1 00:00:10,080 --> 00:00:13,360 Speaker 1: Hello, and welcome to another episode of the Odd Thoughts Podcast. 2 00:00:13,520 --> 00:00:14,840 Speaker 1: I'm Tracy Alloway. 3 00:00:14,720 --> 00:00:15,880 Speaker 2: And I'm Joe Wisenthal. 4 00:00:16,079 --> 00:00:18,959 Speaker 1: Joe, do you remember this time last year some of 5 00:00:19,000 --> 00:00:21,200 Speaker 1: the discourse around the housing market. 6 00:00:21,320 --> 00:00:21,880 Speaker 2: Yeah, of course. 7 00:00:21,920 --> 00:00:24,200 Speaker 3: I mean this was like really like when people were 8 00:00:24,239 --> 00:00:26,560 Speaker 3: like waking up to these sort of like eye popping 9 00:00:26,640 --> 00:00:29,880 Speaker 3: mortgage rates, at least by recent standards, you know, zoom out. 10 00:00:29,880 --> 00:00:31,640 Speaker 3: Maybe not that high, but by recent standard, like, oh, 11 00:00:31,680 --> 00:00:36,440 Speaker 3: this is it. Housing is sort of over crash. Prices plunge, 12 00:00:36,560 --> 00:00:37,279 Speaker 3: We're back. 13 00:00:37,479 --> 00:00:41,000 Speaker 1: That's exactly it. So we had a really historic run 14 00:00:41,120 --> 00:00:45,240 Speaker 1: up in benchmark interest rates and those were translating into 15 00:00:45,440 --> 00:00:48,720 Speaker 1: higher mortgage rates, and everyone thought that this was going 16 00:00:48,760 --> 00:00:52,480 Speaker 1: to lead to a you know in some people thought 17 00:00:52,760 --> 00:00:55,920 Speaker 1: it would be a house price collapse. Others thought it 18 00:00:55,960 --> 00:01:00,760 Speaker 1: would be some sort of impact, something signific one way 19 00:01:00,840 --> 00:01:05,160 Speaker 1: or the other. And yet fast forward twelve months. I'm 20 00:01:05,160 --> 00:01:08,560 Speaker 1: looking at the case, Chiller intokes. We had like a 21 00:01:08,680 --> 00:01:13,479 Speaker 1: tiny dip, you know, relatively small going into the end 22 00:01:13,480 --> 00:01:16,320 Speaker 1: of last year, and now house prices are rising again. 23 00:01:16,440 --> 00:01:20,160 Speaker 3: We basically hit like the shortest housing bear market ever. 24 00:01:20,480 --> 00:01:24,200 Speaker 3: We did really tiny dipping prices. Every index you mentioned, 25 00:01:24,240 --> 00:01:26,840 Speaker 3: I saw some other one just yesterday, like one of 26 00:01:26,920 --> 00:01:29,800 Speaker 3: those like National like Freddy Ones. I don't know, that's 27 00:01:29,880 --> 00:01:33,360 Speaker 3: like rocketing up again. Obviously we know that like the 28 00:01:33,440 --> 00:01:36,119 Speaker 3: homebuilders sort of like slammed the brake. So it's like, okay, 29 00:01:36,160 --> 00:01:40,520 Speaker 3: here's prices following buyers drop out, homebuilders get crushed, their 30 00:01:40,560 --> 00:01:42,360 Speaker 3: stocks are is we've been talking about on a bunch 31 00:01:42,360 --> 00:01:44,920 Speaker 3: of recent episodes. They're like basically at all time high. 32 00:01:44,959 --> 00:01:49,120 Speaker 3: So somehow this huge repricing of mortgages did not cause 33 00:01:49,160 --> 00:01:52,560 Speaker 3: the housing bear market that many but not everyone expected. 34 00:01:52,800 --> 00:01:55,320 Speaker 1: Yeah, and I mean it's bad news if you were 35 00:01:55,520 --> 00:01:58,520 Speaker 1: hoping that house prices would collapse that you could finally 36 00:01:58,720 --> 00:02:02,640 Speaker 1: enter the market, news if you are a homeowner potentially. 37 00:02:03,240 --> 00:02:07,280 Speaker 1: But anyway, you remember we talked to a guest last year, 38 00:02:07,360 --> 00:02:10,880 Speaker 1: I think it was last October, and the idea is basically, 39 00:02:11,400 --> 00:02:15,360 Speaker 1: we were getting this really weird housing market with rates 40 00:02:15,400 --> 00:02:19,000 Speaker 1: going up, but house price is actually not that vulnerable 41 00:02:19,040 --> 00:02:21,600 Speaker 1: to a decline. And I think that scenario has more 42 00:02:21,680 --> 00:02:22,640 Speaker 1: or less panned. 43 00:02:22,400 --> 00:02:25,680 Speaker 3: Out totally and it's been the theme of a few episodes, 44 00:02:25,720 --> 00:02:29,040 Speaker 3: but it is totally true. Which is that a precondition 45 00:02:29,240 --> 00:02:32,840 Speaker 3: so to speak of like a real housing downturn is 46 00:02:32,919 --> 00:02:36,799 Speaker 3: unemployment and the existence of forced sellers, and so it's 47 00:02:36,840 --> 00:02:39,240 Speaker 3: not a very good time to buy. But also very 48 00:02:39,280 --> 00:02:41,800 Speaker 3: few people are forced sellers other than I think we 49 00:02:41,960 --> 00:02:44,320 Speaker 3: like talked about, you know, their divorces and things like that, 50 00:02:44,960 --> 00:02:47,400 Speaker 3: or people who have to move for their work. And 51 00:02:47,560 --> 00:02:50,880 Speaker 3: you know, this has manifested itself, not just in firm prices, 52 00:02:51,080 --> 00:02:54,240 Speaker 3: but like no housing inventory, and the people who track 53 00:02:54,360 --> 00:02:57,280 Speaker 3: levels of housing inventory, it's like record lows are close 54 00:02:57,320 --> 00:02:59,959 Speaker 3: to it. And so yeah, demand has dropped with high 55 00:03:00,160 --> 00:03:03,519 Speaker 3: high mortgage raise, but so is supply and you get 56 00:03:03,520 --> 00:03:04,799 Speaker 3: your price stability. 57 00:03:05,000 --> 00:03:05,440 Speaker 2: That's right. 58 00:03:05,560 --> 00:03:08,160 Speaker 1: So on this episode, I am very pleased to say 59 00:03:08,240 --> 00:03:11,080 Speaker 1: we're going to be doing a checkup of the weird 60 00:03:11,240 --> 00:03:13,800 Speaker 1: housing market. Let's put it that way. We're going to 61 00:03:13,800 --> 00:03:16,080 Speaker 1: be speaking again with Jim Egan. He is, of course 62 00:03:16,320 --> 00:03:19,960 Speaker 1: the US housing strategist over at Morgan Stanley. So, Jim, 63 00:03:20,160 --> 00:03:22,040 Speaker 1: thank you so much for coming back on all thoughts. 64 00:03:22,280 --> 00:03:24,000 Speaker 2: Thank you for having me back. It's a pleasure to 65 00:03:24,000 --> 00:03:24,280 Speaker 2: be here. 66 00:03:24,760 --> 00:03:28,119 Speaker 1: So since we last spoke, I've been following your research 67 00:03:28,280 --> 00:03:32,680 Speaker 1: and your thesis when we spoke was this idea of 68 00:03:32,960 --> 00:03:38,280 Speaker 1: basically a subdued impact on house prices, maybe less housing 69 00:03:38,360 --> 00:03:42,800 Speaker 1: activity itself. Since then, you've sort of ratcheted down your 70 00:03:42,840 --> 00:03:46,080 Speaker 1: expectations for house prices and then ratcheted them back up, 71 00:03:46,200 --> 00:03:49,080 Speaker 1: not by a huge degree, I should say, but walk 72 00:03:49,160 --> 00:03:52,040 Speaker 1: us through what the past ten months or eight months 73 00:03:52,120 --> 00:03:54,960 Speaker 1: or so have been like from your perspective, trying to 74 00:03:55,000 --> 00:03:56,160 Speaker 1: gauge what's going on here? 75 00:03:56,960 --> 00:03:59,040 Speaker 2: Right, So, I think you two both brought up a 76 00:03:59,040 --> 00:04:02,160 Speaker 2: lot of kind of the key underlying points for how 77 00:04:02,200 --> 00:04:05,160 Speaker 2: we think about the housing market, our general framework, we 78 00:04:05,320 --> 00:04:07,280 Speaker 2: like to call it our four pillared framework, where we're 79 00:04:07,280 --> 00:04:11,280 Speaker 2: talking about demand for shelter, supply of shelter, the affordability 80 00:04:11,320 --> 00:04:14,600 Speaker 2: of the US housing market, and the availability of mortgage credit. 81 00:04:15,000 --> 00:04:17,320 Speaker 2: But a lot of what's been going on has been 82 00:04:17,360 --> 00:04:22,000 Speaker 2: this kind of juxtaposition between supply and affordability. Mortgage rates 83 00:04:22,080 --> 00:04:26,320 Speaker 2: move incredibly higher, and we see affordability deteriorate at a 84 00:04:26,360 --> 00:04:29,479 Speaker 2: pace unlike anything that we've ever really seen in twenty 85 00:04:29,520 --> 00:04:33,120 Speaker 2: twenty two. But the key question to ask on the 86 00:04:33,120 --> 00:04:37,360 Speaker 2: back of that is who's affordability actually just deteriorated. And 87 00:04:37,560 --> 00:04:39,720 Speaker 2: the structure of the mortgage market this time around is 88 00:04:39,800 --> 00:04:44,400 Speaker 2: such that you have what we'll call strong hands, a 89 00:04:44,440 --> 00:04:47,000 Speaker 2: lot of homeowners were able to either buy their home 90 00:04:47,120 --> 00:04:49,919 Speaker 2: or refinance their mortgage at record low rates, and so 91 00:04:50,040 --> 00:04:53,600 Speaker 2: they have these thirty year fixed rate mortgages where they're 92 00:04:53,600 --> 00:04:57,520 Speaker 2: just incentivized not to list their home for sale. And so, Joe, 93 00:04:57,520 --> 00:05:00,880 Speaker 2: you mentioned that inventories are close to historic. We have 94 00:05:00,960 --> 00:05:03,920 Speaker 2: existing listings going back over forty years, and we're pretty 95 00:05:03,960 --> 00:05:06,880 Speaker 2: much at the lows right now. And so if you 96 00:05:07,000 --> 00:05:11,640 Speaker 2: don't have those homes listed for sale, then all of 97 00:05:11,640 --> 00:05:16,000 Speaker 2: a sudden, despite the fact that affordability might theoretically warrant 98 00:05:16,040 --> 00:05:19,760 Speaker 2: lower home prices, homeowners aren't willing to sell or they're 99 00:05:19,800 --> 00:05:23,320 Speaker 2: not forced to sell into those lower home prices that 100 00:05:23,360 --> 00:05:25,640 Speaker 2: affordability might theoretically warrant. 