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Speaker 1: This is Masters in Business with Barry Riddholts on Bloomberg

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Speaker 1: Radio this weekend. On the podcast, I have an extra

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Speaker 1: special guest. Her name is ivy's Elman, and I have

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Speaker 1: been following her research and writing for the better part

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Speaker 1: of a decade plus. UH. She has had a series

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Speaker 1: of phenomenal calls within various aspects of the real estate industry,

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Speaker 1: be it the home builders, the mortgage originators, the credit underwriters.

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Speaker 1: She is definitely a contrarian. She is somebody who is

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Speaker 1: extremely astute as to the economic cycle and how it

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Speaker 1: affects housing. If you are at all interested in real estate,

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Speaker 1: credit homes, both single family and multi family, and all

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Speaker 1: of the latest innovations in either technology or UH financial

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Speaker 1: and sations and financing of of especially from the private

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Speaker 1: equity side. We we just spend some time talking about

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Speaker 1: I buying the instantaneous buyers that have appeared that facilitate

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Speaker 1: transactions of sellers. I think you're gonna find this conversation

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Speaker 1: filled with wonky goodness. So, with no further delay, my

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Speaker 1: conversation with real estate and equity analyst expert Ivy Selman.

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Speaker 1: I'm Barry rit Halts. You're listening to Masters in Business

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Speaker 1: on Bloomberg Radio. My special guest this week is Ivy Zellman.

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Speaker 1: She is the CEO and founder of Zellman and Associates,

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Speaker 1: a boutique research firm focusing exclusively on the housing industry.

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Speaker 1: She is an institutional investor, Hall of Fame Equity Analyst

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Speaker 1: UH The All American Research Team Rankings placed Ivy and

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Speaker 1: her team with eleven first place rankings between nineteen Then

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Speaker 1: you know and and I V. S Ellman. Welcome to Bloomberg.

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Speaker 1: Thank you for having me. Very so you cover one

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Speaker 1: of my very favorite areas because it's so fascinating, especially

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Speaker 1: in the United States, housing, the pursuit, construction, financing of it.

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Speaker 1: Let's talk about the early days of your career and

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Speaker 1: how you became a housing analysts. You began on Wall

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Speaker 1: Street that about rights right? What path led you there? Well,

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Speaker 1: actually I didn't start out interested in housing admittedly. UM.

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Speaker 1: I was UM really focused as an undergrad on accounting

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Speaker 1: and I was working UM at Arthur Young now Ernst

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Speaker 1: and Young, going to night school. So I went to

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Speaker 1: undergrad for six years and during the time that I

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Speaker 1: was studying at George Mason University and working in Ernst

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Speaker 1: and young as an accounty major. I was asking a

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Speaker 1: lot of these accountants that I worked with, do you

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Speaker 1: like what you do? And they hated it. They almost

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Speaker 1: universally everyone I talked with said you don't want to

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Speaker 1: be an accountant. So I was like, well, what should

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Speaker 1: I do? And they basically all said, go get a

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Speaker 1: job in Wall Street? And I'm like, what does that mean?

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Speaker 1: Because at George Mason, Wall Street firms didn't recruit students there,

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Speaker 1: so I had to network and knock on doors, and

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Speaker 1: eventually it led me to Wall Street, where I got

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Speaker 1: a job at Solomon Brothers in investment banking and I

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Speaker 1: was there for a two year stint as an investment

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Speaker 1: banking analysts prior to be coming in going into equity research.

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Speaker 1: And so well told you were there from nine about right, Yeah,

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Speaker 1: kind of overlapping with the Michael Lewis Liars Poker era,

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Speaker 1: one of my favorite books. But so that that is

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Speaker 1: a very much a male dominated period in Wall Street.

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Speaker 1: Not that Wall Street has has really done enough to

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Speaker 1: to even the gender levels, but back in the nineties

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Speaker 1: that had to be kind of a wild place to work.

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Speaker 1: It was a lot of fun, I think starting out

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Speaker 1: out first being in a class because I was in

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Speaker 1: a training program. I think I was one of three

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Speaker 1: women of seventy kids, and we were all there for

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Speaker 1: two years. I was intimidated because most of them were

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Speaker 1: from the Ivy League, and so I initially not even

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Speaker 1: being just a woman, but just you know, having from

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Speaker 1: a state university. UM. But you know, once you're once

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Speaker 1: you're there, you know, you put your head down, you

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Speaker 1: work hard, and it was really just about proving myself

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Speaker 1: and as working hard as I can. So I think

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Speaker 1: that today I look back on that time and I

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Speaker 1: had a lot of fun, but it was about just

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Speaker 1: you know, execution and working as hard as you can

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Speaker 1: to prove yourself. So how did you transition from investment

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Speaker 1: banking analysts to housing analysts? After two years you're out

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Speaker 1: of a job, which you know that's the case when

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Speaker 1: you took the job. It's a it's a two year lifespan.

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Speaker 1: It's a two year lifespan, and most of the seventy

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Speaker 1: odd plus or minus will go on to get their

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Speaker 1: m b A and then return, you know, back to

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Speaker 1: Wall Street. And because I had student loans already through

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Speaker 1: undergrad and unfortunately didn't want to take on the responsibility

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Speaker 1: or go back to school after six years. I just

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Speaker 1: was looking for a job to pay my rent. And

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Speaker 1: internally we had something called the you know, the Treasury

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Speaker 1: scandal going on at that time, and unfortunately John good

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Speaker 1: Friend and the firm was in turmoil. So a lot

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Speaker 1: of people period with Warren Buffett came in and right

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Speaker 1: the ship pretty much. And prior to Warren Buffett writing

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Speaker 1: the Ship, the view was there, you know, the lights

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Speaker 1: were going to go out at Solomon and a lot

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Speaker 1: of people were leaving, and there was an opportunity that

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Speaker 1: opened up in in equity research, in the housing space

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Speaker 1: and the actually in corporate finance. I worked in Transportation group,

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Speaker 1: and gentleman by the name of Julius Maldudas, which is

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Speaker 1: a famous airline analyst, he's like, you should go work

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Speaker 1: in equity research, you know, and and go help them.

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Speaker 1: So I got a job with his recommendation as an

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Speaker 1: associate in the UM. At that time, it was Bruce

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Speaker 1: Harding who covered S n L's and Fanny Freddie, and

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Speaker 1: he was picking up homebuilding and housing as a favor

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Speaker 1: because Bob Bishop quit said I'm out of here, as

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Speaker 1: many other people were quitting, so I came an associate,

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Speaker 1: and I was just happy to have a job. People

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Speaker 1: like you don't want to be an equity research analyst.

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Speaker 1: They're just like monkeys. They just companies talma to write

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Speaker 1: and and I just wanted to get a job and

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Speaker 1: stay at the firm, and and there there, there you

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Speaker 1: have it. To be fair, some of them are not monkeys.

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Speaker 1: Some of them are insightful researchers who put forth intelligent,

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Speaker 1: um actionable wealth generating research. Absolutely agree with that, and

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Speaker 1: I certainly don't agree with the monkey comment, but it

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Speaker 1: was the beginning of now my nearly thirty year career

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Speaker 1: as an equity analyst. So not not as a monkey,

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Speaker 1: but but actually generating research. So so you're you're kind

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Speaker 1: of thrown into housing. How did you suddenly discover such

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Speaker 1: a proficiency for it? What made you so astute as

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Speaker 1: as someone without a background and housing going into that space?

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Speaker 1: You know, I think what I really loved about it

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Speaker 1: initially was the fact the challenge was to really find

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Speaker 1: ways to differentiate the work that I was doing. And

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Speaker 1: when you have a fragmented industry and housing is something

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Speaker 1: that you know, I could relate to lived in a home.

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Speaker 1: I like the housing market. It was really about finding

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Speaker 1: companies that were privately held that are in the business

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Speaker 1: of housing, whether they were a home builder or a

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Speaker 1: realtor like your mom, or building product manufacturer, and talking

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Speaker 1: to them about the business and learning from them, and

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Speaker 1: then you using that analysis to then try to correlate

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Speaker 1: or predict what public companies would do. Were other people

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Speaker 1: delving into private companies at that time as a way

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Speaker 1: to give them a little more color into what the

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Speaker 1: reality of the public situation was not that much, to

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Speaker 1: be honest with you, In fact, um not to give

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Speaker 1: too much credit to any one person, but it was

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Speaker 1: really I was assigned a buddy. Salomon Brothers decided that

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Speaker 1: a salesperson and analysts would become buddies and they would

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Speaker 1: work closely together for the younger Alice to learn from

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Speaker 1: the senior salesperson, and the senior salesperson really said, you know,

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Speaker 1: you need to go dig in the channel. You need

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Speaker 1: to find private companies. And that was really the direction

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Speaker 1: I went. Now, it just so happened I happened to

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Speaker 1: have married my buddy, but that's a longer story. But

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Speaker 1: my husband, David, really was the one who directed me

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Speaker 1: to go find private companies and that will really help

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Speaker 1: to ferentiate you. Quite fascinating. So let's talk a little

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Speaker 1: bit about Wall Street and housing. I think for the

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Speaker 1: most part, Wall Street has not done a distinguished job

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Speaker 1: covering housing in general, covering the retail and department store sector, um,

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Speaker 1: certainly the credit companies that are associated with residential housing.

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Speaker 1: What's your view is Wall Street? Am I overstanding this?

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Speaker 1: Or does Wall Street not do a great job getting

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Speaker 1: housing right? Well? You know, looking at really our our firm,

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Speaker 1: which um, we think we do get it right. You know,

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Speaker 1: what we've built has enabled us to really um differentiate

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Speaker 1: our overall views because we're dependent not upon what economists

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Speaker 1: are predicting or um other outside parties perspectives, meaning publicly

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Speaker 1: traded management teams telling them what they should do. We're

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Speaker 1: really going outside through our own network, which again we

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Speaker 1: channel check developed relationships. We have nearly a thousand companies

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Speaker 1: that are throughout what I call the housing ecosystem. Whether

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Speaker 1: they're a builder, they're a broker, there are a mortgage originator,

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Speaker 1: there are a manufacturing company that makes building products, or

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Speaker 1: they're in the single family rental business as as an

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Speaker 1: owner operator apartment. We're taking all of these silos, and

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Speaker 1: we're aggregating data that is proprietary data within each silo,

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Speaker 1: and we're then triangulating it amongst this ecosystem to have

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Speaker 1: a firm view of what's going on in the market.

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Speaker 1: And I don't think it's unique to Zelman. No one

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Speaker 1: else has anything like what we do, and it's been

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Speaker 1: built over the course of the decades that I've been

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Speaker 1: in the business. So I can't say what other firms do,

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Speaker 1: but I think we get it right. Well, it sounds

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Speaker 1: like Wall Street is generally a little too close with

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Speaker 1: corporate management and they're looking for guidance and not doing

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Speaker 1: a sort of deep outside the box research UM dive

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Speaker 1: into various aspects of housing or again, am I overstanding that? Well? Again,

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Speaker 1: I can't speak on behalf of what other firms are doing,

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Speaker 1: but I know what we don't do, and I can

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Speaker 1: tell you that back in the I guess Go Go

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Speaker 1: days of the housing market in you know, oh, three

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Speaker 1: oh four, oh five, I wasn't a very popular analyst

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Speaker 1: UM working at credit suites when I was negative and

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Speaker 1: certainly the companies UM didn't see eye to eye with

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Speaker 1: my views. And it's like being the sober person at

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Speaker 1: the party. Um so um, I was definitely a lone

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Speaker 1: range are at times. So let's talk about that period

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Speaker 1: of financial engineering was endemic. Securitization was a giant revenue

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Speaker 1: source and we ended up seeing that eventually spiral out

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Speaker 1: of control into the Great Financial Crisis. So what is

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Speaker 1: it about that era that led so many people astray?

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Speaker 1: Especially the supposed smart guys doing the quantitative um research. Well,

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Speaker 1: I don't know that you could put pen it on

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Speaker 1: one thing. So then agreed um certainly the inability to

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Speaker 1: really take sort of the entire mosaic and see the

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Speaker 1: risk that was so in our opinion obvious. A lot

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Speaker 1: of people started, I call it drinking their own kool

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Speaker 1: aid and believing that there was a secular shift in

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Speaker 1: home ownership rates and that the government was certainly supportive

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Speaker 1: of continued you know, um enabling people to have the

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Speaker 1: American dream. But there was a optimism that was not

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Speaker 1: supported by the you know ingredients that go into you know,

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Speaker 1: creating that opportunity for people. So it it just was

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Speaker 1: a again, is if people just were convinced that it

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Speaker 1: was different this time and that housing housing was you know,

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Speaker 1: gonna go up forever. So I want to point out

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Speaker 1: this is not a case of hindsight bias, where, of

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Speaker 1: course the risks where obvious, says everybody today. In real time,

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Speaker 1: I recall reading some of your research oh four, oh five,

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Speaker 1: oh six, when did you leave? Oh seven, May of

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Speaker 1: oh seven, So in real time, before the bust, you

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Speaker 1: were effectively saying, there's a problem with credit, there's a

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Speaker 1: problem with housing, this is unsustainable. What what was the

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Speaker 1: research that you were putting out at that time saying

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Speaker 1: how how blunt were you? Pretty blunt? Um? I remember

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Speaker 1: report that we untitled Investors Gone Wild in July of

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Speaker 1: two thousand five. I think we had like a thousand

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Speaker 1: people in our conference call across all of it, beyond equities,

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Speaker 1: within you know, fixed income and rivers everywhere. Um, the

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Speaker 1: securitization guys were there, but generally speaking, the amount of investors.

