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Speaker 1: If you're asking should you buy a house right now

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Speaker 1: or wait? Or should you buy bitcoin right now? Our weight,

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Speaker 1: the answer that I would give you is you should

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Speaker 1: wait because you should be getting enough data until you

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Speaker 1: know the answer for yourself. And that is the topic

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Speaker 1: that I'm going to discussing with my next guest. I'm

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Speaker 1: talking about Logan Matashami. He has a data analyst, a

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Speaker 1: data expert. He is in the data in the weeds

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Speaker 1: into both the macroeconomic landscape as well as the real

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Speaker 1: estate space specifically.

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Speaker 2: So this is the data line that we are trying

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Speaker 2: to teach people now that I'm showing.

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Speaker 1: Recently, he is on Twitter going toe to toe with

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Speaker 1: anybody who thinks that they can tell him where the

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Speaker 1: real estate market or macroeconomic pictures. He is not afraid

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Speaker 1: to stand up and debate anybody because he has the data.

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Speaker 2: Residential construction workers always lose their jobs first before recessions

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Speaker 2: or you have a crash. When active inventory is the

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Speaker 2: slow and demand is stable, the amount of homes coming

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Speaker 2: onto the market are still at the lowest levels ever.

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Speaker 2: In demand is stable, let's just quid news.

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Speaker 1: Jump right in. Logan, thanks for joining me today.

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Speaker 2: It is a pleasure to be here, lovely San CLEMENTI.

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Speaker 1: Yeah, yeah, nice to be close to home at this point, right, Yeah,

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Speaker 1: a place that got wrecked in real estate. Previously, I

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Speaker 1: talk about my experience in real estate, and I say that,

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Speaker 1: you know, I kind of got wiped out in two

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Speaker 1: thousand and eight, and I talked about how real estate

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Speaker 1: here dropped sixty percent, and so many people are like, no,

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Speaker 1: it didn't know, it didn't know, it didn't I'm like, well,

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Speaker 1: I lived here. This building right here that I built,

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Speaker 1: had it for sale for twelve million. I turned an

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Speaker 1: offer down for eleven million. It went back to the bank.

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Speaker 1: The banks sold it for fourah.

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Speaker 2: Yeah. Those you know that the two thousand and eight

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Speaker 2: on a historical basis was such an anomaly in terms

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Speaker 2: of the credit boom and then the credit busts, And

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Speaker 2: a lot of my work is actually to explain you

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Speaker 2: can't have two different housing cycles like you hit it

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Speaker 2: from two thousand to two thousand and eight then from

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Speaker 2: twenty twelve to twenty twenty four on a historical basis,

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Speaker 2: So the amount of supply and credit credit stress supply

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Speaker 2: were so apparent back then when we had four years

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Speaker 2: of credit stress before the job loss for session. That's

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Speaker 2: the one thing I always talk about at my conferences

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Speaker 2: that here we are two thousand and five, six, seven, eight,

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Speaker 2: then the job loss for session happened. We're here. It's

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Speaker 2: the exact opposite. Foreclosures, bankruptcies, all this because of the

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Speaker 2: qualified mortgage rule in twenty ten. They've been heading lower

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Speaker 2: for many, many years, So it takes years of build

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Speaker 2: up to have something like two thousand and eight happen,

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Speaker 2: and we're not even back to twenty nineteen levels and

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Speaker 2: a lot of data lines. So two different cycles, two

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Speaker 2: different extreme cycles. On a historical basis, Yeah.

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Speaker 1: I want to dig into that. One thing that I

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Speaker 1: hit on quite regularly is that the way central banks

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Speaker 1: interact in the markets changed in two thousand and eight,

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Speaker 1: and it's much different today after twenty twenty. And I

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Speaker 1: think that maybe has a big play, a big piece

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Speaker 1: to play in this as well. So we'll dig into that.

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Speaker 1: So I want to cover why didn't we crash. I

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Speaker 1: want to talk about that, how you were calling for

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Speaker 1: a no no crash while everybody was on the other

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Speaker 1: side of the bet with you. I want to talk

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Speaker 1: about the data. You know, you spend your life in

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Speaker 1: data we'll talk about the data points. I want to

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Speaker 1: get into the macro economic viewpoint, as we talked about earlier.

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Speaker 1: You were on a show with one of my friends,

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Speaker 1: George Gammon and kind of going back and forth. So

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Speaker 1: I want to talk about this like economic outlook, this

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Speaker 1: macroeconomic outlook, and then are we going to see a

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Speaker 1: crash coming? We'll break that down, look at a couple

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Speaker 1: of the big triggers that people talk about, commercial real estate,

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Speaker 1: Airbnb's probabilities of that, how we look at this as

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Speaker 1: a homeowner, as investor, and some single family versus commercial

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Speaker 1: so much more so let's just dig right into it.

