10,880 Speaker 1: by two thousand fourteen they essentially merged or you know 1137 01:16:11,160 --> 01:16:16,360 Speaker 1: air quote, Uh we're bought by Zillo and UM and 1138 01:16:16,439 --> 01:16:20,000 Speaker 1: then you know, I was out, But I m I 1139 01:16:20,200 --> 01:16:23,760 Speaker 1: learned a lot behind the scenes, and uh, you know, 1140 01:16:23,800 --> 01:16:29,519 Speaker 1: in many ways it seems like uh, you know for 1141 01:16:29,640 --> 01:16:32,040 Speaker 1: those listeners that aren't aware. But an I buyer is 1142 01:16:32,160 --> 01:16:36,200 Speaker 1: essentially a company comes to you and buys your house 1143 01:16:36,280 --> 01:16:38,320 Speaker 1: from you. You don't put it on the market. They 1144 01:16:38,400 --> 01:16:41,720 Speaker 1: give you an offer, they factor in repairs, there's a 1145 01:16:41,800 --> 01:16:46,280 Speaker 1: bunch of charges and um, you know, for many sellers 1146 01:16:46,520 --> 01:16:48,840 Speaker 1: it's actually more than a commission might be if you 1147 01:16:48,920 --> 01:16:52,800 Speaker 1: sold for the same price. But there's a convenience. You 1148 01:16:52,880 --> 01:16:55,400 Speaker 1: don't have to show your house you have to let, 1149 01:16:55,520 --> 01:17:00,840 Speaker 1: especially during you know this period of you know, pandemic 1150 01:17:00,960 --> 01:17:04,679 Speaker 1: and all that. Uh and so when it first when 1151 01:17:05,800 --> 01:17:09,680 Speaker 1: and I've heard a presentation by open Door at a 1152 01:17:10,240 --> 01:17:14,640 Speaker 1: at a conference I was at before the pandemic, and 1153 01:17:15,000 --> 01:17:18,360 Speaker 1: it's pretty impressive. But it hope he struck me as 1154 01:17:19,240 --> 01:17:23,720 Speaker 1: because the margins are razor thin. Um that it only 1155 01:17:23,800 --> 01:17:27,160 Speaker 1: will work in a homogeneous housing market like think of 1156 01:17:27,320 --> 01:17:31,559 Speaker 1: Phoenix or Las Vegas. You know where these firms really 1157 01:17:32,560 --> 01:17:36,880 Speaker 1: um you know, do a lot of deals, activity of 1158 01:17:36,960 --> 01:17:40,519 Speaker 1: transactions because the housing stock is very similar, so you 1159 01:17:40,600 --> 01:17:45,559 Speaker 1: can be more precise. Um. I think Zella was uh 1160 01:17:45,800 --> 01:17:50,720 Speaker 1: late to the party, but certainly had the wherewithal to 1161 01:17:50,960 --> 01:17:54,240 Speaker 1: jump in quickly. The problem and what's interesting is in 1162 01:17:54,320 --> 01:17:58,680 Speaker 1: their I buyer effort. They've had a press release that 1163 01:17:59,120 --> 01:18:03,760 Speaker 1: they're not using there's estimate technology, which which I think, 1164 01:18:04,600 --> 01:18:06,240 Speaker 1: I don't know about you, but that to me says 1165 01:18:06,320 --> 01:18:09,679 Speaker 1: something saying there have to be a low bowl offer 1166 01:18:09,720 --> 01:18:12,680 Speaker 1: because they're buying. It's a resell makes sense, right if 1167 01:18:12,760 --> 01:18:16,000 Speaker 1: you're you know, any place you see sell your car 1168 01:18:16,160 --> 01:18:19,200 Speaker 1: for cash one cars or whatever it is, you know 1169 01:18:19,520 --> 01:18:21,560 Speaker 1: they're they're going to pay you less than if you 1170 01:18:21,600 --> 01:18:24,120 Speaker 1: sell it yourself, and it has to be right right, 1171 01:18:24,200 --> 01:18:27,040 Speaker 1: And you know, for some that's a convenience, like you 1172 01:18:27,040 --> 01:18:29,400 Speaker 1: don't want to have to with all that and the stress, 1173 01:18:29,479 --> 01:18:32,680 Speaker 1: and maybe it takes five months, and so I get it. 1174 01:18:32,760 --> 01:18:34,479 Speaker 1: There's gonna be a niche. But I think with the 1175 01:18:35,680 --> 01:18:39,800 Speaker 1: all this really burst on the scene and open Door 1176 01:18:40,000 --> 01:18:43,880 Speaker 1: was really and there's offer Pad, there's others, um you know, 1177 01:18:43,960 --> 01:18:46,120 Speaker 1: I think that it was like, hey, this is going 1178 01:18:46,160 --> 01:18:50,439 Speaker 1: to replace traditional brokerage, and it's gonna be you know, 1179 01:18:50,840 --> 01:18:55,280 Speaker 1: it's a dominant form of of selling your house. And 1180 01:18:55,560 --> 01:18:57,680 Speaker 1: you know, I think it's there's a market for it. 1181 01:18:57,800 --> 01:18:59,439 Speaker 1: I think it's just gonna be a play a much 1182 01:18:59,479 --> 01:19:03,160 Speaker 1: smaller and the problem is that you know, these companies 1183 01:19:03,200 --> 01:19:08,400 Speaker 1: are investing billions in technology to be able to get 1184 01:19:08,520 --> 01:19:13,800 Speaker 1: comfortable with valuation and UM. And it's really, uh, it 1185 01:19:13,880 --> 01:19:18,160 Speaker 1: seems seems like a pretty risky venture. UM. And you know, 1186 01:19:18,280 --> 01:19:23,040 Speaker 1: one side of it is after the pandemic lockdown started 1187 01:19:23,040 --> 01:19:27,920 Speaker 1: to occur, all these companies ceased operations because they've never 1188 01:19:28,040 --> 01:19:30,599 Speaker 1: gone through a down market or you know, what could 1189 01:19:30,640 --> 01:19:33,120 Speaker 1: be a down market. I thought that was really interesting 1190 01:19:33,320 --> 01:19:36,080 Speaker 1: that you know a lot of the you know, the 1191 01:19:36,160 --> 01:19:39,480 Speaker 1: boom we're seeing in fintech and all this is predicated 1192 01:19:39,840 --> 01:19:43,840 Speaker 1: on rising market conditions, you know, strong sales activity, growing 1193 01:19:43,880 --> 01:19:47,240 Speaker 1: sales activity, UM, and and this that just sort of 1194 01:19:48,520 --> 01:19:50,880 Speaker 1: caused me to pause a little bit. You know. It's like, 1195 01:19:51,840 --> 01:19:56,400 Speaker 1: and I was saying this before the pandemic, um that 1196 01:19:56,760 --> 01:19:58,720 Speaker 1: you know, these these haven't been tested in the down 1197 01:19:58,840 --> 01:20:03,560 Speaker 1: market and how the that worked as their inventory explode, 1198 01:20:03,880 --> 01:20:06,679 Speaker 1: you know, as sales really slowed down. How does that work? 1199 01:20:06,960 --> 01:20:09,599 Speaker 1: And they haven't been tested yet. So I think it's 1200 01:20:09,600 --> 01:20:14,360 Speaker 1: an evolving model. It's here to stay. And and I 1201 01:20:14,479 --> 01:20:17,280 Speaker 1: think you know, they're they're gonna work really hard to 1202 01:20:17,360 --> 01:20:20,400 Speaker 1: figure it out, and there's gonna be pinning the herd, 1203 01:20:20,680 --> 01:20:24,200 Speaker 1: so to speak. Um. You know, with all these companies 1204 01:20:24,240 --> 01:20:26,400 Speaker 1: out there. There's not enough room for all of them, right. 