101 00:05:25,920 --> 00:05:29,680 Speaker 3: Of the inventory that exists, how much of it is 102 00:05:29,960 --> 00:05:32,320 Speaker 3: people who are selling for some reason or another. Because 103 00:05:32,320 --> 00:05:36,040 Speaker 3: there's some selling, it's none versus the role of new supplies. 104 00:05:36,040 --> 00:05:37,960 Speaker 3: So basically new homes. 105 00:05:38,400 --> 00:05:40,400 Speaker 2: When we think of inventory, we break it down across 106 00:05:40,600 --> 00:05:44,000 Speaker 2: three lines, right, existing listings, new home builds, and then 107 00:05:44,040 --> 00:05:46,240 Speaker 2: you have kind of what we call the shadow inventory. 108 00:05:46,440 --> 00:05:49,800 Speaker 2: This is distressed this is your forced sellers, this is foreclosures. Right, 109 00:05:49,839 --> 00:05:51,920 Speaker 2: We're going to put that to the side for this conversation, 110 00:05:52,000 --> 00:05:55,359 Speaker 2: because we do think that mortgage credit standards that fourth pillar. 111 00:05:55,640 --> 00:05:58,320 Speaker 2: They've been so robust, they've remained so tight in the 112 00:05:58,360 --> 00:06:00,919 Speaker 2: aftermath of the Great Financial Crisis, that we just don't 113 00:06:00,960 --> 00:06:05,800 Speaker 2: necessarily see a substantial increase in defaults and foreclosures coming 114 00:06:06,080 --> 00:06:08,720 Speaker 2: now from a new home sales perspective versus an existing 115 00:06:08,720 --> 00:06:11,719 Speaker 2: home sales perspective, a new listing's perspective versus an existing 116 00:06:11,720 --> 00:06:16,160 Speaker 2: listings perspective, this is still largely going to be an 117 00:06:16,240 --> 00:06:21,080 Speaker 2: existing listings market right new home sales. One of the 118 00:06:21,160 --> 00:06:23,360 Speaker 2: characteristics over the past six months of this year has 119 00:06:23,360 --> 00:06:25,760 Speaker 2: been the fact that new home sales have made up 120 00:06:25,760 --> 00:06:29,960 Speaker 2: a larger percentage of total transaction volumes since two thousand 121 00:06:30,000 --> 00:06:34,520 Speaker 2: and six versus existing However, that just means they've climbed 122 00:06:34,560 --> 00:06:37,679 Speaker 2: back to about twenty percent of transaction volumes, So existing 123 00:06:37,680 --> 00:06:41,560 Speaker 2: listings are still call it, eighty percent of those monthly transactions, 124 00:06:41,600 --> 00:06:44,640 Speaker 2: even if those listings are kind of running at forty 125 00:06:44,720 --> 00:06:45,159 Speaker 2: year lows. 126 00:06:45,920 --> 00:06:48,800 Speaker 1: So one of the interesting things that's happened in recent 127 00:06:48,839 --> 00:06:52,680 Speaker 1: months is the home builders seem to have really ramped 128 00:06:52,800 --> 00:06:55,640 Speaker 1: up activity, which is somewhat unusual because you would assume 129 00:06:55,640 --> 00:06:58,920 Speaker 1: with interest rates going up, their cost of capital would 130 00:06:59,000 --> 00:07:03,120 Speaker 1: be increasing, and yet it seems that supply is still 131 00:07:03,160 --> 00:07:06,080 Speaker 1: so tight that everyone wants to get in on building 132 00:07:06,120 --> 00:07:09,239 Speaker 1: new houses. How big of a surprise has that been 133 00:07:09,279 --> 00:07:14,000 Speaker 1: for you? And would you expect the new home building 134 00:07:14,200 --> 00:07:17,080 Speaker 1: response to moderate at some point? 135 00:07:17,520 --> 00:07:19,520 Speaker 2: So I think if we take a little bit of 136 00:07:19,560 --> 00:07:21,800 Speaker 2: a step back and look at the total starts figures, 137 00:07:21,840 --> 00:07:23,560 Speaker 2: because I agree, if we look at some of the 138 00:07:23,560 --> 00:07:26,160 Speaker 2: housing data that's come across in the past month, the 139 00:07:26,200 --> 00:07:29,400 Speaker 2: past two months, I'd say that the three data points 140 00:07:29,560 --> 00:07:32,800 Speaker 2: if you wanted to grab an optimistic housing view, would 141 00:07:32,800 --> 00:07:35,240 Speaker 2: be do home sales? Wait, what's optimistic? 142 00:07:35,680 --> 00:07:38,400 Speaker 3: Yeah, I don't even I don't even know what the 143 00:07:38,400 --> 00:07:39,880 Speaker 3: optimistic side is anymore. 144 00:07:40,040 --> 00:07:42,320 Speaker 2: That's a good question, I guess if you want to 145 00:07:42,360 --> 00:07:44,440 Speaker 2: say that we're going to enter I don't even want 146 00:07:44,480 --> 00:07:47,960 Speaker 2: to call it a V shaped recovery, but a significant 147 00:07:48,000 --> 00:07:51,160 Speaker 2: increase in housing activity and then potentially even an increase 148 00:07:51,200 --> 00:07:54,120 Speaker 2: in home prices on the back of that, as opposed 149 00:07:54,160 --> 00:07:56,960 Speaker 2: to maybe an L shape. Have we found the bottom 150 00:07:57,000 --> 00:08:00,840 Speaker 2: and we're moving or another leg down? Okay, So if 151 00:08:00,840 --> 00:08:04,640 Speaker 2: you wanted to grab a we're entering a recovery activity? 152 00:08:04,720 --> 00:08:07,080 Speaker 2: Is going to increase. Sales and starts are going to increase, 153 00:08:07,200 --> 00:08:09,000 Speaker 2: Prices are going to increase. By the way, these are 154 00:08:09,000 --> 00:08:11,720 Speaker 2: not our forecasts. You would grab new home sales, you 155 00:08:11,760 --> 00:08:14,400 Speaker 2: would grab housing starts, and you would grab home builder confidence. Right, 156 00:08:14,400 --> 00:08:16,760 Speaker 2: those are the ones that have been increasing. I mentioned 157 00:08:16,800 --> 00:08:19,440 Speaker 2: already new home sales making up a larger share of 158 00:08:19,480 --> 00:08:22,320 Speaker 2: transactions than really any point since two thousand and six 159 00:08:22,400 --> 00:08:25,920 Speaker 2: to begin this year, that we think, in part is 160 00:08:26,040 --> 00:08:29,240 Speaker 2: helping home builder confidence increase. It's climbed every single month 161 00:08:29,520 --> 00:08:31,320 Speaker 2: for the first six months of this year after falling 162 00:08:31,600 --> 00:08:34,480 Speaker 2: in every single month with twenty twenty two. But one 163 00:08:34,520 --> 00:08:36,360 Speaker 2: thing that we would say here is a growth in 164 00:08:36,440 --> 00:08:40,880 Speaker 2: new home sales is not necessarily indicative of a growth 165 00:08:40,920 --> 00:08:45,839 Speaker 2: in the overall demand for shelter. That housing starts number, 166 00:08:46,440 --> 00:08:47,880 Speaker 2: we think we have to take a step back and 167 00:08:47,920 --> 00:08:50,559 Speaker 2: look at it in terms of single unit and multi unit. Right, 168 00:08:50,640 --> 00:08:54,040 Speaker 2: single unit starts have historically made up call it, seventy 169 00:08:54,080 --> 00:08:57,120 Speaker 2: to eighty percent of that number. They're a slightly smaller 170 00:08:57,120 --> 00:08:59,040 Speaker 2: share of that total number now, as multi unit has 171 00:08:59,040 --> 00:09:01,840 Speaker 2: made up a bigger share from peak in this cycle. 