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Speaker 1: So let's just say right off the bat, we talked

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Speaker 1: about before we started recording, Mark Twain said, it's not

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Speaker 1: what you don't know, it's what you absolutely know for certain.

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Speaker 1: And everybody was seemingly one hundred percent certain that when

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Speaker 1: the rates went when the Fed raise rates at the

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Speaker 1: highest rate in history from zero to you know, mortgage

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Speaker 1: rates went up to about eight percent, that it was

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Speaker 1: going to have to be a crash because people couldn't

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Speaker 1: afford it, so prices would have to come down. They didn't.

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Speaker 2: Yes, And I think twenty twenty two when we look

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Speaker 2: at the history of US economics, was the craziest housing

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Speaker 2: year ever, even crazier than two thousand and eight in COVID.

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Speaker 2: We started the year off unbelievably hot in pricing, so

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Speaker 2: much that in February of twenty twenty two, I deemed

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Speaker 2: it the savagely unhealthy housing market that we were having.

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Speaker 2: I think seventy eight percent of all the homes in

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Speaker 2: America were having multiple bids. So here at Housing Wire,

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Speaker 2: with Alto's research, we have a way of tracking inventory

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Speaker 2: weekly fresh active inventory. In March of twenty twenty two,

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Speaker 2: we got down to two hundred and forty thousand single

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Speaker 2: family homes in the entire country. So for a country

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Speaker 2: so three hundred and thirty five million people, over one

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Speaker 2: hundred and fifty seven million people working, that's all we had.

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Speaker 2: That is not a good spot. So naturally home prices

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Speaker 2: were escalating out of control. Then rates started to rise.

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Speaker 2: Whenever rates rise, demand slows down, price growth cools downs.

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Speaker 2: Except morgage rates went from three to six, six to five,

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Speaker 2: five to seven and a half in twenty twenty two.

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Speaker 2: What it did was create the fastest home sale crash

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Speaker 2: ever recorded in history. Whenever from six and a half

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Speaker 2: million down to four million.

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Speaker 1: It took when you say home sale crash, the amount

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Speaker 1: of the amount of sales sales happened.

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Speaker 2: Sales plunged, naturally, everybody went into the well prices fall

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Speaker 2: of volume premise. Except there's one problem. Active inventory was

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Speaker 2: near all time lows. New listings data in the second

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Speaker 2: half of twenty twenty two was trending negative on a

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Speaker 2: year of year basis. There's where I think that if

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Speaker 2: you don't track that data, nobody would have known it.

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Speaker 2: So as soon as rates stopped rising and you found

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Speaker 2: a place where you could stop and then go lower,

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Speaker 2: then demand picks up. And that means that entire housing

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Speaker 2: crash of twenty twenty two, where prices were falling in

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Speaker 2: the second half of the year, that stops and we

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Speaker 2: go back to the okay, stable demand, inventory low. Do

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Speaker 2: we have anything in the history of US economics in

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Speaker 2: the last five hundred years, can't even go that baar,

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Speaker 2: but that you have a crash when active inventory is

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Speaker 2: this low and demand is stable. So twenty twenty three,

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Speaker 2: mortgage rates went from you know, six to eight percent

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Speaker 2: higher than the previous year, but home sales stopped crashing

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Speaker 2: and home prices were up six percent for the year.

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Speaker 2: So the supplying demand equilibrium works on a weekly basis.

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Speaker 2: This is why we track it and we try to

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Speaker 2: give people heads up. But everything stopped on kind of

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Speaker 2: November ninth, twenty twenty two, and it took everyone six

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Speaker 2: to seven months to realize that. Where we were talking

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Speaker 2: about it November, December, January February, and now we're just

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Speaker 2: back to this very low demand, very low supply, and

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Speaker 2: in that environment, it's hard to get national home prices

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Speaker 2: to crash. In that setting, nominal home prices are crashing

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Speaker 2: is really rare in America. Here. It's just stable demand,

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Speaker 2: low inventory. Keep it as simple as that, and then

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Speaker 2: you go with the data every single week. All right.

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Speaker 1: I want to take a break real quick, just to

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Speaker 1: let you know that if you're sick of the globe,

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Speaker 1: But if we let's dig into that a little bit.

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Speaker 1: So first of all, I like to say there's no

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Speaker 1: such thing as the real estate market. Thousands of real

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Speaker 1: estate market size, type, location, et cetera. And so there

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Speaker 1: were plenty of locations that did drop. I mean, we

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Speaker 1: saw Seattle have a big drop, while Austin dropped quite

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Speaker 1: a bit potentially whatever people define as a crash, I mean,

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Speaker 1: I think maybe we saw up to twenty percent decline

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Speaker 1: in some home prices in some of those markets.