1205 01:20:27,080 --> 01:20:30,600 Speaker 1: It's hey, listen, the inconvenience of selling your house on 1206 01:20:30,680 --> 01:20:34,559 Speaker 1: the market and having people trample through your living space, 1207 01:20:35,120 --> 01:20:38,639 Speaker 1: that convenience has a value. But I assume that value 1208 01:20:38,800 --> 01:20:42,160 Speaker 1: is I don't know, five bucks, two thousand bucks. But 1209 01:20:42,240 --> 01:20:43,800 Speaker 1: it's not going to be let me sell this house 1210 01:20:43,840 --> 01:20:47,240 Speaker 1: for all its less than I otherwise would have get gotten. 1211 01:20:47,800 --> 01:20:51,240 Speaker 1: I don't think it's worth that amount. So it'll be 1212 01:20:51,400 --> 01:20:55,880 Speaker 1: interesting to see how this progresses over time. Yeah, and 1213 01:20:56,000 --> 01:20:59,439 Speaker 1: I think I think, just like everything in this sort 1214 01:20:59,439 --> 01:21:04,479 Speaker 1: of post lockdown pandemic world, there's gonna be there's just 1215 01:21:04,640 --> 01:21:08,320 Speaker 1: a recalculation going on right now, all sorts of things, 1216 01:21:08,400 --> 01:21:11,880 Speaker 1: and this will be one of them. Really interesting last 1217 01:21:11,960 --> 01:21:15,280 Speaker 1: question before we get to our favorite questions. You had 1218 01:21:15,400 --> 01:21:21,400 Speaker 1: briefly mentioned SALTS, which is the the tax deduction for 1219 01:21:21,640 --> 01:21:26,439 Speaker 1: state and local right taxes against your house, which the 1220 01:21:26,560 --> 01:21:30,840 Speaker 1: previous administration had slashed to about ten thous dollars, which 1221 01:21:30,880 --> 01:21:36,040 Speaker 1: I know infuriated people in blue states like New York 1222 01:21:36,080 --> 01:21:40,000 Speaker 1: and California and Connecticut. So so let me ask you 1223 01:21:40,120 --> 01:21:43,960 Speaker 1: the question, who are the geographic winners and losers of 1224 01:21:44,080 --> 01:21:47,360 Speaker 1: the pandemic. How much of it is related to that 1225 01:21:47,720 --> 01:21:52,960 Speaker 1: salt deduction changing for real estate? And do you think 1226 01:21:53,200 --> 01:21:57,879 Speaker 1: there's a move afoot to tie a rollback of salts 1227 01:21:58,520 --> 01:22:01,280 Speaker 1: to the infrastructure bill? Do you think this has any 1228 01:22:01,400 --> 01:22:04,000 Speaker 1: legs that this will change? And I'm not asking this 1229 01:22:04,200 --> 01:22:08,040 Speaker 1: because it personally hit me in the pocketbook, it did, 1230 01:22:08,560 --> 01:22:12,960 Speaker 1: But it's a fascinating subject. Sure, sure, I think so. 1231 01:22:13,600 --> 01:22:21,519 Speaker 1: You know, essentially, it's a dollar exemption cap on property 1232 01:22:21,640 --> 01:22:25,760 Speaker 1: taxes and uh, state and local taxes and salt. You know, 1233 01:22:25,800 --> 01:22:29,920 Speaker 1: when I grew up, salt sted for Strategic Arms Limitation treaty, 1234 01:22:30,240 --> 01:22:33,880 Speaker 1: but uh, and then there was salt to UM. This 1235 01:22:34,080 --> 01:22:37,799 Speaker 1: is a different salt that you know, uh cuts closer 1236 01:22:37,880 --> 01:22:41,639 Speaker 1: to home, so to speak, and uh, and it really 1237 01:22:42,040 --> 01:22:45,960 Speaker 1: in high cost, high tech states are very vulnerable. You know. 1238 01:22:46,000 --> 01:22:48,959 Speaker 1: The offset to this was to double the standard deduction. 1239 01:22:49,680 --> 01:22:51,840 Speaker 1: And so I remember being, you know, a couple of 1240 01:22:51,960 --> 01:22:55,240 Speaker 1: years ago, because this went into effect January two thou eighteen. 1241 01:22:55,240 --> 01:22:59,120 Speaker 1: I remember going to a conference in Dallas and we 1242 01:22:59,240 --> 01:23:02,840 Speaker 1: were sort of rainstorming our next conference, and what were 1243 01:23:02,880 --> 01:23:04,920 Speaker 1: some of the things we're going to talk about? And 1244 01:23:04,960 --> 01:23:08,479 Speaker 1: I brought this up, and everybody from the Midwest like 1245 01:23:08,640 --> 01:23:11,320 Speaker 1: stared at me, like, what are you talking about, because 1246 01:23:12,000 --> 01:23:16,920 Speaker 1: they don't have the same you know, high taxes the 1247 01:23:17,360 --> 01:23:20,640 Speaker 1: relative to you know, different locales, they might, but in 1248 01:23:20,720 --> 01:23:24,639 Speaker 1: the context of you know, New York State or New 1249 01:23:24,760 --> 01:23:30,080 Speaker 1: Jersey or Connecticut or California, Illinois, you know, these are 1250 01:23:30,240 --> 01:23:36,720 Speaker 1: really consequential and um, and I think you know, aside 1251 01:23:36,880 --> 01:23:40,759 Speaker 1: from Rockland County, New York being like the highest property 1252 01:23:40,880 --> 01:23:44,280 Speaker 1: tax per capita, I believe I've read that in a 1253 01:23:44,320 --> 01:23:47,519 Speaker 1: Bloomberg story, or it might be Westchester, Like I think 1254 01:23:47,560 --> 01:23:50,960 Speaker 1: they're buying for the top, um, you know, really big numbers, 1255 01:23:51,000 --> 01:23:55,040 Speaker 1: and that's sort of been baked into housing prices. So 1256 01:23:55,560 --> 01:23:59,920 Speaker 1: really what this does is it if you know, if 1257 01:24:00,080 --> 01:24:03,600 Speaker 1: you just to be aspirational for a second, you know, 1258 01:24:03,720 --> 01:24:07,240 Speaker 1: you buy a house for ten million dollars and the 1259 01:24:07,400 --> 01:24:13,280 Speaker 1: typical annual property taxes are about a hundred seventy Uh. 1260 01:24:13,479 --> 01:24:18,000 Speaker 1: And let's just say you're state and local taxes are 1261 01:24:18,560 --> 01:24:23,120 Speaker 1: the same. So double your property taxes, uh, and you 1262 01:24:23,160 --> 01:24:26,560 Speaker 1: can only write off ten thousand dollars. Now, Uh, that 1263 01:24:27,120 --> 01:24:31,280 Speaker 1: really changes the math, uh substantially. And so what you've 1264 01:24:31,320 --> 