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Speaker 1: When you go to let's say Las Vegas and you're

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Speaker 1: driving from the airport and your taxi drivers telling you

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Speaker 1: he's buying houses, and then you know, you go to

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Speaker 1: the nail salon, the woman and the nail salon is

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Speaker 1: during your nails is buying houses, and you realize we

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Speaker 1: have maybe we have a problem. I think that the

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Speaker 1: investors and the magnitude that we're buying both new and

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Speaker 1: existing homes with no money down and understanding the mortgage

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Speaker 1: piece was probably one of the biggest um parts of

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Speaker 1: our conviction on why we had a real problem here,

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Speaker 1: and and mentioning again affordability was clearly way out of

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Speaker 1: reach from any historical perspective. Um. The other aspect of it,

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Speaker 1: besides investors gotten wild, was the amount that the builders

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Speaker 1: were willing to pay for land and having the ability

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Speaker 1: to talk to private companies and who would be competing

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Speaker 1: with the builder for that land, and the private builders

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Speaker 1: would tell us, oh my god, you cannot believe what

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Speaker 1: these guys are paying for the land. That was another

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Speaker 1: part of our analysis that really led us to understand

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Speaker 1: the risks that these um companies were really willing to

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Speaker 1: absorb at the expense of shareholders. You put your finger

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Speaker 1: on a couple of things I want to bring up,

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Speaker 1: one of which is historically, most builders are pretty cognizant

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Speaker 1: of the real estate cycle and the business cycle, and

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Speaker 1: they get aggressive when things are cheap, and when things

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Speaker 1: get expensive they pull back. But for some reason, it

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Speaker 1: seemed that a lot of people sort of stopped doing

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Speaker 1: that in oh five or six oh seven. What was

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Speaker 1: it about that period that made them forget, Oh no,

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Speaker 1: you don't want to pay up for lands. It'll come

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Speaker 1: back down when the cycle turns well, you know, I

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Speaker 1: think there was a view that the demographics had shifted

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Speaker 1: and that um there was support for you know, a

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Speaker 1: secular growth in housing that we hadn't hadn't seen in

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Speaker 1: prior cycles. That was the That was what the companies

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Speaker 1: pitched to the investment community. They and they really believed

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Speaker 1: in many of them. Um, they also had Wall Street

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Speaker 1: pushing hard to drive top line. So what had been

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Speaker 1: matching short term assets with short term debt or long

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Speaker 1: term debt with long term assets. You know, what you

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Speaker 1: started seeing is builders willingly taking on more leverage, buying

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Speaker 1: larger parcels because it would feed the machine, enabling them

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Speaker 1: to continue show strong growth. And so the market was

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Speaker 1: really demanding growth and they were willing to put the

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Speaker 1: capital to work. You know, it's one of the only

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Speaker 1: businesses that you know, once you build the factory and

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Speaker 1: then sell it, you have to rebuild your factory. And unfortunately,

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Speaker 1: this is one of a factory that you know, you

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Speaker 1: have to best fifty cents to seventy cents to make

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Speaker 1: a dollar revenue capital intense business, and you start buying

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Speaker 1: land that won't be let's say, put into the manufacturing

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Speaker 1: capacity realization machine for a few years. You can really

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Speaker 1: put some significant risk on the balance sheet. Quite quite interesting.

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Speaker 1: So let's talk a little bit about the timing of

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Speaker 1: the launch of Zelman and Associates. You do this? Was

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Speaker 1: it later on? Oh seven? Is that right? We left

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Speaker 1: Credit Suites in May and started Zelman October seven. Okay,

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Speaker 1: so October fifth, two thousand seven. The October October five,

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Speaker 1: two thousand seven is when the equity markets peaked and

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Speaker 1: would not see that level again until So your timing

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Speaker 1: was kind of interesting and coincidential. You obviously saw some

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Speaker 1: variation of what was coming. Why launch into that sort

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Speaker 1: of Mayhew Or was the expectation, Hey, nobody's job is safe,

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Speaker 1: we might as well do it ourselves, or what were

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Speaker 1: you thinking? Well, my team's at Credit Suites. Dennis McGill

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Speaker 1: who was my UM partner associate and he's the co

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Speaker 1: founder of his Element Associates, along with Alan Rattner, who

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Speaker 1: was also working with us on the team of Credit

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Speaker 1: SUITEZ we were working um as equity analysts, really focused

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Speaker 1: on housing, but we were servicing the entire firm because

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Speaker 1: we were such in the eye of the storm, and

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Speaker 1: we had such a controversial call, and I had such

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Speaker 1: an unbelievable network that we created through these private industry

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Speaker 1: contacts that we wanted. We weren't feeling that we were getting.

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Speaker 1: First of all, we were unfortunately a lot of people

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Speaker 1: internally within the salesforce and the traders and in the

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Speaker 1: in this curization, the ABS guys, they didn't agree with

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Speaker 1: our call. So we were a little bit um. Hey,

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Speaker 1: somebody has to be on the wrong side of the trade, right. Well,

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Speaker 1: we were not very popular. And you know, I was

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Speaker 1: even told by the head of product management from Credit

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Speaker 1: Suez is um perspective that your job could be at

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Speaker 1: risk if you don't make you know, you had your

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Speaker 1: I think in two thousand six, this is what happened.

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Speaker 1: Two thousand and six. The stocks were down about and

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Speaker 1: there was slowing and we were right. And then Bob

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Speaker 1: toll And told brothers say, hey, things are picking up.

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Speaker 1: This is back in September six and they called it

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Speaker 1: the Zelman bottom, and and that you need to get

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Speaker 1: with it. And you need to be more bullish. You

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Speaker 1: had your little good time. Now now you need to

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Speaker 1: turn around and be bullish. And I remember publishing Dennis

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Speaker 1: and I we had fun writing this report. UM in

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Speaker 1: December of two thousand six. We wrote twelve reasons or

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Speaker 1: the ten reasons to sell homebuilding stocks. Wait, let me,

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Speaker 1: let's just make sure I understand the time in here.

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Speaker 1: So you're negative on on home builders and housing stocks.

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Speaker 1: They fall over the next twenty four months? Is that fair?

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Speaker 1: I think it was July aboh five was when they

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Speaker 1: we started really seeing inventory starting to left twelve months,

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Speaker 1: let's say twelve months. So this is a fierce bear

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Speaker 1: market and it's only the beginning down. Um. And and somebody,

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Speaker 1: not your direct boss, but somebody in the firm says,

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Speaker 1: all right, you've had you a little fun, you've had

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Speaker 1: your little pullback. You better flip bullish and your contray

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Speaker 1: responses bullish. Watch this. No hesitation, not wondering about, hey,

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Speaker 1: these guys can get me fired. There was no thought

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Speaker 1: about that, or was there. Um, Well, this this was

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Speaker 1: a managing director running all of the morning call product manager.

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Speaker 1: And I was pretty piste off. And actually, UM went

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Speaker 1: to my director of research and complained and and actually

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Speaker 1: the research director was very supportive of me, and so

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Speaker 1: with that it was they were great to me. But

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Speaker 1: this particular person, unfortunately it was, was someone I was

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Speaker 1: pretty upset with. But subsequent to that, sort of like

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Speaker 1: the Zelman bottom, we published something in October o six

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Speaker 1: called wonder Land, and Wonderland was basically saying that the

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Speaker 1: home building industry is going to have to write off

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Speaker 1: equity because they've overpaid for so much land. We actually

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Speaker 1: estimated about equity right off. How much was that in

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Speaker 1: actual dollars and it actuality It turned out to be

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Speaker 1: fifty six that they wrote off, So we were way off,

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Speaker 1: but we were so contrariant at this time, so that

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Speaker 1: was what else was off? No nor off, Yeah, no

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Speaker 1: right offs or anything. So that was October six. That

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Speaker 1: was another sort of flagship report. But in December the

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Speaker 1: stocks kept going up, so they were rallying in our face.

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Speaker 1: We're getting a lot of backlash. Salesforce was against us.

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Speaker 1: People internally were like, what's the story. And in December

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Speaker 1: we came out with the ten reasons to sell homebuilding

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Speaker 1: stocks and give us a few reasons out of the tent.

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Speaker 1: The town was they were. You know, basically the mortgage

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Speaker 1: market was not sustainable. The fueling of the growth was

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Speaker 1: coming from you know, these ridiculous exotic mortgage products you had.

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Speaker 1: Land prices were going to crash. We had consumers that

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Speaker 1: were not buying because the investors were buying. Um. I'd

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Speaker 1: have to go back and look at all the specifics.

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Speaker 1: But any any big clients say, I don't care about that.

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Speaker 1: This is contrarian. I'm going to do this and put

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Speaker 1: giant bets to work. Sure. Um. John Paulson was one

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Speaker 1: of our clients that we talked to regularly. Steve Eisman

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Speaker 1: was one of my buddies. I probably spoke with him daily,

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Speaker 1: along with his team Danny Moses and Vinny Daniels. That

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Speaker 1: those guys were every day we were on the phone

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Speaker 1: with them. There were some people that were really convinced,

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Speaker 1: as we were, that this Barrish call at some point

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Speaker 1: was going to work. So the Selma Gomez character and

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Speaker 1: the Big Short that that was supposed to be you,

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Speaker 1: is that right? I got one quote in there, but

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Speaker 1: not that one you did. What was the quote in

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Speaker 1: the Big Short? Oh? I don't remember what the quote,

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Speaker 1: but Michael Lewis did stick me in there? You mentioned

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Speaker 1: the you mentioned the cab driver in in Vegas on

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Speaker 1: the way back from the airport. My favorite scene with

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Speaker 1: Steve Carrell is he's I don't remember it was a stripper,

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Speaker 1: a waitress, but it was in a strip club and

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Speaker 1: he's asking her. They're talking about real estate, and he's saying,

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Speaker 1: how do you afford the mortgage on that house? And

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Speaker 1: she goes, that house I own. I have four houses.

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Speaker 1: And that's the moment where okay, I think I have

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Speaker 1: to I don't remember what character he was who he

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Speaker 1: was playing in real life. He was playing Steve. He

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Speaker 1: was Steve Eisman. Okay, so that character, that's the moment um.

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Speaker 1: It's a little more dramatic in a strip club than

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Speaker 1: speaking to a Wall Street analyst about oh you know

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Speaker 1: I Actually my husband and I we owned um a

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Speaker 1: home in Florida and we go out to the beach

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Speaker 1: and it's in a community. And the guy that was

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Speaker 1: putting the umbrellas in the San Chris, he told my

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Speaker 1: husband that he owned about ten fifteen lots. And I

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Speaker 1: was like, this is probably two thousand four, two thousand five,

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Speaker 1: and he was asking my husband, do you want to

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Speaker 1: go look at some loss with me, because you can

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Speaker 1: buy them with no money down. And I was like,

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Speaker 1: I'm like, David, do you hear this? This is crazy?

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Speaker 1: So you know everywhere you know. But but Steve was

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Speaker 1: on it. He had the call, he really did. So

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Speaker 1: a friend of mine called called that era. Um, the

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Speaker 1: so called home owners were really renters with an option

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Speaker 1: to default, which which I thought was kind of amusing. Interesting.

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Speaker 1: Let's talk a little bit about where we are in

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Speaker 1: the housing market today. I've seen a couple of things

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Speaker 1: that remind me a little bit of the early two thousands. Um.

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Speaker 1: HDTV is going strong and Flip this house is back,

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Speaker 1: and although these days it seems to be more about

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Speaker 1: renovating than it is about buying and selling them. Um.

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Speaker 1: But the housing market seems to have mostly recovered in

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Speaker 1: about half the country. I'm ballparking that. Where where do

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Speaker 1: you see the housing market today? And does it remind

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Speaker 1: you at all of the bad old days? I think

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Speaker 1: the housing market right now is pretty healthy. Two eighteen

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Speaker 1: was a tough year. The market decelerated pretty much most

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Speaker 1: of the year, more month to month, worse than normal seasonality.

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Speaker 1: But by the time we got to the end of

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Speaker 1: the year. It ended with a big thud, and a

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Speaker 1: lot of people thought housing was gonna lead us into

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Speaker 1: a recession again, mainly due to the stock market turmoil,

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Speaker 1: getting the political turmoil global and certainties sort of perfect storm.

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Speaker 1: So housing came to kind of a screeching halt. And

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Speaker 1: yet the fundamentals actually were pretty favorable. We have strong

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Speaker 1: job growth, consumer confidence is high, and incomes are accelerating.