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Speaker 2: From the peak. You had a few cities. There's one

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Speaker 2: hundred and eight thousand cities in America, so we actually

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Speaker 2: authentically had home prices falling in the second half of

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Speaker 2: twenty twenty two. That was correlating with the fastest crash

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Speaker 2: and home sales ever, so that that made sense.

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Speaker 1: So volume of sales crashed in the prices were.

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Speaker 2: Falling in the second half. Not usually seasonality has weak

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Speaker 2: pricing in the second half, but this is authentic price declines.

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Speaker 2: But then home sales stopped crashing and we bounced off

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Speaker 2: of that. You know, we had a big month to

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Speaker 2: month perth in twenty twenty three, and we're just been

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Speaker 2: hovering around here around the four million level. Now, for me,

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Speaker 2: the four million existing home level is really big to

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Speaker 2: our work because historically after nineteen ninety six, we rarely

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Speaker 2: go below that. So everyone is looking at the low

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Speaker 2: housing demand, but they're not thinking about the low housing

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Speaker 2: supply in that equil arium of context. So there are

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Speaker 2: a few cities that have not gotten back to the

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Speaker 2: peak in twenty twenty two. But if you look at

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Speaker 2: the entire country as a whole, if you look at

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Speaker 2: housing in that way, then explains why. You know, Kese

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Speaker 2: shul index was up six percent in twenty twenty three

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Speaker 2: while mortgage rates were heading higher throughout the year, and.

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Speaker 1: Even during that we saw some cities, many cities still

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Speaker 1: going up through that period while some cities were crashing

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Speaker 1: down at the same time.

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Speaker 2: Yeah, there there there are a lot of cities that

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Speaker 2: just did not have much inventory and when they're date,

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Speaker 2: when their demands stabilized. Again, think of it housing in

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Speaker 2: this simple context. This wasn't like the housing bubble years

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Speaker 2: where it was a major credit or sales. But we

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Speaker 2: authentically had too many people chasing too few homes. And

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Speaker 2: when you don't have that many homes out there, you know,

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Speaker 2: even if you just had ten buyers, you go to four.

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Speaker 2: If that ten buyer goes to four, but that's only

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Speaker 2: two properties you still have, you know, the supplying demand

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Speaker 2: equilibrium more for the prices rising. That's a concept that

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Speaker 2: not a lot of people do because they don't track

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Speaker 2: the weekly data like we do. So we're just trying

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Speaker 2: to teach people how Why did this all make sense?

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Speaker 2: Why is pricing firmed up even though demand hasn't really

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Speaker 2: risen in about eighteen months, right?

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Speaker 1: I mean everything boils down to supply and demand. And

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Speaker 1: so to the point that you're making the demand slowed down.

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Speaker 1: People weren't buying as much. Rates went really high, but

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Speaker 1: the supply had dwindled more than the demand did.

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Speaker 2: Yeah, it's it's remarkable to see because when we look

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Speaker 2: at our data, inventory percentage wise actually went up one

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Speaker 2: hundred percent, but that was from two hundred and forty

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Speaker 2: thousand homes to now five hundred thousand.

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Speaker 1: So and where is that historically?

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Speaker 2: I mean, we're over a million.

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Speaker 1: Usually we're still half.

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Speaker 2: We're still half now. If we take the NAR data

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Speaker 2: and we go back to nineteen eighty two, active listings

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Speaker 2: are usually between two to two and a half million.

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Speaker 2: That's normal. In two thousand and seven inventory peaked that

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Speaker 2: was four million. That was before the two thousand and

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Speaker 2: eight recession. We had four million active listings today based

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Speaker 2: on the last existing Home Sales report, just a tat

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Speaker 2: above a million active listings. You want to use a

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Speaker 2: NAR data which takes all the homes, condos and everything's

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Speaker 2: pendings so we are fifty percent below. I mean, we'd

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Speaker 2: have to go one hundred percent higher actually to just

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Speaker 2: get back to the four decade average of active listings.

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Speaker 2: That's how depressed home sales or home inventory is, and

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Speaker 2: a lot of that is qualified mortgage. People get thirty

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Speaker 2: or fixed mortgages, they stay in their homes, fixed debt costs,

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Speaker 2: rising wages, so a lot of people there, they're not

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Speaker 2: moving as much anyway, so there's no need to sell

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Speaker 2: your house unless you could afford to. And that's what

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Speaker 2: the qualified mortgage is. Supplies a function of demand when

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Speaker 2: you list that home. Now, majority seventy five to eighty

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Speaker 2: two percent of the people buy homes, so you actually

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Speaker 2: have to be qualified first before you listen. And during

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Speaker 2: the housing bubble years, we had rising demand, rising inventory,

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Speaker 2: rising prices, rising construction. Completely different marketplace currently.

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Speaker 1: Yeah, although back in two thousand and eight, we did

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Speaker 1: have a lot of you know, Phoenix, Vegas, a lot

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Speaker 1: of places in Florida had built too much inventory. They

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Speaker 1: sort of had these ghost cities almost, if you will.