01:24:36,760 Speaker 1: seen is, you know, higher end housing markets pre pandemic Uh, 1265 01:24:37,000 --> 01:24:40,599 Speaker 1: in the suburban markets really get hit hard, the north 1266 01:24:40,640 --> 01:24:42,840 Speaker 1: shore of Long Island. A lot of the higher end 1267 01:24:42,920 --> 01:24:46,360 Speaker 1: housing markets around the country that we tracked UM spent 1268 01:24:46,840 --> 01:24:52,760 Speaker 1: most noticeably in California where we focus on southern California. Uh. 1269 01:24:53,120 --> 01:24:57,960 Speaker 1: You definitely have seen prices UH fall as a result, um, 1270 01:24:58,920 --> 01:25:03,800 Speaker 1: not overnight. It's sort of been a gradual um decline UM. 1271 01:25:04,760 --> 01:25:07,679 Speaker 1: And you know, it was really interesting. And again back 1272 01:25:07,720 --> 01:25:12,160 Speaker 1: to my idea that the pandemic has been this great disruptor, 1273 01:25:13,160 --> 01:25:16,880 Speaker 1: is that Florida has been and was anticipated, you know, 1274 01:25:17,040 --> 01:25:20,719 Speaker 1: January one, two thousand and eighteen, the Florida real estate community, 1275 01:25:20,760 --> 01:25:23,840 Speaker 1: I covered about fourteen housing markets in Florida on the 1276 01:25:24,080 --> 01:25:28,240 Speaker 1: Gulf side and the Ocean side, and and everybody's just 1277 01:25:28,479 --> 01:25:31,040 Speaker 1: you know ready, you know, they're just they're you know, 1278 01:25:31,800 --> 01:25:35,720 Speaker 1: ready for this massive flood of demand from the Northeast. 1279 01:25:36,880 --> 01:25:41,400 Speaker 1: And while it was there, it was tepid. And once 1280 01:25:42,080 --> 01:25:45,360 Speaker 1: the pandemic hit, and I think you know, for many 1281 01:25:45,439 --> 01:25:48,519 Speaker 1: that have been on the fence and skewing to the 1282 01:25:48,600 --> 01:25:52,400 Speaker 1: wealthy in the high cost housing markets, you did see 1283 01:25:52,479 --> 01:25:57,839 Speaker 1: this UH surgeon activity during after the lockdown and in Florida, 1284 01:25:58,760 --> 01:26:02,400 Speaker 1: UH and surpris rising ly, at least to me, it 1285 01:26:02,520 --> 01:26:08,960 Speaker 1: hasn't stopped that, you know, the contract data we're seeing uh, 1286 01:26:09,200 --> 01:26:11,719 Speaker 1: you know, in many of these in the five counties 1287 01:26:11,760 --> 01:26:17,160 Speaker 1: in southern California, southern Florida, we're seeing contract activity that 1288 01:26:17,439 --> 01:26:25,559 Speaker 1: is forty two up year every year in March and uh, 1289 01:26:25,840 --> 01:26:30,880 Speaker 1: and it is really absorbing the what Florida had been 1290 01:26:30,960 --> 01:26:33,560 Speaker 1: known for on the ocean side for a tremendous and 1291 01:26:33,600 --> 01:26:38,479 Speaker 1: build up in inventory, especially as you skew up in price. Um. 1292 01:26:38,600 --> 01:26:40,360 Speaker 1: And we're seeing a lot of that get burned off. 1293 01:26:41,280 --> 01:26:44,360 Speaker 1: Inventory is definitely coming down because sales activity has been 1294 01:26:44,360 --> 01:26:47,439 Speaker 1: at record levels. And I think a lot of it 1295 01:26:47,560 --> 01:26:53,840 Speaker 1: had to do with the salt tax and the and 1296 01:26:54,000 --> 01:27:00,439 Speaker 1: the and the ability to work remotely. Um uh you know, 1297 01:27:01,040 --> 01:27:03,000 Speaker 1: but the pandemic we should look at. The pandemic is 1298 01:27:03,040 --> 01:27:06,680 Speaker 1: sort of the trigger or the the the instigator of this, 1299 01:27:06,960 --> 01:27:12,560 Speaker 1: because I think it accelerated everything. It accelerated remote you know, 1300 01:27:12,760 --> 01:27:16,920 Speaker 1: remote software by probably a decade. It accelerated you know, 1301 01:27:17,040 --> 01:27:22,240 Speaker 1: what was an anemic response to the tax, the salt tax, uh, 1302 01:27:22,560 --> 01:27:26,000 Speaker 1: federal law all of a sudden became like a big 1303 01:27:26,120 --> 01:27:29,639 Speaker 1: marketing point. So I think if you know, there there 1304 01:27:29,840 --> 01:27:36,360 Speaker 1: is surprisingly um, you know, an appetite for putting patches 1305 01:27:36,479 --> 01:27:41,479 Speaker 1: on the law, but that comes with you know, revenue 1306 01:27:41,560 --> 01:27:47,760 Speaker 1: laws and so uh so I would say that the 1307 01:27:47,920 --> 01:27:53,000 Speaker 1: odds of something are are you know, I wouldn't say 1308 01:27:53,040 --> 01:27:55,479 Speaker 1: it's a sure thing. It seems it's not a sure thing, 1309 01:27:55,720 --> 01:27:59,400 Speaker 1: but it's certainly the odds of it are greatly improved 1310 01:28:00,560 --> 01:28:03,400 Speaker 1: over the last couple of months. And what I'm detecting 1311 01:28:04,240 --> 01:28:07,280 Speaker 1: that doesn't mean it'll happen, but I but I do. 1312 01:28:07,600 --> 01:28:11,120 Speaker 1: But I wouldn't be surprised if it did. Well, it'll 1313 01:28:11,120 --> 01:28:13,080 Speaker 1: be interesting if it did. There's there's a house I'm 1314 01:28:13,200 --> 01:28:16,800 Speaker 1: enamored with on on Center Islands, a few doors down 1315 01:28:16,880 --> 01:28:20,600 Speaker 1: by from Sean hannony Um that's listed for sale for 1316 01:28:20,800 --> 01:28:24,560 Speaker 1: nine point nine million. And really, until we get that 1317 01:28:24,680 --> 01:28:28,760 Speaker 1: salt deduction back, I can't even think about Yeah by 1318 01:28:28,840 --> 01:28:31,800 Speaker 1: the house, that's ten times the cost of the house 1319 01:28:31,880 --> 01:28:35,639 Speaker 1: I currently so so I'm I'm rooting for the salt 1320 01:28:35,680 --> 01:28:41,400 Speaker 1: deduction to come back. But here's the Here's the thing is, 1321 01:28:42,000 --> 01:28:44,840 Speaker 1: you know you'd have to act immediately because the market 1322 01:28:45,000 --> 01:28:47,960 Speaker 1: right everybody else will pile into it. I literally just 1323 01:28:48,120 --> 01:28:50,599 Speaker 1: sent you, I just sent you a link to that house, 1324 01:28:51,040 --> 01:28:56,960 Speaker 1: which has its own little nestled cove harbor Marina, but 1325 01:28:57,120 --> 01:28:59,240 Speaker 1: it only holds two jet skis. So I don't know 1326 01:28:59,320 --> 01:29:02,160 Speaker 1: if that will work for us, but my wife and 1327 01:29:02,240 --> 01:29:07,000 Speaker 1: I love looking at that sort of stuff's house. Right well, 1328 01:29:07,080 --> 01:29:09,880 Speaker 1: everybody during this lockdown, I think, you know it's you know, 1329 01:29:10,400 --> 01:29:14,519 Speaker 1: uh uh, you know, if they didn't have worries about 1330 01:29:14,720 --> 01:29:17,639 Speaker 1: being employed or you know, they were thinking about the future. 