172 00:09:02,000 --> 00:09:04,719 Speaker 2: In April of twenty twenty two, single unit starts are 173 00:09:04,720 --> 00:09:08,880 Speaker 2: down over twenty percent now. The rate of that decline 174 00:09:08,920 --> 00:09:11,959 Speaker 2: has slowed in recent months, and one of the reasons 175 00:09:11,960 --> 00:09:14,640 Speaker 2: that we think that builders are also turning a little 176 00:09:14,640 --> 00:09:17,800 Speaker 2: bit more optimistic is the backlog of homes under construction 177 00:09:17,840 --> 00:09:21,480 Speaker 2: has been able to clear that built throughout last year 178 00:09:21,920 --> 00:09:25,840 Speaker 2: supply chain issues related to the pandemic labor constraints. It 179 00:09:25,920 --> 00:09:29,400 Speaker 2: just took longer to finish homes. As starts have come down. 180 00:09:29,559 --> 00:09:32,280 Speaker 2: Units under construction have come down from peak. Units under 181 00:09:32,280 --> 00:09:34,400 Speaker 2: construction are down about one hundred and twenty five one 182 00:09:34,440 --> 00:09:38,040 Speaker 2: hundred and thirty thousand units. That's not the case on 183 00:09:38,120 --> 00:09:41,600 Speaker 2: the five plus unit construction side. Units under construction continue 184 00:09:41,640 --> 00:09:46,040 Speaker 2: to grow and the numbers that have beat expectations recently. 185 00:09:46,480 --> 00:09:48,320 Speaker 2: We still think that multi unit is driving the bus. 186 00:09:48,320 --> 00:09:48,560 Speaker 3: There. 187 00:09:49,040 --> 00:09:52,360 Speaker 2: May of this year, remove all seasonal adjustments. May of 188 00:09:52,400 --> 00:09:55,000 Speaker 2: this year we saw more five plus unit starts than 189 00:09:55,040 --> 00:09:57,560 Speaker 2: any month since nineteen eighty six. Wow. 190 00:09:58,400 --> 00:10:01,240 Speaker 3: I think it was this conversation that we had last year, 191 00:10:01,280 --> 00:10:03,200 Speaker 3: and I learned like a bunch of terms that I 192 00:10:03,200 --> 00:10:06,800 Speaker 3: had only pretended to know before, like headship raids and 193 00:10:06,840 --> 00:10:09,360 Speaker 3: how you measure household formation. So I really appreciate you 194 00:10:09,520 --> 00:10:11,560 Speaker 3: I really appreciated that because I finally got to learn 195 00:10:11,920 --> 00:10:13,920 Speaker 3: a few things. But one of the things that we 196 00:10:14,000 --> 00:10:18,440 Speaker 3: did see, especially during the sort of like the pandemic boom, 197 00:10:18,440 --> 00:10:21,400 Speaker 3: weirdly enough the twenty twenty one the sort of surgeon 198 00:10:21,440 --> 00:10:25,520 Speaker 3: household formation, people leaving their roommates, people moving out of 199 00:10:25,559 --> 00:10:27,440 Speaker 3: you know, maybe moving out of their parents' house, like 200 00:10:27,480 --> 00:10:29,920 Speaker 3: the sort of like twenty tense cliche of like living 201 00:10:29,920 --> 00:10:32,600 Speaker 3: in your parents' basement, et cetera. What are we seeing 202 00:10:32,600 --> 00:10:35,400 Speaker 3: in like current trends of household formation. 203 00:10:36,960 --> 00:10:39,840 Speaker 2: I think that's one of the key questions to where 204 00:10:39,840 --> 00:10:43,280 Speaker 2: we're moving going forward. And I will caveat this by saying, 205 00:10:43,600 --> 00:10:47,280 Speaker 2: the data here is a little lagged. We are starting 206 00:10:47,360 --> 00:10:50,079 Speaker 2: to see it slow. Okay, for all the trends that 207 00:10:50,120 --> 00:10:53,760 Speaker 2: you just mentioned, household formation really increased over the course 208 00:10:53,800 --> 00:10:56,920 Speaker 2: of the past three years. If I was on this 209 00:10:56,960 --> 00:11:00,480 Speaker 2: podcast in twenty nineteen and we were talking about demographics, yeah, 210 00:11:00,480 --> 00:11:03,920 Speaker 2: and what they would have meant for household formation going forward, 211 00:11:04,280 --> 00:11:09,000 Speaker 2: we would have said that demographics warrant one point three 212 00:11:09,040 --> 00:11:11,680 Speaker 2: to one point four million formations per year for at 213 00:11:11,760 --> 00:11:15,040 Speaker 2: least the next five Okay, the last three years, we've 214 00:11:15,080 --> 00:11:18,120 Speaker 2: seen something closer to one point eight wow million. 215 00:11:18,320 --> 00:11:18,520 Speaker 1: Wow. 216 00:11:18,920 --> 00:11:21,520 Speaker 2: Yeah, you mentioned headship rates. If we don't think that 217 00:11:21,559 --> 00:11:24,680 Speaker 2: headship rates systemically should have moved higher, they certainly have 218 00:11:24,760 --> 00:11:27,040 Speaker 2: over the last three years. But if you don't think 219 00:11:27,040 --> 00:11:29,800 Speaker 2: that longer term they're moving higher, that means that we've 220 00:11:29,800 --> 00:11:33,000 Speaker 2: pulled forward. If our original numbers were somewhere close to correct, 221 00:11:33,280 --> 00:11:35,880 Speaker 2: call it one point two to one point five million households. 222 00:11:36,360 --> 00:11:37,120 Speaker 2: Just real quickly. 223 00:11:37,200 --> 00:11:39,080 Speaker 3: I know, I said I learned last year on the 224 00:11:39,120 --> 00:11:41,959 Speaker 3: podcast what headship rates are, and now I forget what's 225 00:11:42,000 --> 00:11:42,960 Speaker 3: a headship rate again? 226 00:11:43,160 --> 00:11:45,680 Speaker 2: So a head ship rate, when you look at the population, 227 00:11:45,800 --> 00:11:47,400 Speaker 2: you break it down by whatever cohorts you want to. 228 00:11:47,480 --> 00:11:49,440 Speaker 2: Let's just do it by age, okay, right. So a 229 00:11:49,440 --> 00:11:51,360 Speaker 2: headship rate is if you take everybody who's call it 230 00:11:51,400 --> 00:11:54,040 Speaker 2: twenty five to twenty nine years old. Picture At twenty 231 00:11:54,040 --> 00:11:56,000 Speaker 2: five year old, they're living in an apartment with three 232 00:11:56,040 --> 00:11:58,360 Speaker 2: other people, the headship rate of that very small four 233 00:11:58,360 --> 00:12:01,720 Speaker 2: person cohort twenty five percent. Right. If all of them 234 00:12:01,760 --> 00:12:04,040 Speaker 2: moved to their own apartments all of a sudden, you 235 00:12:04,120 --> 00:12:08,679 Speaker 2: have oh four people heading exactly, okay, right, And so 236 00:12:08,720 --> 00:12:12,000 Speaker 2: typically headship rates for that early to mid twenties, you're 237 00:12:12,040 --> 00:12:15,560 Speaker 2: talking twenty five ish percent, and through your late twenties 238 00:12:15,600 --> 00:12:18,000 Speaker 2: early to mid thirties they climbed to the fifty five 239 00:12:18,080 --> 00:12:18,800 Speaker 2: percent where. 240 00:12:18,600 --> 00:12:21,760 Speaker 3: They The household formation is a verb and headship rate 241 00:12:21,840 --> 00:12:24,040 Speaker 3: is a noun kind of or stock versus flow maybe 242 00:12:24,040 --> 00:12:25,880 Speaker 3: one way to think the stock versus full Okay. 243 00:12:25,720 --> 00:12:28,160 Speaker 1: Yes, so I realized I should have asked you this 244 00:12:28,360 --> 00:12:30,560 Speaker 1: directly at the beginning of the conversation. But what is 245 00:12:30,600 --> 00:12:32,720 Speaker 1: your base forecast for house prices? 246 00:12:32,880 --> 00:12:34,840 Speaker 2: Yes, and so you did talk about a little bit 247 00:12:34,840 --> 00:12:36,920 Speaker 2: of oscillation and what we were calling for. When I 248 00:12:36,960 --> 00:12:39,200 Speaker 2: came on in October, we had brought our end of 249 00:12:39,240 --> 00:12:42,240 Speaker 2: twenty twenty three number down to minus three percent year 250 00:12:42,240 --> 00:12:44,800 Speaker 2: over year. We have just raised that we're back to 251 00:12:45,440 --> 00:12:47,840 Speaker 2: flat zero point zero by the end of the year. 252 00:12:48,200 --> 00:12:51,320 Speaker 2: And that is despite the fact that we continue to 253 00:12:51,360 --> 00:12:54,360 Speaker 2: see in our forecasts a handful of months of negative 254 00:12:54,400 --> 00:12:57,040 Speaker 2: year over year prints. We just did so the case 255 00:12:57,040 --> 00:13:00,920 Speaker 2: Shiller number for June it's two months lagged. It's April data. 256 00:13:01,120 --> 00:13:03,280 Speaker 2: It's the first time they've turned negative year over year 257 00:13:03,600 --> 00:13:06,520 Speaker 2: since twenty twelve. We think that's going to be short lived. 258 00:13:06,559 --> 00:13:07,920 Speaker 2: It's going to be a couple months, it was only 259 00:13:07,920 --> 00:13:10,559 Speaker 2: about twenty four basis points negative, and we think by 260 00:13:10,559 --> 00:13:12,240 Speaker 2: the end of the year we're going to be back 261 00:13:12,240 --> 00:13:12,680 Speaker 2: to flat. 262 00:13:13,000 --> 00:13:15,360 Speaker 3: I just want to say when you when we hit 263 00:13:15,400 --> 00:13:17,400 Speaker 3: you on in October, you were there was an out 264 00:13:17,440 --> 00:13:17,839 Speaker 3: of content. 265 00:13:17,880 --> 00:13:18,760 Speaker 2: I mean, yeah, it was. 266 00:13:19,200 --> 00:13:21,160 Speaker 3: I think it was a lot of credits. 267 00:13:20,840 --> 00:13:23,079 Speaker 1: It got a lot of pushback, and then it turned 268 00:13:23,120 --> 00:13:24,360 Speaker 1: into the consensus space. 