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Speaker 1: And if you look at the housing market from supply

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Speaker 1: and demand, we actually have a pretty significant deficit of

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Speaker 1: a lack of supply, which we estimate to be about

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Speaker 1: So when you just look at what we need in

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Speaker 1: order to provide shelter for the incremental households growing and

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Speaker 1: those getting knocked down demolished, that that's a pretty strong

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Speaker 1: positive part of the thesis. Now, you mentioned half the

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Speaker 1: market for the United States recovered. That's in terms of

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Speaker 1: home prices, so about half the country is actually below

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Speaker 1: its prior peak. Um. As you think about pricing, the

431
00:25:21,760 --> 00:25:23,840
Speaker 1: pricing in the in the housing market is a little

432
00:25:23,840 --> 00:25:27,720
Speaker 1: bit now um more challenging. So builders are in fact

433
00:25:27,720 --> 00:25:30,080
Speaker 1: and brokers and real estate agents are seeing a momentum

434
00:25:30,080 --> 00:25:33,400
Speaker 1: in spring um pick back up from the thud now

435
00:25:33,520 --> 00:25:36,480
Speaker 1: was the stock market close to record highs again. The

436
00:25:36,520 --> 00:25:40,520
Speaker 1: political turmoil has settled down, but spring selling season actually

437
00:25:40,640 --> 00:25:44,640
Speaker 1: is definitely pretty good now. The entry level is much

438
00:25:44,640 --> 00:25:48,040
Speaker 1: stronger than the move up and luxury and depending on

439
00:25:48,080 --> 00:25:50,920
Speaker 1: a market where job growth might be stronger versus another

440
00:25:50,960 --> 00:25:54,280
Speaker 1: city where it's not as strong, so all real estate

441
00:25:54,320 --> 00:25:57,440
Speaker 1: it doesn't necessarily move in tandem. But right now I'd

442
00:25:57,440 --> 00:26:00,879
Speaker 1: say it's healthy and affordability is still reasonable. Bowl I

443
00:26:00,960 --> 00:26:03,359
Speaker 1: don't see a lot of concerns at this point. Things

444
00:26:03,400 --> 00:26:06,920
Speaker 1: that we're watching I'm happy to elaborate, but generally i'd

445
00:26:06,920 --> 00:26:09,920
Speaker 1: say we feel pretty good about the market today. So so,

446
00:26:10,000 --> 00:26:15,159
Speaker 1: we have constrained supply, relatively low rates. Even after the

447
00:26:15,200 --> 00:26:19,520
Speaker 1: past year of increases, rates are still historically Um what

448
00:26:19,680 --> 00:26:23,040
Speaker 1: what is a mortgage today? Four for a quarter for

449
00:26:23,160 --> 00:26:26,040
Speaker 1: a quarter? I mean that's pretty reasonable, isn't it. So,

450
00:26:26,040 --> 00:26:29,400
Speaker 1: So given the limited supply and low rates, what does

451
00:26:29,440 --> 00:26:33,840
Speaker 1: that mean for home prices over the next couple of years. Well,

452
00:26:34,000 --> 00:26:37,160
Speaker 1: home prices have been up. The first year they increase

453
00:26:37,240 --> 00:26:39,680
Speaker 1: was two thousand twelve, and since two thousand twelve we've

454
00:26:39,720 --> 00:26:43,000
Speaker 1: been running out about a five to six percent growth.

455
00:26:43,480 --> 00:26:46,560
Speaker 1: Kager and what we're seeing right now is some moderation

456
00:26:46,600 --> 00:26:50,000
Speaker 1: and home price appreciation. You know, the inventory is available

457
00:26:50,040 --> 00:26:52,320
Speaker 1: for sale in the United States if you look at

458
00:26:52,320 --> 00:26:54,160
Speaker 1: it over a long period of time, and we look

459
00:26:54,160 --> 00:26:57,280
Speaker 1: at it inventory those homes listed for sale as a

460
00:26:57,320 --> 00:27:00,520
Speaker 1: percent of households, which we think it provides a friend line.

461
00:27:00,800 --> 00:27:05,160
Speaker 1: Unlike most realtors and your mom probably talked about months supply, um,

462
00:27:05,200 --> 00:27:07,240
Speaker 1: what we'd tell you is that inventories in the US

463
00:27:07,320 --> 00:27:10,879
Speaker 1: are actually at nearly at thirty year lows, so inventories

464
00:27:10,880 --> 00:27:14,000
Speaker 1: and nationally are very very low. And what that means

465
00:27:14,040 --> 00:27:17,320
Speaker 1: is that that there's more demand and supply, so prices

466
00:27:17,359 --> 00:27:20,200
Speaker 1: continue to increase. But we're starting to see some moderation

467
00:27:20,600 --> 00:27:23,080
Speaker 1: and how much pricing power there really is, more of

468
00:27:23,119 --> 00:27:26,600
Speaker 1: that being skewed to more challenging environment at the higher end.

469
00:27:26,960 --> 00:27:29,240
Speaker 1: Some cities, for example, in the luxury price point, are

470
00:27:29,240 --> 00:27:32,880
Speaker 1: actually seeing pretty significant inflation, like New York City, Miami

471
00:27:33,320 --> 00:27:36,960
Speaker 1: and others are just challenged and buyers or sorry, sellers

472
00:27:37,320 --> 00:27:41,320
Speaker 1: need to capitulate, especially on older stock that's boxy or

473
00:27:41,960 --> 00:27:45,800
Speaker 1: you know, dated that needs to be rehabbed and hasn't been.

474
00:27:45,840 --> 00:27:48,360
Speaker 1: So there's sellers I need to be more. They need

475
00:27:48,400 --> 00:27:52,080
Speaker 1: to be more realistic. What about the ultra high ends? Uh,

476
00:27:52,600 --> 00:27:55,919
Speaker 1: my friends, we we both know. Jonathan Miller, he calls

477
00:27:55,960 --> 00:28:00,000
Speaker 1: that aspirational pricing. When people slap a forty or fifth

478
00:28:00,040 --> 00:28:03,000
Speaker 1: you're a hundred million dollar priced egg on something that's

479
00:28:03,000 --> 00:28:06,679
Speaker 1: really worth a fraction of it. Um. What's happening with

480
00:28:06,760 --> 00:28:09,200
Speaker 1: the ultra high end uh end of the market? Is

481
00:28:09,359 --> 00:28:12,880
Speaker 1: that finding a little reality or do we still see

482
00:28:12,960 --> 00:28:18,240
Speaker 1: crazy prices? Um? I think the markets in general are

483
00:28:18,320 --> 00:28:22,440
Speaker 1: still seeing crazy prices. There has been some capitulation. Whereat

484
00:28:22,440 --> 00:28:25,880
Speaker 1: sellers and Grenwage, for example, are starting to recognize it's

485
00:28:25,920 --> 00:28:28,480
Speaker 1: been three years, the helm's not moving, let me lower

486
00:28:28,520 --> 00:28:30,760
Speaker 1: the price of it. So we do see some you know,

487
00:28:31,080 --> 00:28:34,119
Speaker 1: um capitulation, but not nearly as much as we need to.

488
00:28:34,480 --> 00:28:37,359
Speaker 1: In fact, yesterday as with a client visiting in New

489
00:28:37,440 --> 00:28:40,520
Speaker 1: York and when when a New York City prices gonna

490
00:28:40,520 --> 00:28:42,520
Speaker 1: go down more? And I said, well, they've come They've

491
00:28:42,520 --> 00:28:45,200
Speaker 1: come down quite a bit from their aspirational peak. Like

492
00:28:45,280 --> 00:28:47,960
Speaker 1: Jonathan likes to say it. From two thousand fourteen, he says,

493
00:28:47,960 --> 00:28:50,240
Speaker 1: developers aren't willing to lower their prices or giving me

494
00:28:50,320 --> 00:28:53,920
Speaker 1: ten years of no maintenance and no taxes. But they

495
00:28:53,960 --> 00:28:56,640
Speaker 1: won't lower the price. I said, stay tuned, they will.

496
00:28:57,040 --> 00:28:59,120
Speaker 1: You think that will eventually they'll be forced to. I

497
00:28:59,120 --> 00:29:01,560
Speaker 1: think they have to otherwise there might be distressed for

498
00:29:01,600 --> 00:29:04,320
Speaker 1: some of these developers. I mean, the sales for the

499
00:29:04,400 --> 00:29:06,840
Speaker 1: luxury in New York City in the first quarter is

500
00:29:06,920 --> 00:29:10,600
Speaker 1: like non existent. Really, it's very, very weak. So so

501
00:29:10,640 --> 00:29:14,120
Speaker 1: what about the fat part of the distribution of housing.

502
00:29:14,200 --> 00:29:17,120
Speaker 1: The let's call at half a million to a million

503
00:29:17,120 --> 00:29:20,320
Speaker 1: dollar homes more than stut and by the way, that's

504
00:29:20,320 --> 00:29:25,960
Speaker 1: my New York bias price or San Francisco or Chicago

505
00:29:26,080 --> 00:29:28,960
Speaker 1: is more reasonable. Um, lots of places in the rest

506
00:29:28,960 --> 00:29:32,080
Speaker 1: of the country more reasonable, but more than a starter home,

507
00:29:32,280 --> 00:29:35,560
Speaker 1: less than the really high end houses. How is that

508
00:29:35,600 --> 00:29:39,360
Speaker 1: area doing. It's really more market dependent, you know. I

509
00:29:39,360 --> 00:29:42,560
Speaker 1: can tell you in Dallas, for example, over four hundred

510
00:29:42,560 --> 00:29:46,200
Speaker 1: thousand to six hundred thousand, it's very competitive and you're

511
00:29:46,200 --> 00:29:50,479
Speaker 1: probably seeing um a little pressure there builders being forced

512
00:29:50,520 --> 00:29:54,520
Speaker 1: to use more concessions. Whereas if you go into let's

513
00:29:54,520 --> 00:29:59,480
Speaker 1: say a market like um Phoenix, the four to six

514
00:29:59,560 --> 00:30:02,800
Speaker 1: is very healthy and you might even see some pricing power.

515
00:30:02,960 --> 00:30:07,520
Speaker 1: So generally that segment of the market has been more

516
00:30:07,640 --> 00:30:12,680
Speaker 1: um I think mature in terms of the cycle. And

517
00:30:12,800 --> 00:30:15,840
Speaker 1: when you think back to two thousand, really two thousand

518
00:30:15,880 --> 00:30:18,560
Speaker 1: level with the bottom, so as we saw growth, really

519
00:30:18,600 --> 00:30:22,440
Speaker 1: the fat of the market really has had now seven

520
00:30:22,520 --> 00:30:26,520
Speaker 1: eight years recovery, whereas the entry level, believe it or not,

521
00:30:26,680 --> 00:30:29,320
Speaker 1: the builders did not want to build that true affordable

522
00:30:29,360 --> 00:30:32,080
Speaker 1: product where we call it, you know, building out in

523
00:30:32,120 --> 00:30:36,080
Speaker 1: the excerbs, the pioneers where you have to drive to qualify.

524
00:30:36,320 --> 00:30:40,680
Speaker 1: Part of which it was because the mentality was that

525
00:30:40,880 --> 00:30:44,120
Speaker 1: consumers only want to walk to work and or you

526
00:30:44,160 --> 00:30:47,080
Speaker 1: can't get a mortgage. Now, the mortgage market was so tight,

527
00:30:47,480 --> 00:30:50,720
Speaker 1: builders were concerned about building affordable for lower credit quality.

528
00:30:51,120 --> 00:30:54,560
Speaker 1: So really the entry level, true entry level price point

529
00:30:55,080 --> 00:30:58,600
Speaker 1: didn't start getting constructed until really in earnest, until two

530
00:30:58,640 --> 00:31:02,640
Speaker 1: thousand sixteen. In fact, we would argue to today the

531
00:31:02,760 --> 00:31:05,840
Speaker 1: entry level portion of new home sales is still materially

532
00:31:05,880 --> 00:31:10,320
Speaker 1: below where what would be perceived normal. So it's a

533
00:31:10,320 --> 00:31:12,080
Speaker 1: bit of a tale of two markets where you have

534
00:31:12,120 --> 00:31:15,640
Speaker 1: one of one. Meat of the market still has some legs,

535
00:31:15,680 --> 00:31:19,680
Speaker 1: but it's later stage and it's still reasonable healthy in

536
00:31:19,760 --> 00:31:22,880
Speaker 1: terms of inventories. Still the six months that that's a

537
00:31:22,920 --> 00:31:25,880
Speaker 1: balanced market. The move up is still below six months,

538
00:31:26,400 --> 00:31:29,760
Speaker 1: but you are seeing the low end entry level where

539
00:31:29,760 --> 00:31:34,400
Speaker 1: there's real robust demand but just not enough product. Quite

540
00:31:34,440 --> 00:31:38,480
Speaker 1: quite interesting what you mentioned how regional UM real estate

541
00:31:38,560 --> 00:31:42,640
Speaker 1: is what areas stand out, either for good or bad reasons,

542
00:31:43,160 --> 00:31:48,000
Speaker 1: as interesting or unusual around the country. UM. I was

543
00:31:48,040 --> 00:31:51,040
Speaker 1: just in Nashville last week and I was just unbelievable

544
00:31:51,120 --> 00:31:55,040
Speaker 1: booming market with you know, really a pro business stance

545
00:31:55,080 --> 00:31:58,120
Speaker 1: that you know, companies continue to move there and the

546
00:31:58,200 --> 00:32:01,640
Speaker 1: migrations moving there. But just top of mind because having

547
00:32:01,640 --> 00:32:03,840
Speaker 1: just been there, were we were there, I was speaking

548
00:32:03,840 --> 00:32:05,480
Speaker 1: as a guest for a real estate conference, and I

549
00:32:05,480 --> 00:32:08,200
Speaker 1: was sort of blown away by the growth. UM. What

550
00:32:08,320 --> 00:32:10,560
Speaker 1: we're seeing a lot that we study the markets and

551
00:32:10,640 --> 00:32:15,600
Speaker 1: we understand where migration patterns, importantly, which states are winning

552
00:32:15,600 --> 00:32:18,560
Speaker 1: and which are losing. And Florida is just a winner,

553
00:32:18,760 --> 00:32:23,120
Speaker 1: both with millennials and with the boomers. And you're seeing

554
00:32:23,120 --> 00:32:26,920
Speaker 1: a tremendous amount of migration into Florida. And despite Miami

555
00:32:27,000 --> 00:32:30,080
Speaker 1: Beaches softness right now at the higher price point, I

556
00:32:30,080 --> 00:32:33,000
Speaker 1: think Florida is going to continue to be a winner. UM.