1331 01:29:17,840 --> 01:29:21,160 Speaker 1: And like when we get out of lockdown, I was 1332 01:29:21,240 --> 01:29:23,840 Speaker 1: obsessed with I want a lot more land with a 1333 01:29:24,120 --> 01:29:26,960 Speaker 1: with a barn. So you know, we're like looking all 1334 01:29:27,040 --> 01:29:32,640 Speaker 1: over Connecticut, uh, just just because. And then you'll get 1335 01:29:32,720 --> 01:29:35,120 Speaker 1: more land at the same price you get you get 1336 01:29:35,120 --> 01:29:37,880 Speaker 1: about yeah, you get like three or four times the 1337 01:29:38,040 --> 01:29:41,840 Speaker 1: land and the same house for half the price and 1338 01:29:42,320 --> 01:29:45,000 Speaker 1: you know, an historic barn or something along that line. 1339 01:29:45,080 --> 01:29:49,080 Speaker 1: So I want to stand alone garage, which I don't have. 1340 01:29:49,200 --> 01:29:51,320 Speaker 1: Im in a My garage is part of the house, 1341 01:29:52,040 --> 01:29:54,320 Speaker 1: and I can if I can get enough land where 1342 01:29:54,320 --> 01:29:58,000 Speaker 1: I could build a free standing garage, it will remove 1343 01:29:58,240 --> 01:30:02,280 Speaker 1: limitations on how many uh how many cars I can have, 1344 01:30:03,080 --> 01:30:07,880 Speaker 1: how many bring a trailer. I'm literally wearing a bring 1345 01:30:07,960 --> 01:30:11,360 Speaker 1: a trailer t shirt as we recorded us, all right, 1346 01:30:11,400 --> 01:30:14,519 Speaker 1: so let's but by the way, there was a term 1347 01:30:14,720 --> 01:30:18,120 Speaker 1: for that sort of zillo. I'm drawing a blank on it. 1348 01:30:18,240 --> 01:30:22,639 Speaker 1: That's sort of zillo browsing. You can absolutely just get 1349 01:30:23,000 --> 01:30:27,320 Speaker 1: lost in in that world. And uh, it's pure escapism 1350 01:30:27,439 --> 01:30:30,680 Speaker 1: looking at five and ten and twenty five millions. By 1351 01:30:30,680 --> 01:30:34,439 Speaker 1: the way, the funny thing is what's shocking about not 1352 01:30:34,640 --> 01:30:38,240 Speaker 1: putting a cap on the price when you browse zillo 1353 01:30:39,280 --> 01:30:41,880 Speaker 1: is that you're looking at particular neighborhood. Hey, show me 1354 01:30:41,880 --> 01:30:45,800 Speaker 1: all the houses in East Hampton and and you know, 1355 01:30:45,920 --> 01:30:48,880 Speaker 1: above a million dollars, and you'll see these things come 1356 01:30:48,960 --> 01:30:51,880 Speaker 1: up at forty and sixty and ninety million dollars. It's 1357 01:30:52,000 --> 01:30:55,799 Speaker 1: um out in Montalk Dick cab its property, which apparently 1358 01:30:55,960 --> 01:30:59,439 Speaker 1: is eighteen acres or something like that. It was up 1359 01:30:59,520 --> 01:31:02,920 Speaker 1: for sale for some ungodly number. I don't know if 1360 01:31:02,960 --> 01:31:05,760 Speaker 1: you get if he got it, but it's shocking when 1361 01:31:05,800 --> 01:31:08,320 Speaker 1: we see what happens. All right, before I run out 1362 01:31:08,360 --> 01:31:11,640 Speaker 1: of time, let me jump to our favorite questions that 1363 01:31:11,800 --> 01:31:14,040 Speaker 1: we ask all of our guests, and and let me 1364 01:31:14,120 --> 01:31:17,160 Speaker 1: try and um run through these more quickly than usual 1365 01:31:17,240 --> 01:31:20,120 Speaker 1: because we have been b sing the whole time. Tell 1366 01:31:20,240 --> 01:31:22,439 Speaker 1: us what you're streaming these days. Give us your favorite 1367 01:31:22,479 --> 01:31:29,600 Speaker 1: Netflix or Amazon Prime Entertainment. So uh so, actually I 1368 01:31:31,080 --> 01:31:33,920 Speaker 1: I am one of those people like we we cut 1369 01:31:34,040 --> 01:31:40,240 Speaker 1: the cable during the lockdown and uh and so I 1370 01:31:40,320 --> 01:31:42,479 Speaker 1: have Hulu, I have Netflix, I have all these things. 1371 01:31:42,560 --> 01:31:46,439 Speaker 1: It's amazing, but I don't watch it. I like watch it. 1372 01:31:46,720 --> 01:31:49,120 Speaker 1: I just don't watch TV other than you know, a 1373 01:31:49,200 --> 01:31:54,040 Speaker 1: few Yankee games. I just and you know you've said 1374 01:31:54,080 --> 01:31:55,879 Speaker 1: to me, hey, we're in the golden age of television. 1375 01:31:56,240 --> 01:31:59,200 Speaker 1: I literally I think you're becoming my dad, like who 1376 01:31:59,320 --> 01:32:02,519 Speaker 1: never liked to be. I just don't watch TV anymore, um, 1377 01:32:02,840 --> 01:32:05,960 Speaker 1: hardly at all. So so I I'm sort of the 1378 01:32:06,520 --> 01:32:11,040 Speaker 1: the opposite of most of my peers. It seems so 1379 01:32:11,160 --> 01:32:14,960 Speaker 1: no Queen's Gambit or anything like that. Nothing it is, 1380 01:32:15,280 --> 01:32:18,439 Speaker 1: uh you know, I think the closest I get to 1381 01:32:18,960 --> 01:32:22,280 Speaker 1: and and this is just silly, Uh, is that I'm 1382 01:32:22,360 --> 01:32:27,120 Speaker 1: sort of obsessed with uh radio detective shows from the 1383 01:32:27,200 --> 01:32:31,040 Speaker 1: nineteen forties and fifties. Um. I listened to a lot 1384 01:32:31,080 --> 01:32:33,640 Speaker 1: of podcasts of like old radio shows a sort of 1385 01:32:33,680 --> 01:32:36,560 Speaker 1: white noise when I'm working. So I am I just 1386 01:32:36,640 --> 01:32:39,439 Speaker 1: don't fit the profile now that I know that that's 1387 01:32:39,479 --> 01:32:43,280 Speaker 1: your gig. Let me just suggest something that you might enjoy, 1388 01:32:43,439 --> 01:32:46,640 Speaker 1: which is a little off to the side from that. 1389 01:32:47,479 --> 01:32:50,559 Speaker 1: John Pizzorelli hosts a show called Radio Deluxe where it's 1390 01:32:50,560 --> 01:32:55,439 Speaker 1: just him and his wife. And that's amazing that So 1391 01:32:55,680 --> 01:32:58,720 Speaker 1: you listen to that. It's great music. Plus they're both 1392 01:32:58,840 --> 01:33:03,320 Speaker 1: so knowledgeable that you get color on Yeah, you get 1393 01:33:03,360 --> 01:33:05,920 Speaker 1: color on the songs and