269 00:13:24,400 --> 00:13:27,520 Speaker 3: But like it really did, like at the time, this 270 00:13:27,640 --> 00:13:29,520 Speaker 3: was it was a real out of consensus called and 271 00:13:29,559 --> 00:13:31,280 Speaker 3: I think that we should like sort of take a 272 00:13:31,320 --> 00:13:33,920 Speaker 3: moment to recognize and that's you know, that's how I 273 00:13:33,960 --> 00:13:35,720 Speaker 3: have you back. But that was like at the time 274 00:13:35,800 --> 00:13:41,160 Speaker 3: you people must have thought you were crazy. 275 00:13:41,920 --> 00:13:45,760 Speaker 1: Listeners can't see Jim's face, but he's thinking how to 276 00:13:45,840 --> 00:13:47,960 Speaker 1: Reswand first. 277 00:13:47,720 --> 00:13:50,480 Speaker 2: Of all, thank you. There were certainly a lot of 278 00:13:50,520 --> 00:13:54,840 Speaker 2: conversations in the fourth quarter of last year that asked 279 00:13:54,960 --> 00:13:58,520 Speaker 2: why we weren't calling for home prices to fall further. Yeah, 280 00:13:58,640 --> 00:14:01,720 Speaker 2: I would say that you made the comment that it 281 00:14:01,760 --> 00:14:05,640 Speaker 2: moved towards consensus. It certainly did. And I don't think 282 00:14:05,840 --> 00:14:08,280 Speaker 2: that our zero percent call by the end of the 283 00:14:08,320 --> 00:14:13,040 Speaker 2: year is too far from consensus right now. 284 00:14:27,280 --> 00:14:30,920 Speaker 1: So what's the biggest wild card or risk factor in 285 00:14:30,960 --> 00:14:33,760 Speaker 1: your outlook at the moment, because I know you mentioned 286 00:14:33,760 --> 00:14:36,200 Speaker 1: that you have this sort of four pillar way of 287 00:14:36,280 --> 00:14:39,520 Speaker 1: looking at the housing market. I think the four factors 288 00:14:39,520 --> 00:14:44,480 Speaker 1: are supplied demand, affordability, and credit availability. And then there's 289 00:14:44,520 --> 00:14:49,400 Speaker 1: also this question of unemployment, which seems to be a 290 00:14:49,440 --> 00:14:53,240 Speaker 1: big one sort of hovering over the industry or the 291 00:14:53,280 --> 00:14:55,560 Speaker 1: market as a whole. So what are you looking at 292 00:14:55,560 --> 00:14:58,400 Speaker 1: as the biggest risk factor to your outlook, Tracy? 293 00:14:58,440 --> 00:15:00,920 Speaker 2: I think you mentioned a really good factor here from 294 00:15:01,000 --> 00:15:03,200 Speaker 2: the unemployment perspective, But I want to take a step 295 00:15:03,240 --> 00:15:06,000 Speaker 2: back and frame this in terms of the risks to 296 00:15:06,040 --> 00:15:08,040 Speaker 2: the call to the upside and the risks to the 297 00:15:08,040 --> 00:15:11,560 Speaker 2: call to the downside. We do think that if we're wrong, 298 00:15:11,760 --> 00:15:14,560 Speaker 2: it's because home prices ended up climbing more than we 299 00:15:14,600 --> 00:15:16,560 Speaker 2: expect by the end of the year. And we think 300 00:15:16,640 --> 00:15:21,120 Speaker 2: that because look, affordability still remains incredibly low, close to 301 00:15:21,200 --> 00:15:25,040 Speaker 2: multi decade lows. And so if you were to see 302 00:15:26,160 --> 00:15:30,320 Speaker 2: affordability start to improve, and perhaps it improves because maybe 303 00:15:30,320 --> 00:15:32,360 Speaker 2: we get more of a soft landing than we're expecting, 304 00:15:32,760 --> 00:15:35,720 Speaker 2: Maybe the labor market starts to slow down, doesn't necessarily 305 00:15:35,720 --> 00:15:39,280 Speaker 2: fall off a cliff. Maybe inflation really starts to slow down, 306 00:15:39,320 --> 00:15:40,720 Speaker 2: and all of a sudden you get a world in 307 00:15:40,760 --> 00:15:43,800 Speaker 2: which perhaps the Fed can start cutting earlier than people 308 00:15:43,840 --> 00:15:47,200 Speaker 2: expect rates start to come down. Affordability is largely a 309 00:15:47,200 --> 00:15:51,160 Speaker 2: three prong declaration. It's incomes, it's rates, and it's home prices. 310 00:15:51,640 --> 00:15:55,520 Speaker 2: And if rates start to come down, yes, affordability going 311 00:15:55,560 --> 00:15:57,360 Speaker 2: to be very difficult for that to get back to 312 00:15:57,400 --> 00:16:01,880 Speaker 2: where we were in the twenty twenty twenty twenty one timeframe. 313 00:16:02,600 --> 00:16:05,400 Speaker 2: But if people start seeing five and a half percent 314 00:16:05,440 --> 00:16:08,240 Speaker 2: mortgage rates as opposed to seven, that could bring more 315 00:16:08,240 --> 00:16:10,640 Speaker 2: people off the sidelines, and supply is still going to 316 00:16:10,680 --> 00:16:14,080 Speaker 2: be low. Jaybackau and our agency MBS team calculates something 317 00:16:14,080 --> 00:16:16,080 Speaker 2: called the truly Refinanciable Index, and I do think this 318 00:16:16,160 --> 00:16:19,160 Speaker 2: is one of the more important numbers in our forecast, 319 00:16:19,240 --> 00:16:22,400 Speaker 2: or at least interesting. It measures what percentage of the 320 00:16:22,440 --> 00:16:25,280 Speaker 2: mortgage universe has at least a twenty five basis point 321 00:16:25,280 --> 00:16:28,080 Speaker 2: incentive to refinance at any given point in time, given 322 00:16:28,120 --> 00:16:31,880 Speaker 2: where prevailing rates are. As we're sitting here today, it's 323 00:16:31,960 --> 00:16:35,680 Speaker 2: less than two percent of the universe. If mortgage rates 324 00:16:35,680 --> 00:16:38,360 Speaker 2: would rally all the way to four percent, that is 325 00:16:38,400 --> 00:16:41,320 Speaker 2: nowhere close to our forecasts by they if they get 326 00:16:41,360 --> 00:16:43,280 Speaker 2: to six percent by the middle of next year, we 327 00:16:43,320 --> 00:16:46,080 Speaker 2: think that would be roughly in line with expectations. They 328 00:16:46,360 --> 00:16:48,240 Speaker 2: might be higher than that. But if they get to 329 00:16:48,360 --> 00:16:52,760 Speaker 2: four percent, that truly refinancible index only climbs to twenty 330 00:16:52,840 --> 00:16:55,760 Speaker 2: one percent of the mortgage market. Seventy nine percent of 331 00:16:55,840 --> 00:16:58,480 Speaker 2: mortgage homeowners have a mortgage rate of three and a 332 00:16:58,520 --> 00:17:01,280 Speaker 2: half percent. They're not to be incentivized to list their 333 00:17:01,280 --> 00:17:03,480 Speaker 2: homes as these rates start to come down. So you 334 00:17:03,480 --> 00:17:06,400 Speaker 2: could get this demand reaction into what is still an 335 00:17:06,400 --> 00:17:10,480 Speaker 2: incredibly tight supply environment that leads to upside risk to 336 00:17:10,520 --> 00:17:10,840 Speaker 2: our call. 337 00:17:11,560 --> 00:17:16,560 Speaker 3: Interesting, So the demand variable just seems way more potent 338 00:17:16,760 --> 00:17:20,840 Speaker 3: than the supply variable on the upside, on the upside downside, Yeah, 339 00:17:20,920 --> 00:17:24,040 Speaker 3: now we're looking at supply. Okay, if you don't necessarily 340 00:17:24,040 --> 00:17:27,800 Speaker 3: see an improvement in affordability, if you do get a 341 00:17:27,840 --> 00:17:30,159 Speaker 3: harder landing than we think, if the unemployment rate picks up, 342 00:17:30,320 --> 00:17:32,280 Speaker 3: and so all of a sudden, you do have issues 343 00:17:32,960 --> 00:17:36,159 Speaker 3: that remain there from the demand side, and you have 344 00:17:36,400 --> 00:17:40,479 Speaker 3: some impetus for supply to start being delivered into this 345 00:17:40,640 --> 00:17:43,560 Speaker 3: lower demand environment. That's where you could start to see 346 00:17:43,600 --> 00:17:47,000 Speaker 3: on prices come down because of where lending standards have been. 347 00:17:47,440 --> 00:17:49,919 Speaker 3: We don't think it's going to be defaults and foreclosures. 348 00:17:50,560 --> 00:17:53,480 Speaker 3: You anticipated where I was going to ask, because I imagine, 349 00:17:53,520 --> 00:17:56,439 Speaker 3: so we're at like three point six percent unemployment, Like 350 00:17:56,840 --> 00:17:59,440 Speaker 3: you know, there's a world where like it goes over 351 00:17:59,520 --> 00:18:01,600 Speaker 3: four and a half. Yeah, I don't know, but like 352 00:18:01,720 --> 00:18:05,159 Speaker 3: I imagine that let's say that went up to five percent 353 00:18:05,200 --> 00:18:10,080 Speaker 3: in a recession, that that would have much less of 354 00:18:10,119 --> 00:18:14,359 Speaker 3: an impact on housing supply than an equivalent move in 355 00:18:14,359 --> 00:18:17,040 Speaker 3: the year two thousand and seven, with so many of 356 00:18:17,080 --> 00:18:19,800 Speaker 3: the ninja loans and variants. 