557
00:32:33,040 --> 00:32:35,880
Speaker 1: You continue to see winners out west and the Southwest,

558
00:32:35,920 --> 00:32:40,560
Speaker 1: strength in Vegas, Arizona, and Colorado. California, on the other hand,

559
00:32:41,000 --> 00:32:44,000
Speaker 1: is where we see some concern and we've lost foreign

560
00:32:44,120 --> 00:32:47,840
Speaker 1: national buyers there, that for foreign national Chinese buyers pretty

561
00:32:47,880 --> 00:32:50,800
Speaker 1: much all but gone. People that are there Chinese buyers

562
00:32:50,800 --> 00:32:54,080
Speaker 1: are buying, but that foreign nationals are gone. The Bay

563
00:32:54,160 --> 00:32:58,120
Speaker 1: Area despite Silicon Valley and you know, the benefits there

564
00:32:58,600 --> 00:33:01,400
Speaker 1: seems to be just not accelerating like the rest of

565
00:33:01,480 --> 00:33:05,960
Speaker 1: California off of what was the weaker period of eighteen um.

566
00:33:06,040 --> 00:33:09,320
Speaker 1: And some of that is it related to tax reform? Salt?

567
00:33:09,680 --> 00:33:14,280
Speaker 1: Is it concerned just in terms of the continued pressure

568
00:33:14,680 --> 00:33:18,600
Speaker 1: literally literally my next question. So, so we keep reading

569
00:33:18,640 --> 00:33:22,680
Speaker 1: about the egress from New York to Florida and from

570
00:33:22,880 --> 00:33:26,040
Speaker 1: California to Arizona. And I know some of that is

571
00:33:26,080 --> 00:33:30,080
Speaker 1: just normal retirements. Hey, at a certain age. Um, if

572
00:33:30,120 --> 00:33:33,120
Speaker 1: you live in in Westchester, Long Island, you may not

573
00:33:33,240 --> 00:33:35,120
Speaker 1: want to go to Florida, but it's the law you

574
00:33:35,480 --> 00:33:38,240
Speaker 1: have to move down there. Um. But you know the

575
00:33:38,320 --> 00:33:41,520
Speaker 1: David Tepper story leaving New Jersey because it saved him

576
00:33:42,360 --> 00:33:47,360
Speaker 1: a bajillion dollars in taxes. How significant are those most

577
00:33:47,440 --> 00:33:50,960
Speaker 1: recent tax changes and the loss of the state and

578
00:33:51,000 --> 00:33:55,680
Speaker 1: local tax deduction to the real estate market. Well, first

579
00:33:55,720 --> 00:33:58,680
Speaker 1: you have to look at it in totality and appreciate

580
00:33:58,760 --> 00:34:02,600
Speaker 1: that about eighty four percent of tax filers actually had

581
00:34:02,640 --> 00:34:06,480
Speaker 1: a reduction in the taxes that they pay, right, So really,

582
00:34:06,480 --> 00:34:08,840
Speaker 1: but that's on a gross number, is it Is it

583
00:34:08,880 --> 00:34:11,399
Speaker 1: a big deduction? Is it a little deduction? You mean,

584
00:34:11,600 --> 00:34:16,480
Speaker 1: after if you took everything into consideration, the benefit is

585
00:34:16,520 --> 00:34:20,120
Speaker 1: actually the majority actually had a benefit. Now, where the

586
00:34:20,160 --> 00:34:23,360
Speaker 1: negative impact is at the higher price or the higher

587
00:34:23,400 --> 00:34:26,960
Speaker 1: income brackets. So where the risk would be is for

588
00:34:27,000 --> 00:34:31,680
Speaker 1: that eighty to eighty five percentile incomes percentile. So we're

589
00:34:31,719 --> 00:34:34,719
Speaker 1: if you're in the highest income bracket. But really the

590
00:34:34,800 --> 00:34:39,400
Speaker 1: question will be if you assumingly are in let's say Rye,

591
00:34:39,520 --> 00:34:42,200
Speaker 1: New York or Scarsdale, or you're living out in Long

592
00:34:42,239 --> 00:34:44,200
Speaker 1: Island and your kids are in high school or your

593
00:34:44,280 --> 00:34:46,840
Speaker 1: kids are in elementary school, are you really picking up

594
00:34:46,880 --> 00:34:49,719
Speaker 1: where you work and leaving the state because the taxes? No,

595
00:34:50,680 --> 00:34:52,960
Speaker 1: you know, could you start to see some pricing pressure

596
00:34:53,239 --> 00:34:55,840
Speaker 1: because maybe my buddy and his wife that are empty

597
00:34:55,880 --> 00:34:59,160
Speaker 1: nesters and they can you know, everybody's mobile today. With

598
00:34:59,239 --> 00:35:01,440
Speaker 1: today's technolo ology, you can work for from their home.

599
00:35:01,600 --> 00:35:03,839
Speaker 1: They're gonna pick up and leave, So you're gonna see

600
00:35:03,880 --> 00:35:07,360
Speaker 1: more inventory start to build for that marginal person that

601
00:35:07,480 --> 00:35:10,600
Speaker 1: can leave. That will put some more pressure on prices.

602
00:35:10,680 --> 00:35:13,399
Speaker 1: So I think the lever is price and I don't

603
00:35:13,440 --> 00:35:15,719
Speaker 1: think that it will create a collapse. But I think

604
00:35:15,719 --> 00:35:19,560
Speaker 1: the coastal sort of tri state area California markets are

605
00:35:19,560 --> 00:35:23,120
Speaker 1: going to see some more incremental inventory lead to moderation

606
00:35:23,160 --> 00:35:26,319
Speaker 1: and pricing. Quite quite interesting. Can you stick around a bit?

607
00:35:26,520 --> 00:35:28,759
Speaker 1: I have a ton of more questions for We have

608
00:35:28,920 --> 00:35:32,440
Speaker 1: been speaking with I V. Selman, CEO and co founder

609
00:35:32,560 --> 00:35:36,279
Speaker 1: of Zelman Associates. If you enjoy this conversation, be sure

610
00:35:36,320 --> 00:35:38,600
Speaker 1: and come back for the podcast extras, where we keep

611
00:35:38,640 --> 00:35:42,320
Speaker 1: the tape running and continue discussing all things real estate.

612
00:35:42,719 --> 00:35:48,400
Speaker 1: You can find that wherever Finder podcasts are sold, Apple, uh, Stitcher, Overcast,

613
00:35:49,239 --> 00:35:53,440
Speaker 1: Bloomberg dot com. We love your comments, feedback and suggestions

614
00:35:53,800 --> 00:35:58,239
Speaker 1: right to us at m IB podcast at Bloomberg dot net.

615
00:35:58,360 --> 00:36:01,440
Speaker 1: You could check out my daily column on Bloomberg dot

616
00:36:01,520 --> 00:36:04,600
Speaker 1: com slash Opinion. Follow me on Twitter at Rid Halts.

617
00:36:05,160 --> 00:36:08,640
Speaker 1: I'm Barry Ridhults. You're listening to Masters in Business. I'm

618
00:36:08,680 --> 00:36:25,279
Speaker 1: Bloomberg Radio Welcome to the podcast. Ivy. Thank you so

619
00:36:25,360 --> 00:36:26,920
Speaker 1: much for doing this. I've been looking forward to this

620
00:36:26,960 --> 00:36:30,560
Speaker 1: for a long time. UM, I am a real estate junkie,

621
00:36:30,840 --> 00:36:34,799
Speaker 1: not only because it was dinner table conversation every night

622
00:36:35,239 --> 00:36:40,560
Speaker 1: back in the days when mortgage race were um, but

623
00:36:40,719 --> 00:36:43,759
Speaker 1: it's just fascinating. Everybody has to live somewhere. Why not

624
00:36:43,920 --> 00:36:48,440
Speaker 1: live someplace fun, interesting, neat in the house that is

625
00:36:49,719 --> 00:36:53,719
Speaker 1: um sort of representative of your style and tastes and

626
00:36:53,840 --> 00:36:56,960
Speaker 1: values and interests. And it's really, uh, it's really a

627
00:36:57,000 --> 00:37:01,120
Speaker 1: fascinating space. You have to be thrilled that you found

628
00:37:01,120 --> 00:37:03,319
Speaker 1: your way into real estate, even though that was never

629
00:37:03,480 --> 00:37:07,440
Speaker 1: your intention when you began. I am I'm thrilled. I

630
00:37:07,520 --> 00:37:10,400
Speaker 1: love it so um. So let's let's go through a

631
00:37:10,400 --> 00:37:13,320
Speaker 1: few of the questions we missed during the broadcast section

632
00:37:13,440 --> 00:37:18,880
Speaker 1: before we get to our favorite questions in a few minutes. UM,

633
00:37:19,000 --> 00:37:21,440
Speaker 1: I have to ask about the launch of Zelmann Associate.

634
00:37:21,520 --> 00:37:24,360
Speaker 1: So October seven, we were talking about the date you

635
00:37:24,400 --> 00:37:28,200
Speaker 1: said you launched October three. I believe October five was

636
00:37:28,239 --> 00:37:31,640
Speaker 1: the old time high back then, at least for the dow.

637
00:37:32,280 --> 00:37:36,200
Speaker 1: What was it like launching right into the teeth of

638
00:37:36,239 --> 00:37:40,759
Speaker 1: the rollover and slide down for the next eighteen months. Well,

639
00:37:40,840 --> 00:37:45,760
Speaker 1: my partner and I Dennis mcguel, Um, we recruited our

640
00:37:45,880 --> 00:37:50,760
Speaker 1: partners in crime. It's Credit Sweet, Alan Ratner and Melinda Greantedge,

641
00:37:50,800 --> 00:37:53,399
Speaker 1: who was my secretary at the time, kind of pulled

642
00:37:53,400 --> 00:37:56,400
Speaker 1: her over from Credit Sweet, and my husband was also

643
00:37:56,560 --> 00:37:58,319
Speaker 1: in the beginning, so it was really the five of

644
00:37:58,440 --> 00:38:02,920
Speaker 1: us and um it was seven. We were working our

645
00:38:03,040 --> 00:38:05,440
Speaker 1: butts off in order to be prepared for our big

646
00:38:05,560 --> 00:38:07,680
Speaker 1: date that we set. But I think it was so

647
00:38:07,760 --> 00:38:10,799
Speaker 1: much fun as well, because we at this point it

648
00:38:10,840 --> 00:38:15,000
Speaker 1: already had taste of victory where we knew that what

649
00:38:15,080 --> 00:38:17,920
Speaker 1: we had predicted was actually not only coming to fruition,

650
00:38:18,520 --> 00:38:21,480
Speaker 1: but way worse than we had ever considered or or predicted.