on the writers and and 1394 01:33:06,040 --> 01:33:07,720 Speaker 1: a lot of the stuff is from the era you 1395 01:33:07,760 --> 01:33:13,080 Speaker 1: would just describe. Yeah, I feel like I'm a young 1396 01:33:13,360 --> 01:33:18,439 Speaker 1: soul but with old taste, right, And they do mix 1397 01:33:18,520 --> 01:33:20,720 Speaker 1: it up. It's some newer stuff, but a lot of 1398 01:33:20,800 --> 01:33:24,000 Speaker 1: it traces back to the Great American Songbook, and that 1399 01:33:24,200 --> 01:33:28,160 Speaker 1: obviously is twenties, thirties, forties, fifties. It's very different than 1400 01:33:29,000 --> 01:33:32,000 Speaker 1: modern stuff. Um. Let's look about mentors who helped to 1401 01:33:32,160 --> 01:33:36,240 Speaker 1: shape your career. Well, I've had two that I really 1402 01:33:36,280 --> 01:33:39,400 Speaker 1: would jump it would jump out at me. One is, um, 1403 01:33:40,200 --> 01:33:43,000 Speaker 1: my first job coming out of New York. I actually 1404 01:33:43,120 --> 01:33:46,640 Speaker 1: went to college to be in the hotel business. My 1405 01:33:46,800 --> 01:33:49,960 Speaker 1: father had built a hotel when I was younger. Um, 1406 01:33:50,200 --> 01:33:51,519 Speaker 1: and I didn't know what else to do, and I 1407 01:33:51,600 --> 01:33:56,160 Speaker 1: knew something with real estate, but not UM specifically, and 1408 01:33:56,320 --> 01:34:01,439 Speaker 1: I lasted for three years and pretty much hated every 1409 01:34:01,520 --> 01:34:05,320 Speaker 1: minute of it. UM the company that I worked for, 1410 01:34:05,479 --> 01:34:08,920 Speaker 1: was eventually acquired by Marriott, and I just it just 1411 01:34:09,120 --> 01:34:14,080 Speaker 1: wasn't I wasn't passionate about it. However, I just my 1412 01:34:14,280 --> 01:34:19,720 Speaker 1: first boss, gentleman named John Nelson, uh, really taught me 1413 01:34:19,800 --> 01:34:25,519 Speaker 1: how to navigate like corporate politics and how to like 1414 01:34:25,680 --> 01:34:31,519 Speaker 1: really cut away at the sort of the noise and 1415 01:34:31,760 --> 01:34:34,439 Speaker 1: solve the problem. And I just never forgot it. And 1416 01:34:34,760 --> 01:34:38,280 Speaker 1: uh and that was, you know, forty plus years ago, 1417 01:34:38,760 --> 01:34:41,479 Speaker 1: and I still touch based with them every so often. 1418 01:34:41,640 --> 01:34:44,679 Speaker 1: He really meant a lot to me. The other mentor 1419 01:34:44,760 --> 01:34:48,840 Speaker 1: I had. The other mentor I had was uh one 1420 01:34:48,880 --> 01:34:53,680 Speaker 1: of the founder of Douga Salomons, Doddie Herman, who uh 1421 01:34:54,280 --> 01:35:00,200 Speaker 1: she's the one that UM, uh you know basically really 1422 01:35:00,320 --> 01:35:03,880 Speaker 1: implored me because of I was, you know, she found 1423 01:35:03,960 --> 01:35:06,880 Speaker 1: me I was. I would I would brief the executives 1424 01:35:06,960 --> 01:35:10,719 Speaker 1: about a, uh, you know, the state of the market, 1425 01:35:10,800 --> 01:35:14,960 Speaker 1: what was going on, and and uh she implored me 1426 01:35:15,240 --> 01:35:20,799 Speaker 1: too essentially you know, expand and write about other markets 1427 01:35:20,880 --> 01:35:24,519 Speaker 1: that I don't necessarily work in. And um, and that's 1428 01:35:25,080 --> 01:35:28,320 Speaker 1: that's what I She really championed me and really relied 1429 01:35:28,400 --> 01:35:32,720 Speaker 1: on what the market number, which was very contrarian to 1430 01:35:33,680 --> 01:35:37,360 Speaker 1: the sort of real estate seitgeist, which is it's always 1431 01:35:37,400 --> 01:35:42,000 Speaker 1: a good time to buy or sell and uh. And 1432 01:35:42,160 --> 01:35:44,800 Speaker 1: it was more like we want to give and that's 1433 01:35:44,800 --> 01:35:47,880 Speaker 1: spend their mantra. It's sort of entrepreneurial, like we want 1434 01:35:47,920 --> 01:35:53,040 Speaker 1: to give our customers, uh, you know, neutral market benchmark 1435 01:35:53,280 --> 01:35:55,960 Speaker 1: so they can make informed decisions. That's essentially what it was. 1436 01:35:56,800 --> 01:35:59,240 Speaker 1: And to me that was sort of shocking, and I 1437 01:35:59,439 --> 01:36:02,640 Speaker 1: was really I went with it. And now we you know, 1438 01:36:02,840 --> 01:36:05,200 Speaker 1: issue hundreds of reports a year and they're used by 1439 01:36:05,200 --> 01:36:09,360 Speaker 1: the Fed and all the like alphabet soup of agencies 1440 01:36:09,439 --> 01:36:12,400 Speaker 1: in Washington, and they're not seen as a brochure. And 1441 01:36:13,280 --> 01:36:16,559 Speaker 1: and to her credit, that was you know, she really 1442 01:36:16,640 --> 01:36:19,479 Speaker 1: feeled that in me, and I I'll forever be grateful. 1443 01:36:19,840 --> 01:36:22,920 Speaker 1: So I want to first of all, you remind me 1444 01:36:23,080 --> 01:36:28,080 Speaker 1: of a very infamous National Association of Realtors advertisements they 1445 01:36:28,160 --> 01:36:31,840 Speaker 1: threw out early in the collapse in the mid two thousands, 1446 01:36:31,920 --> 01:36:34,519 Speaker 1: which is it's always a great time to buy or 1447 01:36:34,600 --> 01:36:37,240 Speaker 1: sell a house. I don't know if you remember that, 1448 01:36:37,479 --> 01:36:40,160 Speaker 1: but it was all, well, you you know, if you 1449 01:36:40,240 --> 01:36:42,880 Speaker 1: have a stock market background, hey, it's either a good 1450 01:36:42,920 --> 01:36:47,439 Speaker 1: time to buy or sell, but not both unless you're 1451 01:36:47,520 --> 01:36:52,040 Speaker 1: the broker taking the piece in the middle. So either exactly. 