357 00:18:19,400 --> 00:18:22,440 Speaker 2: I couldn't have said it better myself. Like one of 358 00:18:22,480 --> 00:18:26,480 Speaker 2: the huge differences you mentioned ninja loans just the overall 359 00:18:26,480 --> 00:18:28,879 Speaker 2: structure of the mortgage market, the percentage of the mortgage 360 00:18:28,880 --> 00:18:32,480 Speaker 2: market that were adjustable rate. You had mortgages that were 361 00:18:32,600 --> 00:18:35,879 Speaker 2: resetting into a lower home price environment had a tighter 362 00:18:35,960 --> 00:18:39,400 Speaker 2: lending standard environment, so that monthly payment was increasing. Those 363 00:18:39,440 --> 00:18:43,119 Speaker 2: homeowners effectively needed to refinance that mortgage, and it was 364 00:18:43,240 --> 00:18:47,000 Speaker 2: really difficult for them to access that credit, which meant 365 00:18:47,600 --> 00:18:50,320 Speaker 2: a larger a large share of mortgages falling to Linquin. 366 00:18:51,640 --> 00:18:54,840 Speaker 2: This time around, not only do you not have that 367 00:18:55,040 --> 00:18:59,240 Speaker 2: lending environment, you have a much stronger just mortgage base. 368 00:19:00,119 --> 00:19:03,760 Speaker 2: On top of that, services have a much more robust toolkit, 369 00:19:03,880 --> 00:19:09,879 Speaker 2: if you will, for closure mitigation, options, modifications, servicers working 370 00:19:09,920 --> 00:19:13,359 Speaker 2: to help borrowers stay in their homes. That wasn't something 371 00:19:13,359 --> 00:19:15,000 Speaker 2: that we as an industry had had a whole lot 372 00:19:15,000 --> 00:19:17,639 Speaker 2: of experience with in two thousand and eight. Services are 373 00:19:17,720 --> 00:19:19,760 Speaker 2: much more comfortable with that now, right. 374 00:19:19,880 --> 00:19:22,600 Speaker 3: I forgot like all those stories of like people trying 375 00:19:22,640 --> 00:19:25,240 Speaker 3: to get their banks on the phone, even I just. 376 00:19:25,160 --> 00:19:28,359 Speaker 1: God, yeah, I just had big flashbacks to writing a 377 00:19:28,400 --> 00:19:32,240 Speaker 1: lot about like the hamp modification program post two thousand 378 00:19:32,240 --> 00:19:35,359 Speaker 1: and eight. But like now we have blueprints for doing 379 00:19:35,480 --> 00:19:39,760 Speaker 1: these sort of modifications or like loan forget, not forgiveness, 380 00:19:39,800 --> 00:19:41,160 Speaker 1: but the modificing. 381 00:19:41,359 --> 00:19:44,600 Speaker 3: Yeah, somehow to stave off the like the wastefulness and 382 00:19:44,640 --> 00:19:46,159 Speaker 3: the costliness of a foreclosure. 383 00:19:46,280 --> 00:19:46,560 Speaker 2: Yeah. 384 00:19:46,560 --> 00:19:51,199 Speaker 1: But since you mentioned banks and credit availability, we have 385 00:19:51,440 --> 00:19:56,720 Speaker 1: seen some banking drama this year, and there was some 386 00:19:56,760 --> 00:20:03,119 Speaker 1: talk initially that concerns around bank portfolios and maybe banks 387 00:20:03,160 --> 00:20:08,040 Speaker 1: preparing for higher capital regulation or requirements was going to 388 00:20:08,200 --> 00:20:13,360 Speaker 1: lead to less willingness to underwrite mortgage credit. Is there 389 00:20:13,920 --> 00:20:16,600 Speaker 1: any evidence that we're seeing that or is that something 390 00:20:16,640 --> 00:20:17,560 Speaker 1: that's on your radar. 391 00:20:18,200 --> 00:20:21,440 Speaker 2: It is definitively on our radar. We've done a lot 392 00:20:21,480 --> 00:20:23,800 Speaker 2: of work under an umbrella that we've kind of called 393 00:20:23,800 --> 00:20:26,840 Speaker 2: a new regime for bank assets. For the reasons that 394 00:20:26,880 --> 00:20:32,400 Speaker 2: you're mentioning, we do anticipate more regulation either being proposed 395 00:20:32,560 --> 00:20:35,960 Speaker 2: or announced through the end of this year. Where regulations 396 00:20:36,040 --> 00:20:40,520 Speaker 2: like LCR liquidity coverage ratios t lack total loss absorbing capital, 397 00:20:40,800 --> 00:20:44,640 Speaker 2: banks away from the gesips having to have their mark 398 00:20:44,680 --> 00:20:48,160 Speaker 2: to market losses on available for sale securities moving through 399 00:20:48,200 --> 00:20:50,880 Speaker 2: to their regulatory capital which they could have opted out 400 00:20:50,960 --> 00:20:54,040 Speaker 2: of up until what we believe these proposals will look like. 401 00:20:54,760 --> 00:20:57,359 Speaker 2: All of that, we think means they have to hold 402 00:20:57,920 --> 00:21:00,400 Speaker 2: more cash. Effectively, they have to have a higher level 403 00:21:00,400 --> 00:21:04,040 Speaker 2: of liquidity. It means they're going to have less dollars 404 00:21:04,040 --> 00:21:06,439 Speaker 2: to lend. It also means they're probably going to be 405 00:21:06,440 --> 00:21:09,359 Speaker 2: looking a little bit more shorter duration on the asset side, 406 00:21:09,359 --> 00:21:12,120 Speaker 2: and banks by a lot of mortgage backed securities. By 407 00:21:12,160 --> 00:21:14,439 Speaker 2: our estimates, banks hold about thirty three percent of the 408 00:21:14,480 --> 00:21:18,679 Speaker 2: agency MBS universe. They buy that as longer duration assets, 409 00:21:18,720 --> 00:21:21,879 Speaker 2: so we do think that that's going to impact mortgage 410 00:21:21,960 --> 00:21:25,199 Speaker 2: rates from that perspective. When we originally thought through this, 411 00:21:25,720 --> 00:21:28,520 Speaker 2: again Jay back out of the agency strategist, he went 412 00:21:28,600 --> 00:21:32,440 Speaker 2: underweight mortgages because this is a structural change to bank 413 00:21:32,480 --> 00:21:35,879 Speaker 2: demand for mortgages on a go forward basis. But valuations 414 00:21:35,920 --> 00:21:38,000 Speaker 2: matter as well, so we're neutral at this point. Mortgages 415 00:21:38,040 --> 00:21:39,919 Speaker 2: did sell off, and so we think that at this 416 00:21:39,960 --> 00:21:43,520 Speaker 2: point they're effectively fair value. But that is how we 417 00:21:43,640 --> 00:21:46,960 Speaker 2: kind of have to think about affordability moving forward. And 418 00:21:46,960 --> 00:21:50,280 Speaker 2: then from a credit availability perspective, if you ask where 419 00:21:50,480 --> 00:21:53,520 Speaker 2: from a four pillar perspective we were in that outlook 420 00:21:53,520 --> 00:21:55,760 Speaker 2: the last time I was here versus now, I would 421 00:21:55,800 --> 00:21:58,600 Speaker 2: have told you that we probably expected lending standards to ease, 422 00:21:59,080 --> 00:22:01,480 Speaker 2: at least on the margin over the course of twenty 423 00:22:01,520 --> 00:22:04,880 Speaker 2: twenty three. We no longer believe that lending standards. We think, 424 00:22:05,200 --> 00:22:08,560 Speaker 2: if anything, they'll stay tight, probably going to tighten from here. 425 00:22:08,840 --> 00:22:11,920 Speaker 2: Some of the credit availability indices are already showing a 426 00:22:12,000 --> 00:22:14,919 Speaker 2: little of that behavior, but lending standards have remained so 427 00:22:15,080 --> 00:22:17,880 Speaker 2: tight for fifteen years. The question is really how much 428 00:22:17,920 --> 00:22:19,040 Speaker 2: tighter can they get. 429 00:22:19,200 --> 00:22:21,760 Speaker 3: I want to talk about another dynamic of this sort 430 00:22:21,760 --> 00:22:24,239 Speaker 3: of pandemic housing boom. You know, we talked about the 431 00:22:24,280 --> 00:22:27,920 Speaker 3: surge and household formation and roommates no longer being roommates 432 00:22:27,960 --> 00:22:30,040 Speaker 3: and people moving out of their family's homes. The other 433 00:22:30,080 --> 00:22:34,720 Speaker 3: thing we saw is people with high incomes leaving cities 434 00:22:34,800 --> 00:22:38,520 Speaker 3: and going into markets in which they had above average income. 435 00:22:38,600 --> 00:22:41,359 Speaker 3: So if you're working for Facebook or something and suddenly 436 00:22:41,359 --> 00:22:44,239 Speaker 3: you can like go live you know, in Arizona or 437 00:22:44,480 --> 00:22:47,160 Speaker 3: Utah or whatever, and suddenly you're the highest paid person 438 00:22:47,160 --> 00:22:50,800 Speaker 3: in the area, you can outbid all the locals for homes. Obviously, 439 00:22:50,880 --> 00:22:54,399 Speaker 3: like that wave ended, probably reversing a little bit, and 440 00:22:54,400 --> 00:22:56,200 Speaker 3: then some companies like, no, we actually don't want you 441 00:22:56,240 --> 00:22:58,760 Speaker 3: out in the middle of nowhere. Come back to the office, Ecerea. 