651
00:38:21,560 --> 00:38:24,759
Speaker 1: And so while we were in the teeth of the

652
00:38:24,840 --> 00:38:28,560
Speaker 1: storm with not you know, clear certainty which direction and

653
00:38:28,600 --> 00:38:31,720
Speaker 1: how much more severe the storm could be, we had

654
00:38:32,080 --> 00:38:37,080
Speaker 1: um just a fantastic times circling investors and interest. We

655
00:38:37,080 --> 00:38:39,239
Speaker 1: were we were in the sweet spot. So it was

656
00:38:39,280 --> 00:38:42,680
Speaker 1: so much fun. I mean, we had um crazy days

657
00:38:42,760 --> 00:38:46,480
Speaker 1: and nights and it was all consuming. I I can

658
00:38:46,520 --> 00:38:49,600
Speaker 1: tell you that it was difficult with three little babies

659
00:38:49,680 --> 00:38:53,279
Speaker 1: running around, but it was like where you'd wake up

660
00:38:53,320 --> 00:38:54,839
Speaker 1: at four in the morning and you just couldn't wait

661
00:38:54,880 --> 00:38:56,239
Speaker 1: to get in front of your computer. So it was

662
00:38:56,320 --> 00:39:00,000
Speaker 1: just thrilling, really thrilling. So I remember, I'm trying, I'm

663
00:39:00,000 --> 00:39:02,040
Speaker 1: want to do the get the years right. I could

664
00:39:02,040 --> 00:39:04,920
Speaker 1: be doing the My memory could be faulty. In in

665
00:39:05,640 --> 00:39:09,319
Speaker 1: I think it was OH five the home builders rolled over,

666
00:39:09,920 --> 00:39:12,799
Speaker 1: and I don't remember that was that year, but it

667
00:39:12,840 --> 00:39:15,320
Speaker 1: was clear they were undistressed while the rest of the

668
00:39:15,360 --> 00:39:19,280
Speaker 1: market was going higher. And then the next year, um,

669
00:39:19,400 --> 00:39:23,480
Speaker 1: the banks and brokers OH six started to come under pressure,

670
00:39:23,840 --> 00:39:26,960
Speaker 1: and again the market kept going up, and then OH seven,

671
00:39:27,080 --> 00:39:30,880
Speaker 1: I don't remember what segment rolled over. It was New Century,

672
00:39:31,280 --> 00:39:35,160
Speaker 1: is that what it was? March of seven mortgage, So

673
00:39:35,400 --> 00:39:37,520
Speaker 1: that so is the mortgage and the writers in OH seven,

674
00:39:37,560 --> 00:39:40,800
Speaker 1: and the market kept going up. So when you're launching

675
00:39:40,840 --> 00:39:45,080
Speaker 1: the firm, these are three calls that you had previously

676
00:39:45,160 --> 00:39:49,160
Speaker 1: talked about as a contrarian, as an outlier, who turned

677
00:39:49,200 --> 00:39:51,960
Speaker 1: out to be correct. When you launched the firm, I

678
00:39:52,000 --> 00:39:54,319
Speaker 1: have to assume a lot of clients came along with you.

679
00:39:54,800 --> 00:39:58,880
Speaker 1: Fortunately they did, so it was a very strong launch.

680
00:39:59,000 --> 00:40:02,200
Speaker 1: And um, you know we have had the ability to

681
00:40:02,239 --> 00:40:06,480
Speaker 1: continue to recruit new clients and really provide what we

682
00:40:06,560 --> 00:40:11,040
Speaker 1: think is unique proprietary research that no one else UM

683
00:40:11,160 --> 00:40:14,360
Speaker 1: and on no one else on Wall Street does anything

684
00:40:14,400 --> 00:40:17,800
Speaker 1: like we do. So we really provide a significant advantages

685
00:40:17,840 --> 00:40:21,480
Speaker 1: to our institutional investors and private equity firms that use Selman.

686
00:40:21,680 --> 00:40:25,160
Speaker 1: So private equity are are also clients. Yeah, mostly it's

687
00:40:25,160 --> 00:40:26,920
Speaker 1: hedge funds and mutual funds, but we also have some

688
00:40:26,960 --> 00:40:29,960
Speaker 1: private equity clients as well. So so let's talk a

689
00:40:29,960 --> 00:40:32,760
Speaker 1: little bit about that network. How do you go about

690
00:40:33,080 --> 00:40:35,719
Speaker 1: because the only thing I can even remotely compare it

691
00:40:35,800 --> 00:40:40,600
Speaker 1: to In the early days, Ed Hyman started a UM

692
00:40:40,680 --> 00:40:44,920
Speaker 1: on an economic side, building out a network of private

693
00:40:44,920 --> 00:40:49,120
Speaker 1: companies that would report their data to him. And basically

694
00:40:49,719 --> 00:40:51,920
Speaker 1: part of the reason he was so successful in the

695
00:40:52,800 --> 00:40:56,360
Speaker 1: economic space as a non economist is his data was

696
00:40:56,440 --> 00:41:00,400
Speaker 1: better than what BLS was generating. Right, sounds like you

697
00:41:00,400 --> 00:41:07,240
Speaker 1: you created something similar within the real estate space, builders, brokers,

698
00:41:07,480 --> 00:41:11,880
Speaker 1: real estate UM developers. Who who else was in that network?

699
00:41:12,200 --> 00:41:15,279
Speaker 1: And how do you go about reaching out to these folks?

700
00:41:15,360 --> 00:41:20,040
Speaker 1: So we we do follow Ed's model in going after

701
00:41:20,120 --> 00:41:24,360
Speaker 1: sort of understanding what is happening in various UM silos

702
00:41:24,360 --> 00:41:27,240
Speaker 1: within the economy. But ours is dedicated just to housing

703
00:41:27,280 --> 00:41:29,920
Speaker 1: and housing related But so we've got UM survey of

704
00:41:30,719 --> 00:41:35,280
Speaker 1: private homebuilders, a survey of land developers, UM, a quarterly

705
00:41:35,320 --> 00:41:39,200
Speaker 1: survey UM for banks to discuss their lending to acquisition

706
00:41:39,320 --> 00:41:44,320
Speaker 1: and development financing for builders. UM. We have a apartment survey,

707
00:41:44,600 --> 00:41:48,320
Speaker 1: a building product manufacturing distribution survey. We just published that today,

708
00:41:48,760 --> 00:41:52,320
Speaker 1: Single family rental and home center survey. We just publish

709
00:41:52,360 --> 00:41:55,160
Speaker 1: published that one as well today, Chairman, to forget one

710
00:41:55,440 --> 00:41:59,280
Speaker 1: UM the broker survey, which we survey about ten percent

711
00:41:59,280 --> 00:42:02,400
Speaker 1: of existing homes. Else So if you look at each silo,

712
00:42:02,800 --> 00:42:06,279
Speaker 1: the home building survey is the most mature and UM

713
00:42:06,520 --> 00:42:09,919
Speaker 1: most significant, probably in sample size. UM. Oh, I forgot

714
00:42:09,960 --> 00:42:12,880
Speaker 1: the mortgage Originator survey UM, which is also very significant

715
00:42:12,880 --> 00:42:17,120
Speaker 1: in size. But all of them we have not not

716
00:42:17,280 --> 00:42:19,800
Speaker 1: to discount what ed's survey does. But ED has a

717
00:42:19,880 --> 00:42:22,960
Speaker 1: very few questions. Most of the surveys we have will

718
00:42:22,960 --> 00:42:25,680
Speaker 1: be anywhere from twenty to thirty questions. So how do

719
00:42:25,719 --> 00:42:27,759
Speaker 1: you reach out to somebody and say, hey, listen, I

720
00:42:27,840 --> 00:42:30,600
Speaker 1: want you to participate in a quarterly thing. Don't worry,

721
00:42:30,600 --> 00:42:33,640
Speaker 1: it's only eight pages of questions. They'll take your less

722
00:42:33,640 --> 00:42:35,719
Speaker 1: than a week to fill it out. How do you

723
00:42:35,840 --> 00:42:39,960
Speaker 1: make that pitch? Well, first you go back years and

724
00:42:40,360 --> 00:42:42,800
Speaker 1: you have um A survey that's done over the phone,

725
00:42:42,840 --> 00:42:46,400
Speaker 1: and you build and cement relationships, and over time, with technology,

726
00:42:46,840 --> 00:42:49,680
Speaker 1: you create a platform where they can do it online.

727
00:42:49,760 --> 00:42:53,280
Speaker 1: Is all automated. But the exchange with the c suite

728
00:42:53,320 --> 00:42:57,600
Speaker 1: executives that taliated nearly a thousand throughout the ecosystem is

729
00:42:57,760 --> 00:43:01,200
Speaker 1: we will give you the research for free, for free

730
00:43:01,440 --> 00:43:04,120
Speaker 1: if you fill out the survey. And everybody who participates

731
00:43:04,120 --> 00:43:07,680
Speaker 1: wants to know what's happening in the ad Jason silos. Well,

732
00:43:08,160 --> 00:43:10,200
Speaker 1: they want to know what's going on within their peers,

733
00:43:10,239 --> 00:43:13,120
Speaker 1: within their own silo, but they want someone that can

734
00:43:13,120 --> 00:43:16,680
Speaker 1: triangulate all of it. And in fact, our institutional investors

735
00:43:16,719 --> 00:43:21,719
Speaker 1: are so data driven that sometimes the c suite executives

736
00:43:21,920 --> 00:43:25,080
Speaker 1: are information is almost too much for them, which is

737
00:43:25,120 --> 00:43:28,960
Speaker 1: one of the reasons we developed a newsletter called the

738
00:43:29,040 --> 00:43:32,120
Speaker 1: Z Report, which is a much higher level um BI

739
00:43:32,200 --> 00:43:36,120
Speaker 1: monthly report that just gives you really that foot perspective,

740
00:43:36,160 --> 00:43:38,520
Speaker 1: seven to eight articles on all the pieces of the mosaic,

741
00:43:38,680 --> 00:43:41,040
Speaker 1: because some of them were like IVY, it's just too much,

742
00:43:41,480 --> 00:43:44,440
Speaker 1: so they prefer that. So when you say bi monthly,

743
00:43:44,440 --> 00:43:47,680
Speaker 1: it's every other month, not I'm saying bi weekly, bi weekly. Sorry,

744
00:43:47,760 --> 00:43:51,200
Speaker 1: so twice a month off actively, Um, I never know

745
00:43:51,239 --> 00:43:53,560
Speaker 1: which is which. That's no, I said bi monthly, but

746
00:43:53,560 --> 00:43:56,799
Speaker 1: it's twice twice a month. So and that how how

747
00:43:56,840 --> 00:44:00,360
Speaker 1: big of a document is that? Is that something quickly?

748
00:44:00,560 --> 00:44:02,640
Speaker 1: Or I'd say you can read it an intent fifteen

749
00:44:02,680 --> 00:44:05,160
Speaker 1: minutes and it has some charts, but you know whether

750
00:44:05,200 --> 00:44:08,719
Speaker 1: the articles are on you know, rising healthcare costs as

751
00:44:08,760 --> 00:44:14,239
Speaker 1: an impedimental homeownership or affordability, you know, heat reaching a

752
00:44:14,320 --> 00:44:18,440
Speaker 1: new high or or low, whatever the topic, um might be,

753
00:44:18,480 --> 00:44:23,799
Speaker 1: the demographics millennials, you know, accelerate um family formation. We

754
00:44:23,960 --> 00:44:27,520
Speaker 1: take each of the pieces of our puzzle and we

755
00:44:27,600 --> 00:44:30,720
Speaker 1: take articles that we think are timely and it allows

756
00:44:30,719 --> 00:44:33,320
Speaker 1: people again to walk away from a ten to fifteen

757
00:44:33,320 --> 00:44:35,800
Speaker 1: minute read with hopefully a nice hot cuts heat or

758
00:44:35,840 --> 00:44:38,279
Speaker 1: coffee with wow, I really get what's going on now

759
00:44:38,280 --> 00:44:41,919
Speaker 1: in the housing market overall. That's very very interesting. So

760
00:44:42,600 --> 00:44:45,800
Speaker 1: if you want to express an idea in a trade,

761
00:44:46,400 --> 00:44:48,759
Speaker 1: how do you go about doing it? Is it long

762
00:44:48,840 --> 00:44:52,799
Speaker 1: or short? The home builders the credit side, how does

763
00:44:53,480 --> 00:44:55,560
Speaker 1: do some of these hedge funds. We know what happened

764
00:44:55,560 --> 00:44:58,360
Speaker 1: to know you know nine, But how to hedge funds today?

765
00:44:58,600 --> 00:45:03,560
Speaker 1: Take your research and apply it to capital well, because

766
00:45:03,560 --> 00:45:08,000
Speaker 1: we are an equity research firm, So our recommendations are

767
00:45:08,160 --> 00:45:12,160
Speaker 1: to buy, hold, or sell equities. Whether they're going to

768
00:45:12,560 --> 00:45:16,480
Speaker 1: do something that's outside of the equities, we don't recommend.

769
00:45:16,600 --> 00:45:19,440
Speaker 1: So are we're strictly going to recommend whether they short

770
00:45:19,719 --> 00:45:22,919
Speaker 1: or go long stocks? So that's all really the firm.

771
00:45:23,160 --> 00:45:25,760
Speaker 1: So what what sort of stocks do you cover? Obviously

772
00:45:25,800 --> 00:45:28,759
Speaker 1: the home builders are going to be one group, um

773
00:45:28,800 --> 00:45:32,160
Speaker 1: the mortgage originators or another. Do you go further afield

774
00:45:32,200 --> 00:45:35,360
Speaker 1: to reats or anything like that. So we have home builders,

775
00:45:35,400 --> 00:45:39,560
Speaker 1: building product manufacturers and distributors. We have real estate brokers.

776
00:45:39,840 --> 00:45:45,000
Speaker 1: We follow redfin, Zello, Relogy, Remax, We follow mortgage insurers,

777
00:45:45,200 --> 00:45:49,400
Speaker 1: mortgage title companies, and mortgage tech. We follow the home centers.