1452 01:36:52,560 --> 01:36:56,000 Speaker 1: But but I have a very vivid recollection of being 1453 01:36:56,080 --> 01:37:01,559 Speaker 1: on a panel with Dottie Herman in like oh five 1454 01:37:01,760 --> 01:37:05,280 Speaker 1: o six when the rollover was just starting, And you 1455 01:37:05,520 --> 01:37:09,720 Speaker 1: might have been on that panel with us with pre 1456 01:37:10,479 --> 01:37:14,360 Speaker 1: Nobel Bob Schiller. If that rings a bell, Yeah, she 1457 01:37:14,600 --> 01:37:16,560 Speaker 1: wasn't with us on the I was on, Like I 1458 01:37:16,640 --> 01:37:19,519 Speaker 1: think the panel you were on the panel before me 1459 01:37:19,600 --> 01:37:21,960 Speaker 1: and I was after is the one I'm remembering, okay, 1460 01:37:22,240 --> 01:37:24,360 Speaker 1: And I just remember her looking at me like I 1461 01:37:24,479 --> 01:37:27,519 Speaker 1: had two heads when I said, you know, thirty percent 1462 01:37:27,600 --> 01:37:30,679 Speaker 1: drop in real estate is not unthinkable for a financial crisis, 1463 01:37:31,120 --> 01:37:34,080 Speaker 1: and she just was a guest. I have a vivid 1464 01:37:34,200 --> 01:37:37,120 Speaker 1: recollection of that. I could be wrong, but I'm pretty 1465 01:37:37,160 --> 01:37:41,120 Speaker 1: sure it was her. Well, it's funny, uh two thousand seven, 1466 01:37:41,520 --> 01:37:45,120 Speaker 1: you know, Uh, the US market had already started to tank. 1467 01:37:45,760 --> 01:37:50,439 Speaker 1: You know, the uh Bob Shiller Kishiller index peaked into 1468 01:37:50,560 --> 01:37:54,160 Speaker 1: that summer two thousand six, So sales activity actually peaked 1469 01:37:54,200 --> 01:37:58,400 Speaker 1: in two thousand five. It was volume from that is, Yeah, 1470 01:37:58,520 --> 01:38:01,519 Speaker 1: volume leads priced, you know, one or two years. And 1471 01:38:01,560 --> 01:38:06,960 Speaker 1: I've learned that in many different instances. Um, but I remember, uh, 1472 01:38:08,479 --> 01:38:10,920 Speaker 1: he and I were on a stage at Lincoln Center, 1473 01:38:11,040 --> 01:38:13,439 Speaker 1: was like three thousand people in the audience, and the 1474 01:38:14,439 --> 01:38:17,600 Speaker 1: the this is two thousand seven. So Manhattan was a 1475 01:38:17,720 --> 01:38:21,280 Speaker 1: year or two behind the US market because of Wall Street. 1476 01:38:21,360 --> 01:38:24,320 Speaker 1: Camp had really sort of extended our our boom for 1477 01:38:24,400 --> 01:38:27,960 Speaker 1: a few years. And I remember him being asked, well, 1478 01:38:28,000 --> 01:38:31,519 Speaker 1: what do you think how much will prices reset? And 1479 01:38:32,040 --> 01:38:38,599 Speaker 1: he said, and there was just a gasp in the audience, 1480 01:38:39,360 --> 01:38:43,200 Speaker 1: and it was right, you know, just it doesn't happen. 1481 01:38:43,320 --> 01:38:45,800 Speaker 1: And just like what I was saying earlier, like it 1482 01:38:45,880 --> 01:38:50,320 Speaker 1: doesn't happen immediately, you know, the sales drop, inventory surges, 1483 01:38:50,400 --> 01:38:53,679 Speaker 1: and then it takes like a year or two for prices, 1484 01:38:53,840 --> 01:38:56,000 Speaker 1: you know, for sellers to capitulate. If they don't want 1485 01:38:56,000 --> 01:38:58,120 Speaker 1: to sell, they don't sell, they weight, but they have 1486 01:38:58,280 --> 01:39:00,719 Speaker 1: to sell more and more have to sell, and then boom, 1487 01:39:00,920 --> 01:39:03,680 Speaker 1: you know, the prices are falling. And and that's what 1488 01:39:03,800 --> 01:39:06,680 Speaker 1: everybody I think it's wrong with these cycles right there. 1489 01:39:06,800 --> 01:39:10,960 Speaker 1: They're always they're always stuck on what the neighbors sold. 1490 01:39:11,000 --> 01:39:13,320 Speaker 1: The house for a year or two years ago, and 1491 01:39:13,439 --> 01:39:15,160 Speaker 1: it's like, hey, if you have a time machine, you 1492 01:39:15,200 --> 01:39:17,719 Speaker 1: could go back to two thousand three and get that price. 1493 01:39:18,120 --> 01:39:21,280 Speaker 1: But in oh eight, you're you're screwed. And that thirty 1494 01:39:21,360 --> 01:39:24,960 Speaker 1: five percent number came from a piece that Ryan Martin 1495 01:39:25,080 --> 01:39:28,200 Speaker 1: Rogeloff wrote. They end up writing a book This Time 1496 01:39:28,320 --> 01:39:30,920 Speaker 1: is Different. But it was a research piece that was 1497 01:39:31,000 --> 01:39:35,000 Speaker 1: out in oh seven about when you have financial crises, 1498 01:39:35,479 --> 01:39:38,200 Speaker 1: you typically see a fifty percent collapse in the in 1499 01:39:38,240 --> 01:39:41,639 Speaker 1: the real stock market, real estate falls thirty plus percent. 1500 01:39:41,800 --> 01:39:44,679 Speaker 1: I mean, they weren't making predictions. They were saying, here's 1501 01:39:44,680 --> 01:39:47,320 Speaker 1: what the averages look like over the past eight centuries. 1502 01:39:47,960 --> 01:39:51,320 Speaker 1: And it was so prescient that they ended up writing 1503 01:39:51,360 --> 01:39:54,480 Speaker 1: a book about it a couple of years later. Speaking 1504 01:39:54,760 --> 01:39:57,920 Speaker 1: of books, what are some of your favorite books? What 1505 01:39:58,000 --> 01:40:02,479 Speaker 1: are you reading right now? So, so I had been 1506 01:40:02,680 --> 01:40:06,800 Speaker 1: on a on a I don't know, reading about New 1507 01:40:06,880 --> 01:40:09,920 Speaker 1: York and history of New York, sort of the cultural history, 1508 01:40:10,479 --> 01:40:13,960 Speaker 1: just cool things. When I moved to the city, uh 1509 01:40:14,160 --> 01:40:18,760 Speaker 1: in the eighties, I was just enamored with um, you know, 1510 01:40:19,400 --> 01:40:22,280 Speaker 1: uh the grit, I guess you'd call it. And my 1511 01:40:22,439 --> 01:40:25,720 Speaker 1: dad outside of our office twice coming in and out 1512 01:40:25,760 --> 01:40:29,280 Speaker 1: of our office in Midtown and in the you know, 1513 01:40:29,320 --> 01:40:32,559 Speaker 1: in the nineties, was mugged in broad daylight. And I'm thinking, Wow, 1514 01:40:32,640 --> 01:40:34,960 Speaker 1: this is what a city, you know. And I was 1515 01:40:35,000 --> 01:40:38,400 Speaker 1: just thinking about sort of what other components that kind 1516 01:40:38,439 --> 01:40:42,519 Speaker 1: of went into that, And so I I just read 1517 01:40:42,600 --> 01:40:46,000 Speaker 1: a book called The Club King and it was by 1518 01:40:46,200 --> 01:40:49,800 Speaker 1: Peter Gaddion, who is the you know, had all these 1519 01:40:50,240 --> 01:40:53,320 Speaker 1: nightclubs and you know, sort of competing with Studio fifty 1520 01:40:53,360 --> 01:40:55,920 Speaker 1: four and all that, and and what the culture behind 1521 01:40:56,000 --> 01:40:59,439 Speaker 1: that and the limelight was fascinating read. And then the 1522 01:40:59,479 --> 01:41:03,280 Speaker 1: book I'm almost done with now is called The History 1523 01:41:03,320 --> 01:41:06,840 Speaker 1: of St. Mark's. And you've ever been to