442 00:22:58,800 --> 00:23:01,040 Speaker 3: How much did that sort of just stort things and 443 00:23:01,119 --> 00:23:04,280 Speaker 3: contribute to price appreciation? And how much is this sort 444 00:23:04,320 --> 00:23:07,440 Speaker 3: of like I guess it's like ameliorating some of that 445 00:23:07,520 --> 00:23:09,240 Speaker 3: wave like affecting the market now. 446 00:23:10,440 --> 00:23:16,439 Speaker 2: So from a contribute to price appreciation perspective, if you 447 00:23:16,480 --> 00:23:18,720 Speaker 2: ask me the one data point I really want to 448 00:23:18,720 --> 00:23:21,840 Speaker 2: know for home prices six or twelve months forward, it's supply. 449 00:23:21,960 --> 00:23:24,679 Speaker 2: If you ask me five years forward, it's population migration 450 00:23:24,880 --> 00:23:27,719 Speaker 2: and where people are moving. But if you think about 451 00:23:27,760 --> 00:23:30,960 Speaker 2: what happened when at the outset of COVID, it was 452 00:23:30,960 --> 00:23:33,320 Speaker 2: almost a perfect storm from a home price perspective, where 453 00:23:33,320 --> 00:23:36,480 Speaker 2: you had this demand people their ability to work from home, 454 00:23:36,880 --> 00:23:38,720 Speaker 2: maybe their desire to get a little bit more space 455 00:23:38,840 --> 00:23:42,600 Speaker 2: leave densely crowded areas. I think I mentioned this last 456 00:23:42,600 --> 00:23:44,919 Speaker 2: time I was on but the home price appreciation between 457 00:23:45,000 --> 00:23:47,800 Speaker 2: less densely populated zip codes and more densely populated zip 458 00:23:47,800 --> 00:23:50,560 Speaker 2: codes bifurcated in a way that we'd never really seen 459 00:23:50,600 --> 00:23:52,680 Speaker 2: in our data going back to the late eighties early nineties, 460 00:23:52,920 --> 00:23:55,919 Speaker 2: because not only did you have that demand, but with 461 00:23:56,000 --> 00:23:59,119 Speaker 2: mortgage rates coming down to historical lows now all of 462 00:23:59,119 --> 00:24:01,960 Speaker 2: a sudden, the buying power of that demand is increased 463 00:24:02,400 --> 00:24:05,919 Speaker 2: and supply was racing to all time lows. And so 464 00:24:05,960 --> 00:24:09,560 Speaker 2: you kind of had this three pronged demand plus buying 465 00:24:09,600 --> 00:24:14,240 Speaker 2: power of demand plus tight supply leading to real incredible 466 00:24:14,280 --> 00:24:15,760 Speaker 2: home priz croak in some of those areas. 467 00:24:32,320 --> 00:24:36,520 Speaker 1: Since we're throwing out sort of idiosyncratic things here, can 468 00:24:36,560 --> 00:24:41,919 Speaker 1: I ask about airbnb supply And this is something that 469 00:24:42,320 --> 00:24:45,639 Speaker 1: has been cropping up lately. People talking about like, oh, well, 470 00:24:46,760 --> 00:24:49,280 Speaker 1: no one wants to stay at an airbnb anymore. It's 471 00:24:49,320 --> 00:24:51,720 Speaker 1: too much hassle, it's too expensive, you have to clean 472 00:24:51,800 --> 00:24:55,840 Speaker 1: up the entire apartment or house before here how to leave. 473 00:24:55,880 --> 00:24:58,040 Speaker 1: I've never stayed in an airbnb, by the way, so 474 00:24:58,440 --> 00:25:01,000 Speaker 1: I have no idea. People are talking about that as 475 00:25:01,040 --> 00:25:06,000 Speaker 1: a potential source of marginal supply. So if airbnb hosts 476 00:25:06,080 --> 00:25:08,720 Speaker 1: can no longer get people coming into their properties, maybe 477 00:25:08,720 --> 00:25:12,479 Speaker 1: they just decide to sell. Is that at all something 478 00:25:12,480 --> 00:25:15,400 Speaker 1: that you're looking out for, or is that maybe wishful 479 00:25:15,440 --> 00:25:18,040 Speaker 1: thinking on the part of people who are hoping for 480 00:25:18,160 --> 00:25:20,480 Speaker 1: a flood of supply to come into the market so 481 00:25:20,520 --> 00:25:21,440 Speaker 1: they can finally buy. 482 00:25:21,960 --> 00:25:25,800 Speaker 2: Look, I think that's an important question because something that 483 00:25:25,840 --> 00:25:28,639 Speaker 2: I hit earlier on the downside is where could supply 484 00:25:29,119 --> 00:25:34,560 Speaker 2: come from? And we're constantly trying to figure out if 485 00:25:34,600 --> 00:25:38,119 Speaker 2: there's some pocket of homes that could hit in a 486 00:25:38,160 --> 00:25:42,840 Speaker 2: lower demand environment, a challenged affordability environment. And one question 487 00:25:42,880 --> 00:25:46,840 Speaker 2: that comes up has been are these kind of individual 488 00:25:46,880 --> 00:25:50,080 Speaker 2: investors who maybe bought homes for short term rentals, could 489 00:25:50,119 --> 00:25:53,800 Speaker 2: they become that supply? And I don't have the exact 490 00:25:53,880 --> 00:25:56,800 Speaker 2: numbers in terms of how much supply that could really 491 00:25:57,160 --> 00:26:00,320 Speaker 2: represent when we look at the mortgages holistically that were 492 00:26:00,359 --> 00:26:03,880 Speaker 2: originated over the course of the past three years, it's 493 00:26:03,880 --> 00:26:05,560 Speaker 2: a lot of fixed rate paper, it's a lot of 494 00:26:05,680 --> 00:26:10,040 Speaker 2: really low interest rate paper. You've locked in a very 495 00:26:10,040 --> 00:26:12,399 Speaker 2: low cost of shelter, even if it's not your primary shelter. 496 00:26:12,800 --> 00:26:14,720 Speaker 2: You have an elevated amount of equity in that home. 497 00:26:15,080 --> 00:26:18,560 Speaker 2: Perhaps you're not seeing the rental demand that you might 498 00:26:18,800 --> 00:26:22,600 Speaker 2: otherwise see, but it's not necessarily something that we think 499 00:26:22,760 --> 00:26:27,440 Speaker 2: is going to end up being enough supply. We're targeting 500 00:26:27,440 --> 00:26:30,520 Speaker 2: a few other areas that we think might end up 501 00:26:30,560 --> 00:26:33,920 Speaker 2: materializing as that potential supply that does drive our barecase. 502 00:26:34,440 --> 00:26:38,240 Speaker 3: Now speaking of idiosyncratic things, and again maybe it's not 503 00:26:38,520 --> 00:26:42,240 Speaker 3: enough to move the dial, But what about the eye buyers? 504 00:26:42,480 --> 00:26:44,480 Speaker 3: And I remember there are all these stories about like, 505 00:26:44,640 --> 00:26:46,760 Speaker 3: you know, we even talked about it recently on an 506 00:26:46,760 --> 00:26:49,840 Speaker 3: episode with Greg Jensen, which is like people had these 507 00:26:49,880 --> 00:26:52,280 Speaker 3: algorithms and everyone's like, oh, these are the real suckers. 508 00:26:52,320 --> 00:26:53,720 Speaker 2: They'll buy anything at any price. 509 00:26:54,040 --> 00:26:56,600 Speaker 3: Did that really move the dial in your view? Like 510 00:26:56,680 --> 00:26:59,240 Speaker 3: how much of a are you thinking about things like that? 511 00:27:00,000 --> 00:27:01,360 Speaker 3: Disappearance of the eye buyers? 512 00:27:01,880 --> 00:27:05,280 Speaker 2: Any numbers that we can see about the amount of 513 00:27:05,359 --> 00:27:09,000 Speaker 2: homes that have been purchased. Kind of on the institutional side, 514 00:27:09,960 --> 00:27:12,119 Speaker 2: I think if you look at the markets, and this 515 00:27:12,160 --> 00:27:14,240 Speaker 2: is more broadly not just eye buyers, but if you 516 00:27:14,280 --> 00:27:17,520 Speaker 2: look at the markets where institutional investors have been a 517 00:27:17,520 --> 00:27:19,440 Speaker 2: little bit more active over the past few years, those 518 00:27:19,680 --> 00:27:21,399 Speaker 2: also tend to be some of the markets that saw 519 00:27:21,760 --> 00:27:26,000 Speaker 2: the highest degree of home price appreciation. So did that 520 00:27:26,119 --> 00:27:29,280 Speaker 2: demand maybe lead to home prices increasing a little bit 521 00:27:29,320 --> 00:27:32,480 Speaker 2: more than they otherwise would perhaps perhaps on the margins. 