778
00:45:49,480 --> 00:45:53,399
Speaker 1: We follow single family rental rates and apartment reats. And

779
00:45:53,440 --> 00:45:56,319
Speaker 1: I think, do you do office space or storage or

780
00:45:56,440 --> 00:46:00,200
Speaker 1: or retail. No, we only do residential. So that's one

781
00:46:00,239 --> 00:46:02,879
Speaker 1: of the you know, I guess the way we think

782
00:46:02,920 --> 00:46:05,160
Speaker 1: of our niche that it has to be within residential.

783
00:46:05,320 --> 00:46:07,120
Speaker 1: So so let me take you a little off of

784
00:46:07,160 --> 00:46:11,880
Speaker 1: that niche a bit. There's a giant article, uh in

785
00:46:11,920 --> 00:46:16,719
Speaker 1: the Wall Street Journal about the big malls how they

786
00:46:16,760 --> 00:46:19,640
Speaker 1: continue to have some of their anchor stores going away,

787
00:46:19,719 --> 00:46:21,920
Speaker 1: and then once that goes away, everybody else starts to

788
00:46:21,960 --> 00:46:25,640
Speaker 1: fade and it becomes problematic. And there was some place

789
00:46:25,719 --> 00:46:28,040
Speaker 1: some going to get this wrong. I don't remember if

790
00:46:28,040 --> 00:46:32,360
Speaker 1: it was Minneapolis or somewhere where the mall essentially gets

791
00:46:32,360 --> 00:46:36,000
Speaker 1: sold to a developer who raises it and now is

792
00:46:36,040 --> 00:46:41,239
Speaker 1: putting in apartments, homes. It's it's a whole multi use.

793
00:46:41,440 --> 00:46:45,840
Speaker 1: So so is there something worth tracking on the retail

794
00:46:45,880 --> 00:46:49,080
Speaker 1: apocalypse side relative to housing or is that just so

795
00:46:49,200 --> 00:46:52,440
Speaker 1: distant and so far removed it's not worth paying close

796
00:46:52,480 --> 00:46:56,560
Speaker 1: attention to. Well, I think it makes sense to assume

797
00:46:56,560 --> 00:47:00,160
Speaker 1: it's getting repurposed, and as we think about shelter or

798
00:47:00,600 --> 00:47:03,400
Speaker 1: really you have to think about it with with the

799
00:47:03,440 --> 00:47:07,719
Speaker 1: complete eyes, with the complete view of rental as well

800
00:47:07,760 --> 00:47:11,480
Speaker 1: as for sale, and so it gets repurposed for for

801
00:47:11,680 --> 00:47:14,000
Speaker 1: sale or for rent in single family where we have

802
00:47:14,040 --> 00:47:17,040
Speaker 1: a deficit, then we'll be able to track that through

803
00:47:17,080 --> 00:47:20,640
Speaker 1: the land development survey that we're doing, and tracking that

804
00:47:20,760 --> 00:47:23,239
Speaker 1: will enable us to see where the growth is going

805
00:47:23,280 --> 00:47:25,880
Speaker 1: to be and whether or not the growth is justified.

806
00:47:25,920 --> 00:47:28,880
Speaker 1: But today, if you look at shelter, we believe the

807
00:47:28,960 --> 00:47:32,759
Speaker 1: multifamily market is actually above normal and there's plenty of

808
00:47:32,800 --> 00:47:35,279
Speaker 1: supply of that. It's above where it should be. In fact,

809
00:47:35,280 --> 00:47:39,400
Speaker 1: there's um if you look at multi family five plus units,

810
00:47:39,400 --> 00:47:43,080
Speaker 1: so multifamily high rise or generally where the problem is

811
00:47:42,800 --> 00:47:48,120
Speaker 1: is predominantly urban core multifamily is at multi decade highs

812
00:47:48,560 --> 00:47:52,640
Speaker 1: with what with the amount of inventory in backlog where

813
00:47:52,640 --> 00:47:56,680
Speaker 1: a suburban is not as let's say, problematic, but there's

814
00:47:56,719 --> 00:48:00,799
Speaker 1: a real core urban is where the inventories for we

815
00:48:00,840 --> 00:48:04,239
Speaker 1: believe multi family market is actually significant above normal. So

816
00:48:04,280 --> 00:48:06,480
Speaker 1: if we had a guess coming out of the crisis,

817
00:48:06,560 --> 00:48:10,880
Speaker 1: people were either reluctant to buy or unable to qualify

818
00:48:10,960 --> 00:48:13,360
Speaker 1: for a mortgage, so there was a ton of renters

819
00:48:13,440 --> 00:48:15,840
Speaker 1: and it seemed the builders went a little hog wild

820
00:48:15,960 --> 00:48:20,040
Speaker 1: over there. Is it safe to assume that the pendulum

821
00:48:20,120 --> 00:48:23,080
Speaker 1: is going to start swinging in the other direction or

822
00:48:23,239 --> 00:48:26,360
Speaker 1: do does this really have to do they really have

823
00:48:26,400 --> 00:48:29,120
Speaker 1: to run out the rope and and see some problems

824
00:48:29,200 --> 00:48:33,720
Speaker 1: before they adjust what they're building. So if I understand

825
00:48:33,760 --> 00:48:37,880
Speaker 1: your question correctly. You're you're asking, will the builders start

826
00:48:37,920 --> 00:48:40,840
Speaker 1: to build affordable product again? Um, when will they shift

827
00:48:40,880 --> 00:48:44,080
Speaker 1: from multi family to single family? If there's a a

828
00:48:44,280 --> 00:48:47,480
Speaker 1: plethora of multi family and a dearth of single family. Well,

829
00:48:47,520 --> 00:48:52,719
Speaker 1: they're completely different operators, um, different developers, different um operators

830
00:48:52,760 --> 00:48:55,960
Speaker 1: from the perspective that there within their silos, the multi

831
00:48:55,960 --> 00:48:59,040
Speaker 1: family operators would never just go do single fam very unusual.

832
00:48:59,520 --> 00:49:02,960
Speaker 1: You'll some times have like Lenar Corporation is a publicly

833
00:49:03,000 --> 00:49:04,959
Speaker 1: traded company and they're saying they're known for their single

834
00:49:05,000 --> 00:49:07,640
Speaker 1: family building, but they also have a multi family business.

835
00:49:08,280 --> 00:49:12,240
Speaker 1: But very few organizations companies have in the multi family

836
00:49:12,280 --> 00:49:14,640
Speaker 1: space do single family as well. So when when you

837
00:49:15,200 --> 00:49:17,640
Speaker 1: really what I'm wrestling with is if there's way too

838
00:49:17,719 --> 00:49:23,200
Speaker 1: much multi family multi family builders, they're not going to say, hey,

839
00:49:23,200 --> 00:49:25,719
Speaker 1: there's too much supply, let's take a year off. Do

840
00:49:25,800 --> 00:49:28,560
Speaker 1: they just keep building? Do they move towards luxury? What?

841
00:49:28,560 --> 00:49:33,359
Speaker 1: What do they do in the face of excess supply? Well,

842
00:49:33,480 --> 00:49:35,399
Speaker 1: right now, what you'll start to see is that they

843
00:49:35,440 --> 00:49:39,920
Speaker 1: have pressure on rents and they're underwriting requirements that are

844
00:49:40,000 --> 00:49:42,680
Speaker 1: what the way they underwrote the land, they won't be

845
00:49:42,760 --> 00:49:45,360
Speaker 1: hitting their hurdle rates at some point if this supply

846
00:49:45,800 --> 00:49:49,080
Speaker 1: that we believe is still in backlog actually gets delivered

847
00:49:49,280 --> 00:49:52,279
Speaker 1: and pressures their returns. So right now, there's a lot

848
00:49:52,320 --> 00:49:55,200
Speaker 1: of capital chasing this asset class because when you compare

849
00:49:55,239 --> 00:49:58,439
Speaker 1: it to malls or other reeds, it's actually a tall

850
00:49:58,480 --> 00:50:03,040
Speaker 1: midget in many respects, even though right even though it's expensive,

851
00:50:03,360 --> 00:50:06,799
Speaker 1: it's actually one of those very consistent businesses. Doesn't have

852
00:50:06,840 --> 00:50:09,880
Speaker 1: the kind of cylicality that the single family for sale market.

853
00:50:09,960 --> 00:50:12,680
Speaker 1: So it's still a very good business. But what may

854
00:50:12,719 --> 00:50:16,200
Speaker 1: happen from the supply being um in our opinion, at

855
00:50:16,239 --> 00:50:18,920
Speaker 1: excess levels, is that they won't get the returns that

856
00:50:19,000 --> 00:50:21,840
Speaker 1: they underwrote if rents start to come under pressure. We

857
00:50:21,920 --> 00:50:24,840
Speaker 1: do think they get least up. But the question is

858
00:50:24,920 --> 00:50:28,879
Speaker 1: will that spicket of growth start slow as those lease

859
00:50:29,000 --> 00:50:32,160
Speaker 1: rates come under pressure, That in itself will start to

860
00:50:32,200 --> 00:50:35,240
Speaker 1: slow the growth. And before I get to my favorite questions,

861
00:50:35,680 --> 00:50:39,239
Speaker 1: any other things standing out within the residential real estate

862
00:50:39,280 --> 00:50:43,960
Speaker 1: market that's unusual or interesting, be regional or what what

863
00:50:44,000 --> 00:50:47,800
Speaker 1: are you kind of going, huh, that's that's surprising. Well,

864
00:50:47,880 --> 00:50:50,160
Speaker 1: there's a few things UM I can talk about. The

865
00:50:50,200 --> 00:50:55,160
Speaker 1: eye buyer market being I Buyer. Today, we have companies

866
00:50:55,520 --> 00:50:59,160
Speaker 1: that are offering consumers to buy their homes for cash

867
00:50:59,200 --> 00:51:04,200
Speaker 1: within a few days. So Instant Buyer and UM open Door,

868
00:51:04,280 --> 00:51:06,719
Speaker 1: which is a private company, is the leader in this

869
00:51:06,760 --> 00:51:10,040
Speaker 1: business where at a discount to we have an algorithm

870
00:51:10,120 --> 00:51:13,040
Speaker 1: that basically will determine the price that they're willing to

871
00:51:13,080 --> 00:51:16,239
Speaker 1: pay for home, allowing that person to be able to

872
00:51:16,280 --> 00:51:19,759
Speaker 1: move to a move up home. And actually Lenar was

873
00:51:19,800 --> 00:51:22,480
Speaker 1: an investor in open Door, and the reason they invested

874
00:51:22,520 --> 00:51:25,120
Speaker 1: in open doors concept and these guys are a Silicon

875
00:51:25,280 --> 00:51:27,920
Speaker 1: Valley Eric Wu as a CEO, is because they found

876
00:51:27,920 --> 00:51:30,160
Speaker 1: that a lot of our buyers can't sell their homes

877
00:51:30,440 --> 00:51:32,399
Speaker 1: to move in our home. So that was conceptually why

878
00:51:32,400 --> 00:51:35,080
Speaker 1: they did it. So what happened Someone comes along and says,

879
00:51:35,120 --> 00:51:39,239
Speaker 1: we'll pay you cash theoretically at a discount, say let's

880
00:51:39,280 --> 00:51:43,040
Speaker 1: five seven discount to what is retail, and then they'll

881
00:51:43,080 --> 00:51:45,840
Speaker 1: turn around and sell it. They'll put with that money,

882
00:51:45,840 --> 00:51:47,640
Speaker 1: they'll fix it up and then they'll sell it. Now

883
00:51:48,760 --> 00:51:53,640
Speaker 1: Zillos in the business now Zilo offer Redfinn, now Um

884
00:51:53,920 --> 00:51:57,080
Speaker 1: offer pad Knocked. It's it's really growing to be a

885
00:51:57,160 --> 00:52:00,040
Speaker 1: very big business. In fact, Zillo, who we have a

886
00:52:00,040 --> 00:52:03,960
Speaker 1: cell rating on is actually changing their entire business model

887
00:52:04,000 --> 00:52:06,080
Speaker 1: to go after this I buyer market. So that's a

888
00:52:06,120 --> 00:52:10,800
Speaker 1: big interesting thing going on in generally speaking professional flippers, yes,

889
00:52:11,080 --> 00:52:14,880
Speaker 1: professional flippers. Another interesting thing that's going on is the

890
00:52:14,880 --> 00:52:17,840
Speaker 1: built to rent market. So I mentioned that we have

891
00:52:17,880 --> 00:52:20,920
Speaker 1: a deficit of housing, but not everyone can afford to

892
00:52:20,920 --> 00:52:24,840
Speaker 1: buy a home. So what consumers want today though, is

893
00:52:24,880 --> 00:52:28,080
Speaker 1: they want the American dream, they want the backyard, they

894
00:52:28,120 --> 00:52:31,200
Speaker 1: want their own home, but in many cases they can't

895
00:52:31,200 --> 00:52:33,920
Speaker 1: for whatever reason, either get a proof for a mortgage,

896
00:52:34,000 --> 00:52:35,919
Speaker 1: or they don't want to be committed and they don't

897
00:52:35,920 --> 00:52:38,200
Speaker 1: want to they want to have flexibility. So the built

898
00:52:38,200 --> 00:52:41,720
Speaker 1: to rent market is actually accelerating to help close the gap.