Manhattan the 1524 01:41:06,960 --> 01:41:11,639 Speaker 1: block it's like a three or four block um uh 1525 01:41:12,360 --> 01:41:16,880 Speaker 1: from Astor Place to Tompkins Square Park where the riots 1526 01:41:16,920 --> 01:41:20,599 Speaker 1: were in the late eighties, and just the eclectic nature 1527 01:41:20,640 --> 01:41:22,240 Speaker 1: of it. And if you ever want to feel for 1528 01:41:22,680 --> 01:41:26,920 Speaker 1: like what New York was, although less so now because 1529 01:41:26,960 --> 01:41:30,360 Speaker 1: it's gentrified, but that's where it was. It was gritty 1530 01:41:30,720 --> 01:41:34,559 Speaker 1: and I just love I just love that about New York. 1531 01:41:34,680 --> 01:41:36,720 Speaker 1: So any kind of history of New York and this 1532 01:41:36,920 --> 01:41:40,040 Speaker 1: was this book is called The Death of Saint Mark's Place, 1533 01:41:40,800 --> 01:41:45,360 Speaker 1: um speaking of gentrification over an alphabet city near there 1534 01:41:46,240 --> 01:41:49,760 Speaker 1: a B, C, D is white got its name. The 1535 01:41:49,880 --> 01:41:53,640 Speaker 1: gentrification used to be in on Avenue A. Has it 1536 01:41:53,920 --> 01:42:00,639 Speaker 1: penetrated to Avenue see dely, it's completely gentrified. Um sort 1537 01:42:00,640 --> 01:42:04,240 Speaker 1: of uh. I remember, you know when they had to 1538 01:42:04,360 --> 01:42:08,160 Speaker 1: close Tompkins Square Park because I remember one time daring 1539 01:42:08,280 --> 01:42:11,640 Speaker 1: myself to walk through it and it was literally, you know, 1540 01:42:11,800 --> 01:42:15,680 Speaker 1: junkies and homeless and gangs. I mean it was just 1541 01:42:15,800 --> 01:42:19,880 Speaker 1: like in the movies. It was um uh and and 1542 01:42:20,560 --> 01:42:23,439 Speaker 1: you know, just going in that area was a little 1543 01:42:23,560 --> 01:42:27,160 Speaker 1: rough and um. I remember there was a new conversion 1544 01:42:28,080 --> 01:42:31,200 Speaker 1: h called Christo Dora House, which is on the Avenue 1545 01:42:31,320 --> 01:42:35,240 Speaker 1: B on the eastern side of Tompkins Square Park. And 1546 01:42:35,360 --> 01:42:38,240 Speaker 1: the Kristen Dora House is infamous in sort of local 1547 01:42:38,280 --> 01:42:41,160 Speaker 1: New York circles because of all the protests outside of 1548 01:42:41,200 --> 01:42:44,479 Speaker 1: it because it was a more affluent although relative to 1549 01:42:44,560 --> 01:42:48,599 Speaker 1: today's prices, you know, it was a deal. But where 1550 01:42:48,600 --> 01:42:51,200 Speaker 1: they spray painted on the front door, die yet scumb 1551 01:42:51,479 --> 01:42:56,280 Speaker 1: And that phraseology became like the mantra of sort of 1552 01:42:56,360 --> 01:43:02,000 Speaker 1: the anti uh gentrification moved in. Um and so many 1553 01:43:02,080 --> 01:43:05,360 Speaker 1: houses are buildings in that you know, I remember doing 1554 01:43:05,600 --> 01:43:09,800 Speaker 1: you know, appraisals in a kindo co op conversion and 1555 01:43:10,360 --> 01:43:13,360 Speaker 1: modest place, and across the street. You know, it's it's 1556 01:43:13,400 --> 01:43:18,360 Speaker 1: all um, you know, people basically camping out in an 1557 01:43:18,439 --> 01:43:22,200 Speaker 1: abandoned house. And eventually many of these were acquired by 1558 01:43:22,280 --> 01:43:25,000 Speaker 1: the squatters. I had a friend I met a friend 1559 01:43:25,040 --> 01:43:28,080 Speaker 1: of mine or a class colleague. We weren't that close 1560 01:43:28,120 --> 01:43:30,040 Speaker 1: in high school, but in I grew up in d C. 1561 01:43:31,320 --> 01:43:35,479 Speaker 1: And uh, he was like one of these people that 1562 01:43:35,840 --> 01:43:38,760 Speaker 1: ended up like taking control of an abandoned building and 1563 01:43:38,880 --> 01:43:43,360 Speaker 1: then selling it with his buddies and like never has 1564 01:43:43,400 --> 01:43:48,080 Speaker 1: to work again, absolutely insane. Let me get let me 1565 01:43:48,120 --> 01:43:50,400 Speaker 1: get to the last two questions before I run out 1566 01:43:50,439 --> 01:43:53,600 Speaker 1: of time. What sort of advice would you give to 1567 01:43:53,680 --> 01:43:57,679 Speaker 1: a recent college grad who was interested in a career 1568 01:43:57,960 --> 01:44:02,559 Speaker 1: in the real estate industry. Well, if it's the appraisal industry, 1569 01:44:02,960 --> 01:44:07,519 Speaker 1: I at this point would say, hold on before you 1570 01:44:07,600 --> 01:44:11,640 Speaker 1: go this, just because it's it's uh, you know, in 1571 01:44:11,760 --> 01:44:15,519 Speaker 1: the generic sort of mortgage world, it's dying of flow death. 1572 01:44:15,880 --> 01:44:19,200 Speaker 1: In especialty world, like what we do, it's you know, 1573 01:44:19,280 --> 01:44:22,080 Speaker 1: I feel very competent for a long you know, there's 1574 01:44:22,080 --> 01:44:26,320 Speaker 1: always a niche that is hard to automate. UM. In 1575 01:44:26,520 --> 01:44:30,559 Speaker 1: terms of the real estate industry, UM, you know when 1576 01:44:30,600 --> 01:44:33,600 Speaker 1: we think of that, we think of brokerage. Uh. You know, 1577 01:44:33,680 --> 01:44:36,560 Speaker 1: it's like anything like professional athletes you have you know, 1578 01:44:37,200 --> 01:44:43,360 Speaker 1: the top makes of the money and um. And so 1579 01:44:43,479 --> 01:44:46,000 Speaker 1: the goal is to you know, get to that cycle 1580 01:44:46,120 --> 01:44:47,920 Speaker 1: and you know, do you want to do that? UM. 1581 01:44:48,400 --> 01:44:53,200 Speaker 1: I'm finding that the there's a lot more people coming 1582 01:44:53,240 --> 01:44:57,400 Speaker 1: out of college and you know that coming into this 1583 01:44:58,280 --> 01:45:02,479 Speaker 1: uh industry. Then ever before you know, the stereotype is 1584 01:45:02,600 --> 01:45:06,600 Speaker 1: like you know, suburbanites that are you know, board and 1585 01:45:06,760 --> 01:45:10,080 Speaker 1: want to do sell. Um, you sell real estate on 1586 01:45:10,160 --> 01:45:13,479 Speaker 1: the side or it's always a side gig. And I 1587 01:45:13,560 --> 01:45:17,599 Speaker 1: think it's one of those professions where and I'm I'm 1588 01:45:17,920 --> 01:45:23,240 Speaker 1: probably I think I'm right. Point nine of the real 1589 01:45:23,360 --> 01:45:28,280 Speaker 1: estate brokers in America today did not think about being 1590 01:45:28,320 --> 01:45:30,840 Speaker 1: a real estate broker until the opportunity presented itself that 1591 01:45:30,920 --> 01:45:33,720 Speaker 1: they didn't, you know, in high school or college say boy, 1592 01:45:33,800 --> 01:45:36,080 Speaker 1: this is what I want to do. It's always by 1593 01:45:36,120 --> 01:45:41,240 Speaker 1: accident and uh. And you know, so maybe if you're 1594 01:45:41,280 --> 01:45:44,960 Speaker 1: one of those people, something to think about. It is fascinating. 