522 00:27:32,960 --> 00:27:34,760 Speaker 2: But one thing we'd say is that it doesn't appear 523 00:27:34,800 --> 00:27:37,720 Speaker 2: as if the number of homes purchased was really that 524 00:27:37,880 --> 00:27:40,560 Speaker 2: large a percentage, at least as far as the total 525 00:27:40,880 --> 00:27:43,880 Speaker 2: housing market is concerned. And then, Joe, to your point 526 00:27:43,880 --> 00:27:47,280 Speaker 2: about that demand perhaps not being there. Demand has been 527 00:27:47,720 --> 00:27:50,919 Speaker 2: pretty weak. The bifurcated housing view that we talked about 528 00:27:50,960 --> 00:27:54,399 Speaker 2: from last year was a function of sales volumes coming down, 529 00:27:54,520 --> 00:27:57,000 Speaker 2: but home price is not following because supply has been 530 00:27:57,040 --> 00:27:59,359 Speaker 2: so low. And so here we're thinking it's another world 531 00:27:59,359 --> 00:28:04,040 Speaker 2: in which look, as long as supply remains contained, this 532 00:28:04,160 --> 00:28:08,040 Speaker 2: is just another piece of that weaker demand part. 533 00:28:08,359 --> 00:28:12,560 Speaker 1: Right, I have to ask again on the topic of 534 00:28:12,600 --> 00:28:15,880 Speaker 1: idiosyncratic factors. But I remember we spoke to you about 535 00:28:15,880 --> 00:28:18,320 Speaker 1: this the last time you were on but baby boomers 536 00:28:19,040 --> 00:28:22,920 Speaker 1: and the idea that baby boomers own a lot of houses, 537 00:28:23,040 --> 00:28:26,840 Speaker 1: in some cases multiple houses that they might be using 538 00:28:26,880 --> 00:28:31,520 Speaker 1: for additional income. What are the prospects that that supply 539 00:28:32,200 --> 00:28:35,000 Speaker 1: gets freed up anytime soon? And I think your answer 540 00:28:35,000 --> 00:28:38,320 Speaker 1: to this last time was not within the next decade. 541 00:28:38,520 --> 00:28:40,040 Speaker 1: But has anything changed? 542 00:28:41,000 --> 00:28:42,840 Speaker 2: I mean, that's our bair case. You've hit it on 543 00:28:42,880 --> 00:28:48,440 Speaker 2: the head. It is they own roughly a third of 544 00:28:48,440 --> 00:28:51,160 Speaker 2: the housing stock. Not boomers in general, but people over 545 00:28:51,200 --> 00:28:54,200 Speaker 2: the age of sixty five hold one third of all 546 00:28:54,320 --> 00:28:57,520 Speaker 2: owned homes in the United States right now, and over 547 00:28:57,560 --> 00:29:00,880 Speaker 2: fifty percent of them bought that home before the year 548 00:29:00,920 --> 00:29:05,280 Speaker 2: two thousand. So you're talking about a homeowner who has 549 00:29:05,400 --> 00:29:08,800 Speaker 2: seen an incredible amount of home price appreciation. They're also 550 00:29:08,840 --> 00:29:11,840 Speaker 2: probably less likely to even have a mortgage attached to 551 00:29:11,920 --> 00:29:13,920 Speaker 2: that home. So the whole lock and effect that we've 552 00:29:13,960 --> 00:29:18,400 Speaker 2: been discussing doesn't necessarily apply in the same way to 553 00:29:18,520 --> 00:29:23,520 Speaker 2: these homeowners. Another big difference, going back to that shadow 554 00:29:23,560 --> 00:29:26,680 Speaker 2: inventory foreclosures between two thousand and six, two thousand and 555 00:29:26,680 --> 00:29:30,160 Speaker 2: seven and today. Roughly sixty nine to seventy percent of 556 00:29:30,200 --> 00:29:33,680 Speaker 2: owned homes back then had a mortgage attached to them. 557 00:29:34,000 --> 00:29:36,640 Speaker 2: That's down to sixty one or sixty two percent today, 558 00:29:37,240 --> 00:29:39,640 Speaker 2: and I think part of that's being driven by these 559 00:29:39,680 --> 00:29:41,080 Speaker 2: older homeowners who've paid that off. 560 00:29:41,200 --> 00:29:44,640 Speaker 3: So a huge chunk of the housing stock is unforeclosable 561 00:29:44,760 --> 00:29:48,520 Speaker 3: under any economic environment because there is just no debt 562 00:29:48,560 --> 00:29:52,160 Speaker 3: attached to it at all, Virtually unforeclosed, virtually. 563 00:29:51,760 --> 00:29:55,600 Speaker 2: Unforclosable, okay exactly. And so we think that that's also 564 00:29:55,680 --> 00:29:58,760 Speaker 2: contributing to the fact that foreclosures are going to remain 565 00:29:58,840 --> 00:30:01,680 Speaker 2: low now. It it's our bare case, it's not our 566 00:30:01,680 --> 00:30:05,640 Speaker 2: base case, because we're still seeing a trend towards aging 567 00:30:05,680 --> 00:30:11,000 Speaker 2: in place. My grandfather's in his early nineties in Connecticut, 568 00:30:11,080 --> 00:30:13,880 Speaker 2: and I know that he's not thinking about selling his 569 00:30:13,920 --> 00:30:16,960 Speaker 2: home at any point in the near future. But they 570 00:30:17,040 --> 00:30:20,800 Speaker 2: own more than enough homes to create a supply issue 571 00:30:21,040 --> 00:30:23,640 Speaker 2: by the very definitions we just spoke about owning their 572 00:30:23,640 --> 00:30:25,520 Speaker 2: homes before two thousand for instance, that means they own 573 00:30:25,560 --> 00:30:27,320 Speaker 2: the home in two thousand and eight, they watched the 574 00:30:27,400 --> 00:30:30,000 Speaker 2: value plummet. If we get a harder landing, if you 575 00:30:30,040 --> 00:30:32,720 Speaker 2: start seeing unemployment rates take up. If you start seeing 576 00:30:32,720 --> 00:30:35,040 Speaker 2: a little bit more weakness than we're expecting in home prices, 577 00:30:35,800 --> 00:30:37,800 Speaker 2: perhaps they're going to be willing to start listing these 578 00:30:37,840 --> 00:30:42,000 Speaker 2: homes at a larger clip or a faster clip than 579 00:30:42,240 --> 00:30:46,240 Speaker 2: we're expecting. As you mentioned, in our base case ten 580 00:30:46,240 --> 00:30:49,080 Speaker 2: to fifteen years, it will become supply at some point, 581 00:30:49,280 --> 00:30:51,520 Speaker 2: but can really change dynamics if it becomes one to 582 00:30:51,560 --> 00:30:52,160 Speaker 2: two years. 583 00:30:52,560 --> 00:30:56,800 Speaker 1: So we talked about your arguments last year about the 584 00:30:56,840 --> 00:31:01,040 Speaker 1: sort of frozen slash weird housing market, how that became consensus, 585 00:31:01,240 --> 00:31:03,400 Speaker 1: and your base case for this year is for house 586 00:31:03,440 --> 00:31:07,240 Speaker 1: prices to remain relatively flat. What are you looking out 587 00:31:07,320 --> 00:31:09,840 Speaker 1: for for the rest of the year, like, what is 588 00:31:10,040 --> 00:31:11,720 Speaker 1: top of mind for you? 589 00:31:12,640 --> 00:31:16,640 Speaker 2: So I'm going to come back to supply and affordability. 590 00:31:17,200 --> 00:31:20,920 Speaker 2: Why we've tweaked our forecasts is because of the fact 591 00:31:20,920 --> 00:31:26,240 Speaker 2: that affordability historic levels of deterioration. It's still challenged, but 592 00:31:26,280 --> 00:31:29,320 Speaker 2: affordability is no longer getting worse. In fact, over the 593 00:31:29,360 --> 00:31:33,240 Speaker 2: past six months it's improved on the margins supply close 594 00:31:33,280 --> 00:31:36,840 Speaker 2: to forty year lows. It's no longer setting new historic 595 00:31:36,920 --> 00:31:39,640 Speaker 2: lows every month. You mentioned that kind of people who 596 00:31:39,680 --> 00:31:43,200 Speaker 2: are forced to sell, death and divorce, maybe moving for jobs, 597 00:31:43,560 --> 00:31:46,560 Speaker 2: or the turnover rate. It seems like from a supply perspective, 598 00:31:46,560 --> 00:31:50,520 Speaker 2: we've kind of hit that, and so the rate of change, 599 00:31:50,600 --> 00:31:53,960 Speaker 2: the direction of travel for those two metrics matter because 600 00:31:53,960 --> 00:31:57,480 Speaker 2: of the lock and effect. We don't see supply increasing 601 00:31:57,680 --> 00:32:00,520 Speaker 2: all that substantially moving forward. We don't think you have 602 00:32:00,600 --> 00:32:04,680 Speaker 2: another leg down here. We don't see affordability improving hand 603 00:32:04,720 --> 00:32:07,120 Speaker 2: over fist as we move forward, but we don't see 604 00:32:07,120 --> 00:32:10,280 Speaker 2: a lot of deterioration moving forward from an affordability perspective either. 