899
00:52:42,239 --> 00:52:43,960
Speaker 1: And if you look at the build for rent market,

900
00:52:44,000 --> 00:52:46,319
Speaker 1: it could be builders that are willing to sell the

901
00:52:46,440 --> 00:52:49,440
Speaker 1: last few units in a phase to a build or

902
00:52:49,800 --> 00:52:53,080
Speaker 1: a single family rental operator, or they in factor keeping

903
00:52:53,080 --> 00:52:55,799
Speaker 1: the asset themselves on the balance sheet and renting them

904
00:52:55,800 --> 00:52:58,440
Speaker 1: out to generate cash flow. But I believe that the

905
00:52:58,480 --> 00:53:01,880
Speaker 1: build for rent market will accelerate to become a bigger

906
00:53:02,000 --> 00:53:06,000
Speaker 1: portion of today's household So roughly twelve percent of the

907
00:53:06,040 --> 00:53:08,879
Speaker 1: households in this country live in a single family rental home,

908
00:53:09,200 --> 00:53:12,120
Speaker 1: rental home, not in a multi family no singal family rental.

909
00:53:12,480 --> 00:53:15,279
Speaker 1: And one of the misnomers in the marketplace is that

910
00:53:15,320 --> 00:53:16,799
Speaker 1: you either live in an apartment or you live in

911
00:53:16,800 --> 00:53:19,520
Speaker 1: a single family home. And and what people don't appreciate

912
00:53:20,040 --> 00:53:22,200
Speaker 1: is that if you just look at like living alone,

913
00:53:22,560 --> 00:53:24,520
Speaker 1: do you have any idea how many people that live

914
00:53:24,560 --> 00:53:27,080
Speaker 1: alone live in a single family home forgetting if they

915
00:53:27,080 --> 00:53:32,440
Speaker 1: rent it or own it? Just a guess what Really

916
00:53:33,680 --> 00:53:35,320
Speaker 1: that's a giant n well, I guess if you start

917
00:53:35,360 --> 00:53:40,359
Speaker 1: thinking about the older demographic, the second person, the survivor

918
00:53:40,560 --> 00:53:43,560
Speaker 1: once one of the husband wife passes away, that's got

919
00:53:43,560 --> 00:53:47,000
Speaker 1: to be a pretty hefty number. And then divorces, and

920
00:53:47,040 --> 00:53:48,799
Speaker 1: then people who just want to own a house. But

921
00:53:48,880 --> 00:53:51,000
Speaker 1: I would never have guessed. We'll keep in mind this

922
00:53:51,080 --> 00:53:53,640
Speaker 1: is we're not distinguishing between owning versus renting, So just

923
00:53:53,719 --> 00:53:56,960
Speaker 1: thirty percent. So then when you think about lifestyle, if

924
00:53:56,960 --> 00:53:59,719
Speaker 1: you go, okay, then roommates, then I get married, then

925
00:53:59,719 --> 00:54:02,319
Speaker 1: I have children by the time our data shows by

926
00:54:02,320 --> 00:54:06,200
Speaker 1: the time you're married with two children live in a

927
00:54:06,239 --> 00:54:09,800
Speaker 1: single family home. And that in fact is again not disinguishing.

928
00:54:09,880 --> 00:54:13,120
Speaker 1: Writing versus owning. But when you think about millennials, millennials

929
00:54:13,160 --> 00:54:16,360
Speaker 1: today call them seventy million. I've got two millennials or

930
00:54:16,400 --> 00:54:19,200
Speaker 1: young fourteen sixteen high Zoe and Zach. I got Zia two.

931
00:54:19,239 --> 00:54:22,319
Speaker 1: She's all youngest, but she's not a millennial. Um when

932
00:54:22,360 --> 00:54:26,440
Speaker 1: you start to see these millennials actually get married or

933
00:54:26,560 --> 00:54:31,000
Speaker 1: cohabitate and have families, this they're at the early they're

934
00:54:31,000 --> 00:54:33,920
Speaker 1: in their early thirties right now, there's seventy five million

935
00:54:33,960 --> 00:54:35,920
Speaker 1: of them. We're just at the beginning of this wave

936
00:54:36,719 --> 00:54:40,680
Speaker 1: of what will be an unbelievable tailwind too for the

937
00:54:40,719 --> 00:54:43,560
Speaker 1: demographics for the need for single family shelter, assuming you

938
00:54:43,640 --> 00:54:47,560
Speaker 1: believe that people will continue to get married to have children,

939
00:54:47,920 --> 00:54:50,239
Speaker 1: and we have some fun ways to analyze this. So

940
00:54:50,280 --> 00:54:53,760
Speaker 1: we do some obviously studying birthrates. A lot of people

941
00:54:53,760 --> 00:54:56,520
Speaker 1: see the national birth rate for the country is going down,

942
00:54:57,080 --> 00:55:00,000
Speaker 1: but when you look at the twenty five plus year old,

943
00:55:00,480 --> 00:55:02,960
Speaker 1: that birthrate has been growing at a very fast rate.

944
00:55:03,320 --> 00:55:06,960
Speaker 1: We called the good birth rate because nationally birthrates are

945
00:55:06,960 --> 00:55:10,799
Speaker 1: going down, because teenage birth rates are down over since

946
00:55:10,840 --> 00:55:13,160
Speaker 1: so seven, which is which is a good thing, right.

947
00:55:13,160 --> 00:55:15,120
Speaker 1: So what we really look at and I think it

948
00:55:15,440 --> 00:55:19,239
Speaker 1: just to reiterate, it's about lifestyle. Lifestyle drives a need

949
00:55:19,320 --> 00:55:22,359
Speaker 1: for shelter or changes in the type of shelter. So

950
00:55:22,760 --> 00:55:26,040
Speaker 1: when we look at build for rent and we see

951
00:55:26,040 --> 00:55:29,680
Speaker 1: that phenomena is a growing trend, I think that you'll

952
00:55:29,719 --> 00:55:32,399
Speaker 1: hear more about it, and there's more Wall Street money

953
00:55:32,480 --> 00:55:36,200
Speaker 1: contemplating it and builders that are selling to the single

954
00:55:36,200 --> 00:55:39,360
Speaker 1: family reads and doing it themselves, the I buyer market,

955
00:55:39,640 --> 00:55:42,680
Speaker 1: and then just technology. Um, you know, the real estate

956
00:55:42,719 --> 00:55:46,440
Speaker 1: industry is one that is is being disrupted. If you

957
00:55:46,440 --> 00:55:48,720
Speaker 1: think about you know, your mother is a real estate broker,

958
00:55:48,760 --> 00:55:52,080
Speaker 1: it's a very very tough time. They're being attacked from

959
00:55:52,080 --> 00:55:54,920
Speaker 1: all from all angles. I mean she's retired, but the

960
00:55:55,040 --> 00:55:58,319
Speaker 1: days of six percent commissions, that's pretty much gone, right.

961
00:55:58,320 --> 00:56:01,680
Speaker 1: I think that certainly has yet to be eliminated. But

962
00:56:01,760 --> 00:56:05,000
Speaker 1: there's a lot going on that can continue to pressure margin,

963
00:56:05,480 --> 00:56:08,759
Speaker 1: pressure splits. The market is being disrupted from a lot

964
00:56:08,800 --> 00:56:12,680
Speaker 1: of different angles. Huh. Quite fascinating. So the firm is

965
00:56:12,719 --> 00:56:15,640
Speaker 1: called Zelman and Associates. Is this really the I vs.

966
00:56:15,680 --> 00:56:19,759
Speaker 1: Elman show or is it something else? Actually, thank you

967
00:56:19,840 --> 00:56:22,000
Speaker 1: for asking, No, this is not just the I vs.

968
00:56:22,000 --> 00:56:25,239
Speaker 1: Aleman show. In fact, I've got probably close to thirty employees.

969
00:56:25,960 --> 00:56:29,560
Speaker 1: We have about a dozen analysts. Each analyst is responsible

970
00:56:29,680 --> 00:56:34,520
Speaker 1: for their silo and are very successful in aggregating data

971
00:56:34,560 --> 00:56:38,160
Speaker 1: and analyzing the industry that they're responsible for. So it's

972
00:56:38,239 --> 00:56:41,880
Speaker 1: it's really I'm a small piece of what really Zelman

973
00:56:41,920 --> 00:56:45,280
Speaker 1: Associates is, And there's a lot more of a strength

974
00:56:45,360 --> 00:56:49,120
Speaker 1: behind the person you see sitting here and whether it's

975
00:56:49,160 --> 00:56:52,480
Speaker 1: Alan Rattner, our senior homebuilding analysts justin Spear, these people

976
00:56:52,480 --> 00:56:55,560
Speaker 1: work their tails off and UH really appreciate all the

977
00:56:55,600 --> 00:56:57,399
Speaker 1: work and I get a lot of credit, but they're

978
00:56:57,440 --> 00:57:00,560
Speaker 1: the they're the power behind the firm. So before I

979
00:57:00,640 --> 00:57:02,440
Speaker 1: let you go, I have to get to my favorite

980
00:57:02,440 --> 00:57:05,440
Speaker 1: ten questions we ask all our guests sort of a

981
00:57:05,440 --> 00:57:08,160
Speaker 1: speed round. Are you ready for this? Ready? Tell us

982
00:57:08,200 --> 00:57:13,520
Speaker 1: the first car you ever owned? Your making model Toyota Corolla. Nine.

983
00:57:15,320 --> 00:57:18,560
Speaker 1: What's the most important thing we don't know about you?

984
00:57:19,560 --> 00:57:23,080
Speaker 1: That I live in Cleveland and I have three beautiful

985
00:57:23,200 --> 00:57:27,280
Speaker 1: children and they are my life. So you went over

986
00:57:27,320 --> 00:57:30,280
Speaker 1: Cleveland pretty quickly. How do you like? How do you

987
00:57:30,280 --> 00:57:34,120
Speaker 1: like living in Cleveland? Um? Well, I admittedly went kicking

988
00:57:34,120 --> 00:57:37,680
Speaker 1: and screaming married Cleveland boy who I met at Solomon Brothers, David,

989
00:57:38,240 --> 00:57:41,160
Speaker 1: But it's a wonderful place to raise a family, and

990
00:57:41,200 --> 00:57:43,880
Speaker 1: I get to be with my husband's family all the time,

991
00:57:44,320 --> 00:57:46,560
Speaker 1: and it's great for the kids. And if we could

992
00:57:46,600 --> 00:57:48,600
Speaker 1: just get the sun to come out. The weather is

993
00:57:48,600 --> 00:57:50,520
Speaker 1: not great in Cleveland, but the browns are supposed to

994
00:57:50,520 --> 00:57:52,640
Speaker 1: be good this year. So yes, they are supposed to.

995
00:57:52,760 --> 00:57:55,040
Speaker 1: So tell us. Tell us about your early mentors who

996
00:57:55,120 --> 00:57:58,640
Speaker 1: affected the way you you did UH analytics and thought

997
00:57:58,640 --> 00:58:02,600
Speaker 1: about housing well already Credit David, my my my buddy

998
00:58:02,600 --> 00:58:06,520
Speaker 1: at Solomon. Um, but I have to say when you yeah,

999
00:58:06,560 --> 00:58:08,960
Speaker 1: this husband was later, but um, when you think about

1000
00:58:08,960 --> 00:58:10,640
Speaker 1: your life in the a list of people I had

1001
00:58:10,680 --> 00:58:13,120
Speaker 1: the pleasure of working with, whether we're talking about people

1002
00:58:13,160 --> 00:58:15,360
Speaker 1: on the South side of Credit, Swist and Sally, as

1003
00:58:15,400 --> 00:58:17,920
Speaker 1: well as all the clients that I've interacted with. You know,

1004
00:58:18,040 --> 00:58:20,160
Speaker 1: I can give you ten people that come to my

1005
00:58:20,320 --> 00:58:23,040
Speaker 1: top of my head. But one that really stands out

1006
00:58:23,360 --> 00:58:28,080
Speaker 1: is Melinda Greenwich, who was really my mentor early on

1007
00:58:28,120 --> 00:58:30,880
Speaker 1: in my career, my secretary, but she had been at

1008
00:58:30,920 --> 00:58:34,560
Speaker 1: Drexel and she was with me for over twenty years

1009
00:58:34,640 --> 00:58:39,840
Speaker 1: and is a friend business, family life every day, and

1010
00:58:39,960 --> 00:58:42,760
Speaker 1: she no longer works with me. Now, Kim Gray's my mentor.