1595 01:45:45,080 --> 01:45:49,799 Speaker 1: Membership in the n A R fluctuates with the performance 1596 01:45:49,840 --> 01:45:52,400 Speaker 1: of the housing market. You know, it's you know, it's 1597 01:45:52,560 --> 01:45:55,599 Speaker 1: it's up I should know, but I don't. But it's 1598 01:45:55,640 --> 01:45:59,240 Speaker 1: somewhere like a million four million five membership and during 1599 01:45:59,280 --> 01:46:01,680 Speaker 1: the financial cry since it was like down you know, 1600 01:46:02,040 --> 01:46:03,840 Speaker 1: right at a million or you know, just a hair 1601 01:46:04,000 --> 01:46:07,120 Speaker 1: under it. So it's there's tremendous like upward and downward 1602 01:46:07,240 --> 01:46:10,560 Speaker 1: because you're living on your living and breathing on a 1603 01:46:10,680 --> 01:46:14,519 Speaker 1: hundred percent commission. And that's not for everybody, and some 1604 01:46:14,680 --> 01:46:17,080 Speaker 1: people have a knack for it and make a lot 1605 01:46:17,160 --> 01:46:21,759 Speaker 1: of money. Um, you know, nine digit, eight digit numbers, 1606 01:46:22,680 --> 01:46:27,559 Speaker 1: I mean, amazing numbers. But that's the exception, not the rule. 1607 01:46:27,920 --> 01:46:30,760 Speaker 1: And our final question, what do you know about the 1608 01:46:30,840 --> 01:46:34,240 Speaker 1: world of housing today that you wish you knew thirty 1609 01:46:34,320 --> 01:46:37,360 Speaker 1: four years or so ago when you were first getting started? 1610 01:46:38,080 --> 01:46:41,720 Speaker 1: Uh So, I think the first thing would be, uh 1611 01:46:42,760 --> 01:46:49,320 Speaker 1: is that um is that you uh you know, don't 1612 01:46:49,360 --> 01:46:52,479 Speaker 1: aspire to have a bigger rental apartment. I mean I'm 1613 01:46:52,640 --> 01:46:54,960 Speaker 1: clearly biased. I mean the you know, I work, I 1614 01:46:55,080 --> 01:46:58,280 Speaker 1: do my reports, you know for a real estate brokerage company. 1615 01:46:58,280 --> 01:47:00,720 Speaker 1: I'm surrounded with the brokers every day. But the one 1616 01:47:00,760 --> 01:47:04,439 Speaker 1: thing I really wish I had was sort of the 1617 01:47:05,439 --> 01:47:10,920 Speaker 1: more focus on saving money in my twenties, uh, and 1618 01:47:11,080 --> 01:47:13,800 Speaker 1: then and then buying something sooner. I didn't buy my 1619 01:47:13,920 --> 01:47:18,080 Speaker 1: first house still about thirty six because I lived in 1620 01:47:18,160 --> 01:47:22,080 Speaker 1: the city and you know, I couldn't afford houses until 1621 01:47:22,160 --> 01:47:25,240 Speaker 1: I moved out to the suburbs and um, and then 1622 01:47:25,360 --> 01:47:27,400 Speaker 1: have traded up from there. So I really wish that 1623 01:47:27,479 --> 01:47:30,760 Speaker 1: I had been a little bit more goal ariented on 1624 01:47:30,960 --> 01:47:34,720 Speaker 1: that earlier on I realized later now part of it 1625 01:47:34,920 --> 01:47:38,080 Speaker 1: was starting a business put every all the money we 1626 01:47:38,200 --> 01:47:40,800 Speaker 1: had back into it. But the money I was putting 1627 01:47:40,800 --> 01:47:43,360 Speaker 1: into rent, I wish I had I thought about a 1628 01:47:43,439 --> 01:47:48,200 Speaker 1: little bit differently. UM. I like to say that my 1629 01:47:48,439 --> 01:47:51,840 Speaker 1: I have four boys. They're all adults, you know, twenty 1630 01:47:51,920 --> 01:47:56,880 Speaker 1: two to thirty two years old, and my three oldest 1631 01:47:56,960 --> 01:48:01,880 Speaker 1: all have houses. So you didn't that age I didn't. 1632 01:48:01,960 --> 01:48:05,080 Speaker 1: I mean they all beat me by you know, uh, 1633 01:48:05,320 --> 01:48:08,600 Speaker 1: you know, seven eight years and I thought that I 1634 01:48:08,680 --> 01:48:11,720 Speaker 1: didn't want to and I could see the moment, but 1635 01:48:12,120 --> 01:48:14,880 Speaker 1: you know, starting my own business and you know, not 1636 01:48:15,080 --> 01:48:18,960 Speaker 1: just me with my family. Um, and uh, you know, 1637 01:48:19,200 --> 01:48:21,800 Speaker 1: paying too much for rent and having a nice place 1638 01:48:21,880 --> 01:48:24,519 Speaker 1: to rent. I think you know set me back at 1639 01:48:24,920 --> 01:48:29,400 Speaker 1: Tener Tener fifteen years we have been speaking with Jonathan Miller. 1640 01:48:29,479 --> 01:48:33,200 Speaker 1: He is the founder and CEO of Miller Samuel. If 1641 01:48:33,280 --> 01:48:37,160 Speaker 1: you enjoy this conversation, check out our previous four hundred 1642 01:48:37,280 --> 01:48:41,560 Speaker 1: or so other discussions. You can find those at iTunes, Spotify, 1643 01:48:42,160 --> 01:48:46,080 Speaker 1: wherever final podcasts are sold. We love your comments, feedback 1644 01:48:46,120 --> 01:48:50,200 Speaker 1: and suggestions right to us at m IB podcast at 1645 01:48:50,240 --> 01:48:53,920 Speaker 1: Bloomberg dot net. You can sign up from my daily 1646 01:48:54,000 --> 01:48:56,920 Speaker 1: reads at results dot com. Check out my weekly column 1647 01:48:57,040 --> 01:49:01,120 Speaker 1: on Bloomberg dot com slash Opinion. Follow on Twitter at Ritholtz. 1648 01:49:01,280 --> 01:49:03,960 Speaker 1: I would be remiss if I did not thank the 1649 01:49:04,040 --> 01:49:07,880 Speaker 1: Craps staff that helps with these conversations together each week. 1650 01:49:08,520 --> 01:49:12,680 Speaker 1: Tim Harrow is my audio engineer at Tiko. Valbron is 1651 01:49:12,720 --> 01:49:16,000 Speaker 1: our project manager. Michael Batnick is my head of research. 1652 01:49:16,200 --> 01:49:20,880 Speaker 1: Michael Boyle is our producer. I'm Battery Ritolts. You've been 1653 01:49:20,960 --> 01:49:24,400 Speaker 1: listening to Mastor's in Business on Bloomberg regular