605 00:32:11,360 --> 00:32:12,959 Speaker 2: Those are the things that we're going to be tracking 606 00:32:13,040 --> 00:32:15,360 Speaker 2: the most closely. But what does that mean. It means 607 00:32:15,360 --> 00:32:18,000 Speaker 2: that from a housing activity perspective, a sales perspective, a 608 00:32:18,040 --> 00:32:21,360 Speaker 2: starts perspective, we think the big legs down are behind us. 609 00:32:21,960 --> 00:32:25,120 Speaker 2: We think we're kind of moving sideways here. The year 610 00:32:25,160 --> 00:32:26,640 Speaker 2: over year comps are going to get a lot more 611 00:32:26,680 --> 00:32:29,760 Speaker 2: attractive in the second half of twenty twenty three, in particular, 612 00:32:29,800 --> 00:32:31,880 Speaker 2: in the fourth quarter, you're going to see some year 613 00:32:31,920 --> 00:32:34,920 Speaker 2: over year growth. I think for the full year, existing 614 00:32:34,920 --> 00:32:38,160 Speaker 2: home sales, housing starts, single unit housing starts are still 615 00:32:38,160 --> 00:32:40,880 Speaker 2: going to be down ten to fifteen percent, but they're 616 00:32:40,920 --> 00:32:43,760 Speaker 2: down twenty five percent through the first five months of 617 00:32:43,800 --> 00:32:46,959 Speaker 2: the year, so that's a much a pretty significant improvement 618 00:32:47,040 --> 00:32:50,360 Speaker 2: versus where we've been. Home prices they'll stay negative year 619 00:32:50,360 --> 00:32:52,520 Speaker 2: over year for a couple months, they're going to keep 620 00:32:52,520 --> 00:32:54,480 Speaker 2: growing month over month. By the end of the year 621 00:32:54,480 --> 00:32:56,880 Speaker 2: will be flat. And the new home sales are the 622 00:32:56,880 --> 00:32:59,000 Speaker 2: one statistic that we do think is going to show 623 00:32:59,040 --> 00:33:02,520 Speaker 2: year over year growth simply because on a relative basis, 624 00:33:02,600 --> 00:33:04,640 Speaker 2: they're the only game in town that luck and effect 625 00:33:04,720 --> 00:33:06,800 Speaker 2: keeping existing inventory off the market. 626 00:33:07,560 --> 00:33:09,760 Speaker 1: All right, well, Jim, thank you so much for coming 627 00:33:09,800 --> 00:33:11,720 Speaker 1: back on odd Lots. Really appreciate it. 628 00:33:12,440 --> 00:33:14,840 Speaker 2: Thank you very much for having me. Thanks Jim. That 629 00:33:14,920 --> 00:33:15,200 Speaker 2: was great. 630 00:33:27,960 --> 00:33:31,040 Speaker 1: So Joe, that was really interesting, and I really enjoyed 631 00:33:31,040 --> 00:33:34,400 Speaker 1: being able to catch up with Jim, given that, you know, 632 00:33:34,600 --> 00:33:37,480 Speaker 1: given the call last year was pretty out of consensus 633 00:33:37,480 --> 00:33:40,920 Speaker 1: and then sort of became the de facto thing. One 634 00:33:40,920 --> 00:33:44,520 Speaker 1: thing I hadn't realized was that stat about housing starts, 635 00:33:44,560 --> 00:33:49,600 Speaker 1: like the differentiation between single housing versus multi I didn't 636 00:33:49,600 --> 00:33:51,440 Speaker 1: realize it was so segmented. 637 00:33:51,720 --> 00:33:52,680 Speaker 2: No, that's what I know. 638 00:33:52,800 --> 00:33:55,320 Speaker 3: It's a really it's a pretty extraordinary start. And the 639 00:33:55,360 --> 00:33:58,120 Speaker 3: fact that like rents have like really slowed, and yet 640 00:33:58,160 --> 00:34:01,400 Speaker 3: at the same time multifamilies starts continued to be setting 641 00:34:01,400 --> 00:34:04,200 Speaker 3: like these like monster numbers, is like kind of wild. 642 00:34:04,760 --> 00:34:07,720 Speaker 3: I also just think that like the degree to which 643 00:34:08,080 --> 00:34:11,520 Speaker 3: the housing market is much less frail than it was 644 00:34:11,800 --> 00:34:13,920 Speaker 3: in two thousand and eight or the last time we 645 00:34:13,960 --> 00:34:17,120 Speaker 3: had a bear market, because obviously, and we've talked about 646 00:34:17,160 --> 00:34:20,160 Speaker 3: this on a couple episodes, like unemployment would of course 647 00:34:20,200 --> 00:34:23,360 Speaker 3: be a driver of more supply, but if you don't 648 00:34:23,400 --> 00:34:26,120 Speaker 3: have like bad underwriting and you don't have people at 649 00:34:26,120 --> 00:34:28,520 Speaker 3: the brink. And his point about how now there's a 650 00:34:28,680 --> 00:34:32,280 Speaker 3: sort of like modification infrastructure, like these are like huge 651 00:34:32,280 --> 00:34:35,120 Speaker 3: things working against the sort of like bare case in housing. 652 00:34:35,320 --> 00:34:37,719 Speaker 1: Yeah, and I mean I remember post two thousand and 653 00:34:37,719 --> 00:34:40,880 Speaker 1: eight the stories about how some of the mortgage servicers 654 00:34:40,920 --> 00:34:43,759 Speaker 1: just didn't have enough people to go through all the 655 00:34:43,800 --> 00:34:46,480 Speaker 1: paperwork and it was just a massive mess. But now 656 00:34:46,520 --> 00:34:49,719 Speaker 1: that infrastructure seems to be in place. The other thing 657 00:34:49,800 --> 00:34:53,799 Speaker 1: I would say is, speaking of segmentation, I wonder it 658 00:34:53,960 --> 00:34:58,640 Speaker 1: feels like the economy overall is just increasingly segmented between 659 00:34:58,880 --> 00:35:02,759 Speaker 1: homeowners and on homeowners, and it really is. I know, 660 00:35:02,800 --> 00:35:06,960 Speaker 1: he talked about affordability having increased to some degree, but 661 00:35:07,200 --> 00:35:11,200 Speaker 1: it really does feel like it's getting increasingly hard to 662 00:35:11,280 --> 00:35:14,040 Speaker 1: get on that housing ladder totally. 663 00:35:14,120 --> 00:35:16,440 Speaker 3: It's like it could be for years to come, like 664 00:35:16,600 --> 00:35:18,760 Speaker 3: in the year twenty thirty or the year twenty forty, 665 00:35:19,400 --> 00:35:22,719 Speaker 3: Like there are still this huge divergence between like millennials 666 00:35:22,760 --> 00:35:27,000 Speaker 3: who had a pre twenty twenty two mortgage and yeah, seriously, 667 00:35:27,600 --> 00:35:29,640 Speaker 3: and yeah, I think you're right on, Like that's like 668 00:35:29,680 --> 00:35:33,160 Speaker 3: a really interesting It moved so fast and so sharp, 669 00:35:33,640 --> 00:35:36,360 Speaker 3: and some people are sitting on these like there's incredibly 670 00:35:36,400 --> 00:35:39,000 Speaker 3: cheap loans and some people never see them, and that's 671 00:35:39,040 --> 00:35:40,879 Speaker 3: going to weigh on people, and they like have these 672 00:35:40,960 --> 00:35:43,839 Speaker 3: huge consequences that we have no idea about. 673 00:35:43,960 --> 00:35:47,720 Speaker 1: Yeah, and that refine boom that we saw post twenty twenty. 674 00:35:47,760 --> 00:35:51,600 Speaker 1: I also think the tail of it is incredibly long 675 00:35:52,120 --> 00:35:55,399 Speaker 1: in some respects and probably unappreciated, because if you lock 676 00:35:55,480 --> 00:36:00,000 Speaker 1: those lower housing costs in, you have them for years, yeah, 677 00:36:00,200 --> 00:36:03,279 Speaker 1: years and years, while others do not. And so I 678 00:36:03,280 --> 00:36:05,399 Speaker 1: think that's feeding some of the frustrations as well. 679 00:36:05,560 --> 00:36:07,480 Speaker 3: And to his point, like you could have mortgage rates 680 00:36:07,480 --> 00:36:09,480 Speaker 3: going back down to four percent, which is far outside 681 00:36:09,480 --> 00:36:12,440 Speaker 3: of anyone's base case, like not even close, and even 682 00:36:12,520 --> 00:36:14,840 Speaker 3: that no longer moves the dial that much because so 683 00:36:14,920 --> 00:36:18,440 Speaker 3: many people have rates on some level locked in below 684 00:36:18,440 --> 00:36:19,240 Speaker 3: that is pretty wild. 685 00:36:19,320 --> 00:36:21,600 Speaker 1: Yeah, it is all right. Shall we leave it there. 686 00:36:21,680 --> 00:36:22,359 Speaker 2: Let's leave it there. 687 00:36:22,480 --> 00:36:25,440 Speaker 1: This has been another episode of the All Thoughts podcast. 688 00:36:25,520 --> 00:36:28,040 Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at 689 00:36:28,120 --> 00:36:29,280 Speaker 1: Tracy Alloway. 690 00:36:29,080 --> 00:36:31,720 Speaker 3: And I'm Joe Wisenthal. You can follow me on Twitter 691 00:36:31,800 --> 00:36:35,720 Speaker 3: at the Stalwart, follow our producers Carmen Rodriguez at Carmen 692 00:36:35,880 --> 00:36:39,000 Speaker 3: Erman and dash Ol Bennett at Dashbot. And check out 693 00:36:39,040 --> 00:36:42,439 Speaker 3: all of the Bloomberg podcasts under the handle at podcasts. 694 00:36:42,520 --> 00:36:44,000 Speaker 2: And for more Oddlogs. 695 00:36:43,480 --> 00:36:46,799 Speaker 3: Content, go to Bloomberg dot com slash odlots or we 696 00:36:46,840 --> 00:36:50,319 Speaker 3: have transcripts, a blog, and a newsletter, and we have 697 00:36:50,360 --> 00:36:52,879 Speaker 3: a real estate channel on the odd Lots Discord, which 698 00:36:52,880 --> 00:36:55,320 Speaker 3: is a really fun place to talk about all these topics. 699 00:36:55,680 --> 00:36:57,800 Speaker 3: Discord dot gg, slash Odlogs. 700 00:36:57,840 --> 00:36:58,440 Speaker 2: Go check it out. 701 00:36:58,840 --> 00:37:02,520 Speaker 1: And if you enjoy odd Lots, if you find conversations 702 00:37:02,560 --> 00:37:04,920 Speaker 1: like the one we just had with Jim Egan useful 703 00:37:05,000 --> 00:37:08,680 Speaker 1: or interesting, then please leave us a positive review on 704 00:37:08,719 --> 00:37:11,640 Speaker 1: your favorite podcast platform. Thanks for listening.