1011
00:58:42,840 --> 00:58:45,680
Speaker 1: And people think about mentor where you call someone up

1012
00:58:45,680 --> 00:58:48,120
Speaker 1: and you know you have a challenge, you want to

1013
00:58:48,160 --> 00:58:51,520
Speaker 1: talk something through. You know, these women are are there

1014
00:58:51,520 --> 00:58:54,040
Speaker 1: for me through thick and thin, you know, call in

1015
00:58:54,080 --> 00:58:55,800
Speaker 1: the middle of the night. Those are the people that

1016
00:58:55,840 --> 00:58:57,880
Speaker 1: I want to highlight, the people that that mean everything

1017
00:58:57,920 --> 00:59:02,680
Speaker 1: to me. Quite quite interesting, it um, what fill in

1018
00:59:02,720 --> 00:59:10,280
Speaker 1: the blank investors, analysts, UM managers helped shape your thinking

1019
00:59:10,520 --> 00:59:14,720
Speaker 1: about the housing market? Give me your list again. Investors

1020
00:59:14,920 --> 00:59:19,200
Speaker 1: could be anybody, investors, strategist, analysts, economists. Who who has

1021
00:59:19,320 --> 00:59:24,160
Speaker 1: influenced the way you approach the real estate market? Well,

1022
00:59:24,680 --> 00:59:28,160
Speaker 1: it's so many. I think that builders themselves, a lot

1023
00:59:28,200 --> 00:59:31,000
Speaker 1: of the private builders in the market that really helped

1024
00:59:31,000 --> 00:59:33,200
Speaker 1: me to understand the business and give me from an

1025
00:59:33,280 --> 00:59:37,320
Speaker 1: unbiased perspective. And there you know, the quality of information

1026
00:59:37,400 --> 00:59:40,520
Speaker 1: and and and and being able to absorb from the

1027
00:59:40,560 --> 00:59:45,040
Speaker 1: perspective of an open sort of white board. The builders,

1028
00:59:45,040 --> 00:59:48,120
Speaker 1: the private builders. Bert's Silva, who's a good friend, and

1029
00:59:48,280 --> 00:59:50,440
Speaker 1: and the CEO in the in the home building industry,

1030
00:59:50,440 --> 00:59:53,480
Speaker 1: I just learned a tremendous amount from him. Um in

1031
00:59:53,520 --> 00:59:56,000
Speaker 1: the investment world, you know, I think about today some

1032
00:59:56,040 --> 00:59:59,560
Speaker 1: of my top clients, UM, certainly Richard Chiltern and Chiltern

1033
00:59:59,560 --> 01:00:02,840
Speaker 1: advisor 's learning about to go after the best in

1034
01:00:02,880 --> 01:00:07,960
Speaker 1: class managements and understand, you know, just a long term investing. Um,

1035
01:00:08,000 --> 01:00:10,560
Speaker 1: there's an art to it and it doesn't necessarily mean

1036
01:00:10,560 --> 01:00:14,640
Speaker 1: you day trade, and that there's ways to differentiate. UM.

1037
01:00:14,720 --> 01:00:19,240
Speaker 1: Bob Bishop at Impala, who was originally Solemn Brothers Housing Alice,

1038
01:00:19,280 --> 01:00:21,960
Speaker 1: who's now a client. Um, he taught me a lot

1039
01:00:22,000 --> 01:00:26,320
Speaker 1: about the business. UM. Ricky Sandler at Eminence Capital, who's

1040
01:00:26,440 --> 01:00:29,040
Speaker 1: UM someone I grew up with, but he was ahead

1041
01:00:29,040 --> 01:00:31,320
Speaker 1: of the curve from that versus where I was. Taught

1042
01:00:31,360 --> 01:00:33,400
Speaker 1: me a lot about the business. So I can keep going.

1043
01:00:33,920 --> 01:00:36,640
Speaker 1: But that's a that's a healthy list. So let me

1044
01:00:36,680 --> 01:00:38,640
Speaker 1: shift gears on you. What do you do for fun?

1045
01:00:38,680 --> 01:00:42,040
Speaker 1: What do you do when you're out of the office. Well,

1046
01:00:42,080 --> 01:00:46,240
Speaker 1: I love to walk my beautiful Australian shepherd, go for

1047
01:00:46,360 --> 01:00:50,280
Speaker 1: long walks, UM hike. I do a lot of puzzles,

1048
01:00:50,560 --> 01:00:53,640
Speaker 1: jigsaw puzzles like the new Wood puzzles. That's been my

1049
01:00:53,680 --> 01:00:57,200
Speaker 1: new thing. And UM, I've been also doing brain games,

1050
01:00:57,320 --> 01:01:01,520
Speaker 1: which has been fun. And hang watch my kids and

1051
01:01:01,680 --> 01:01:03,919
Speaker 1: watch the kids play sports. My daughter is a great

1052
01:01:03,960 --> 01:01:06,280
Speaker 1: soccer player, and she runs track and she keeps us

1053
01:01:06,360 --> 01:01:09,120
Speaker 1: every weekend very busy. Oh and my oldest is off

1054
01:01:09,160 --> 01:01:10,920
Speaker 1: to University of Miami, so hopefully I'll be there and

1055
01:01:10,920 --> 01:01:13,840
Speaker 1: seeing the sun more. Yeah, in the in the winter. UM,

1056
01:01:14,000 --> 01:01:15,920
Speaker 1: tell us about a time you failed and what you

1057
01:01:16,080 --> 01:01:20,160
Speaker 1: learned from the experience. Well, I would say that I

1058
01:01:20,240 --> 01:01:22,600
Speaker 1: was convinced I was gonna be an investment banker, and

1059
01:01:22,840 --> 01:01:25,160
Speaker 1: I was going Well Street to be an investment banker,

1060
01:01:25,400 --> 01:01:28,600
Speaker 1: and I found that it wasn't the right fit for me,

1061
01:01:28,680 --> 01:01:32,040
Speaker 1: and I was pretty devastated. And what I learned from

1062
01:01:32,080 --> 01:01:35,120
Speaker 1: that experience was that your first job won't necessarily be

1063
01:01:35,200 --> 01:01:38,080
Speaker 1: your last, and that even though you're convinced you think

1064
01:01:38,160 --> 01:01:40,080
Speaker 1: you know what you are going to do with the

1065
01:01:40,080 --> 01:01:42,600
Speaker 1: rest of your life, you actually can evolve into something

1066
01:01:42,600 --> 01:01:45,560
Speaker 1: else and be successful. So for me, that's really the

1067
01:01:45,600 --> 01:01:48,480
Speaker 1: path that led me to where I am today. So

1068
01:01:48,520 --> 01:01:51,800
Speaker 1: what has you most excited about what's going on in

1069
01:01:51,800 --> 01:01:57,560
Speaker 1: the real estate industry these days? Um? The uncertainty of

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01:01:58,000 --> 01:02:05,200
Speaker 1: what's next, from technology, from disruption, from sustainability. You know,

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01:02:05,240 --> 01:02:08,560
Speaker 1: it always is changing every day. What's you know? Unfortunately,

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01:02:08,600 --> 01:02:11,280
Speaker 1: a lot of it's dependent upon the economic backdrop. But

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01:02:11,320 --> 01:02:13,120
Speaker 1: there's a lot of interesting new things that are going

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01:02:13,160 --> 01:02:15,400
Speaker 1: on in our sectors, so we have to stay on

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01:02:15,440 --> 01:02:19,080
Speaker 1: top of them and obviously continue to guide our clients

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01:02:19,640 --> 01:02:22,640
Speaker 1: down the right path for where to steer their investments,

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01:02:22,760 --> 01:02:26,320
Speaker 1: and and sizing and and getting out before the market

1078
01:02:26,320 --> 01:02:30,080
Speaker 1: turns is going to be the next goal. So everybody's

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01:02:30,120 --> 01:02:32,760
Speaker 1: favorite question, tell us some of your favorite books, be

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01:02:32,840 --> 01:02:36,680
Speaker 1: the fiction, nonfiction, real estate related, or whatever. I've got

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01:02:36,720 --> 01:02:40,360
Speaker 1: a colectic a number, but I enjoyed and it was

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01:02:40,440 --> 01:02:44,520
Speaker 1: life changing. A book called Thrive by Arianna Huffington's Okay,

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01:02:44,720 --> 01:02:48,560
Speaker 1: remember one and um that was really impactful, life changing,

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01:02:48,680 --> 01:02:52,560
Speaker 1: life changing from a person who worked seven and learned

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01:02:52,560 --> 01:02:55,960
Speaker 1: a little more balanced from things to Ariana. I read

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01:02:56,120 --> 01:02:59,720
Speaker 1: uh and loved an Acquendolen's Plenty of Cake Plant Candles,

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01:03:00,000 --> 01:03:05,160
Speaker 1: which really gave me a renewed optimism on aging. Much

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01:03:05,200 --> 01:03:08,240
Speaker 1: better than the alternative, much better than the alternative. I

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01:03:08,280 --> 01:03:11,720
Speaker 1: can't help but mentioned Liars Poker and The Big Short

1090
01:03:11,880 --> 01:03:15,240
Speaker 1: my one of my friends and favorite authors, Michael Lewis

1091
01:03:15,920 --> 01:03:18,480
Speaker 1: um All the Light You Cannot See by Anthony Dough,

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01:03:18,800 --> 01:03:23,040
Speaker 1: which is um World War two fiction, but an incredible

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01:03:23,240 --> 01:03:26,440
Speaker 1: read if you like that period. UM. And then just lastly,

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01:03:26,440 --> 01:03:29,120
Speaker 1: I've read a lot of a mother of teenage children

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01:03:29,320 --> 01:03:33,200
Speaker 1: and UM Leonard Sachs Um the books that he's written

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01:03:33,240 --> 01:03:36,160
Speaker 1: for parents. Girls on the Edge is a must read.

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01:03:36,600 --> 01:03:39,720
Speaker 1: And I'm a little bit anti social media parents for

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01:03:39,760 --> 01:03:43,080
Speaker 1: our children, and so I would recommend that highly for

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01:03:43,080 --> 01:03:46,520
Speaker 1: her parents. What sort of advice would you give to

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01:03:46,560 --> 01:03:51,000
Speaker 1: a millennial or someone interested in uh financial real estate

1101
01:03:51,200 --> 01:03:54,360
Speaker 1: who is just beginning their career. I think that everyone

1102
01:03:54,400 --> 01:03:58,000
Speaker 1: should find a mentor everyone should appreciate your first job

1103
01:03:58,120 --> 01:04:03,200
Speaker 1: isn't your last, and read a lot I think UM.

1104
01:04:03,360 --> 01:04:07,360
Speaker 1: For me, it was networking as well. Never stopped networking.

1105
01:04:07,400 --> 01:04:10,840
Speaker 1: I remember folding towels in a gym at six am

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01:04:10,920 --> 01:04:13,360
Speaker 1: to pay for school, and I would talk to every

1107
01:04:13,360 --> 01:04:15,280
Speaker 1: gym member and ask them if they knew anybody. So

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01:04:15,360 --> 01:04:19,120
Speaker 1: network network Network. Our final question, what do you know

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01:04:19,200 --> 01:04:22,920
Speaker 1: about the world of real estate related investing today that

1110
01:04:23,000 --> 01:04:25,600
Speaker 1: you wish you knew twenty five or so years ago

1111
01:04:25,640 --> 01:04:29,920
Speaker 1: when you were first starting out? Well, I wish I understood.

1112
01:04:31,040 --> 01:04:34,880
Speaker 1: I wish I had the benefit of hindsight and appreciating

1113
01:04:34,920 --> 01:04:40,560
Speaker 1: cycles and being UM willing to tolerate more risk that

1114
01:04:40,600 --> 01:04:44,160
Speaker 1: there's opportunities and when there is disruption in the market

1115
01:04:44,200 --> 01:04:46,520
Speaker 1: to take advantage of it. I think I'm way too

1116
01:04:46,520 --> 01:04:50,160
Speaker 1: conservative and I was way too risk averse makes perfect sense.

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01:04:50,800 --> 01:04:54,720
Speaker 1: We have been speaking with Ivy Zellman of Zelman and Associates.

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01:04:55,120 --> 01:04:57,840
Speaker 1: If you enjoy this conversation, well look up an intro

1119
01:04:57,960 --> 01:05:00,560
Speaker 1: down an Inch on Apple iTunes and you can see

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01:05:00,600 --> 01:05:03,479
Speaker 1: any of the other two d and fifty or so

1121
01:05:03,640 --> 01:05:07,120
Speaker 1: such conversations we've had over the previous h five or

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01:05:07,120 --> 01:05:11,400
Speaker 1: so years. We love your comments, feedback and suggestions right

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01:05:11,480 --> 01:05:14,919
Speaker 1: to us at m IB podcast at Bloomberg dot net.

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01:05:15,640 --> 01:05:18,840
Speaker 1: Be sure and give us a review on Apple iTunes.

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01:05:18,920 --> 01:05:22,000
Speaker 1: We we love your feedback, comments and suggestions right to

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01:05:22,120 --> 01:05:25,160
Speaker 1: us at m IB podcast at Bloomberg dot net. I

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01:05:25,200 --> 01:05:27,240
Speaker 1: would be remiss if I did not thank the crack

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01:05:27,320 --> 01:05:30,880
Speaker 1: staff that helps put together these conversations each week. Medina

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01:05:30,960 --> 01:05:35,680
Speaker 1: Parwana is my producer slash audio engineer. Michael Boyle is

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01:05:35,680 --> 01:05:39,280
Speaker 1: our booker, UH Michael Batnick is our head of research.

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01:05:39,480 --> 01:05:44,040
Speaker 1: Atica Valbron is our project manager. I'm Barry Hults. You've

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01:05:44,040 --> 01:05:47,200
Speaker 1: been listening to Masters in Business on Bloomberg Radio.