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Speaker 1: And maybe some markets, maybe Austin, saw some of the

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Speaker 1: same thing.

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Speaker 2: We had such a crash in sales, but it took

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Speaker 2: three years. The peak in two thousand and five six seven,

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Speaker 2: and the bottom was in two thousand and eight. Except

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Speaker 2: back then foreclosures people as were fouling for short sales

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Speaker 2: bankruptcies that four years. Those people aren't sellers they are

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Speaker 2: going to be buyers anymore. So you had what we

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Speaker 2: call a vacuum of sellers that could not buy. There's

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Speaker 2: the big difference now traditional sellers now seventy five to

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Speaker 2: eighty two percent or buyers. Back then, all that supply

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Speaker 2: that was coming on, they were real they were renters,

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Speaker 2: are living with family members. They cannot buy. So that

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Speaker 2: equilibrium that we've worked with housing since twenty ten, that

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Speaker 2: was not part of the process back then. Here if

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Speaker 2: you look at it in that way, supplies of.

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Speaker 1: Functional sellers back then did not turn into buyers. So

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Speaker 1: it wasn't sort of like a well, it.

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Speaker 2: Was a complete vacuum. You had inventory go off. So

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Speaker 2: this is the data line that we are were trying

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Speaker 2: to teach people now that I'm showing recently, there's this

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Speaker 2: new listings weekly data that we show the last three

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Speaker 2: years in America has been the lowest ever. It's seasonal,

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Speaker 2: but it's between thirty thirty thousand to ninety thousand a year. Right,

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Speaker 2: it goes all the way up to June and July

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Speaker 2: and then andfalls. That's the new homes coming onto the

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Speaker 2: market that don't have going into contract. From two thousand

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Speaker 2: and eight to twenty eleven, that data line was running

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Speaker 2: at two hundred and fifty to four hundred thousand per week.

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Speaker 2: Here we're we're still near all time lows. So the

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Speaker 2: amount of homes coming onto the market are still at

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Speaker 2: the lowest levels ever and demand is stable. Back then,

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Speaker 2: unbelole not of new listings, not a lot of demand

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Speaker 2: to stress sellers, foreclosures, bankruptcy, short sales. You had the

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Speaker 2: whole InChI Lada back then. Here a functioning credit market,

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Speaker 2: very low sales, but very low supply, no initial burst

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Speaker 2: of stressed inventory. That's why we always keep people versed

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Speaker 2: with the new listings data to show even in twenty

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Speaker 2: twenty four or whatever last year, the so called Airbnb bust. Yeah, never,

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Speaker 2: we never saw any stress inventory data the entire year.

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Speaker 2: It was the lowest levels of new listings ever recorded

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Speaker 2: in history in twenty twenty three.

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Speaker 1: So I mean very simply, it's always supplying to man,

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Speaker 1: you've already said this a dozen times, and so we

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Speaker 1: sort of we saw those the equilibrium both come down.

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Speaker 1: And the big question that we'll get to is does

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Speaker 1: that what happens with that equilibrium in the future again

300
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Speaker 1: kind of going back to your George Gammon kind of conversation,

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Speaker 1: It's like, if any of these black swans could happen

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Speaker 1: and drastically reduced demand, then that changes. We'll come back

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Speaker 1: to that, but let's just stick back with everybody was

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Speaker 1: sure that the housing price had to crash because rates

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Speaker 1: going up so fast and homes were becoming unaffordable, which

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Speaker 1: they are. I mean even today the home affordability so

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Speaker 1: case Shiller shows like the total price of the home,

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Speaker 1: but most people don't pay for the price of the home.

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Speaker 1: They pay it they buy a payment right, And so

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Speaker 1: now we have incomes have gone up to your point

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Speaker 1: with inflation, not as much as the price of the home.

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Speaker 1: So it's become unaffordable. I had just said that people

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Speaker 1: just buy smaller homes. It is.

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Speaker 2: But here's one thing. If housing was really as affordable,

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Speaker 2: how do we have five million home sales last year

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Speaker 2: new homes and existing homes together together.

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Speaker 1: Well, a lot of those sellers were cash buyers. So

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Speaker 1: they were able to buy that.

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Speaker 2: There are cash buyers, but first time home buyers were

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Speaker 2: still about twenty five to thirty percent of the market.

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Speaker 1: Okay, So dual.

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Speaker 2: Household incomes, you put them together, it takes the affordability

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Speaker 2: index that people use, like a lot of people take

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Speaker 2: the median house income to prices. When you have a

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Speaker 2: dual household income, that model is completely useless. And that

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Speaker 2: explains how we got near five million home sales last

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Speaker 2: year with the majority still being mortgage buyers. Because again,

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Speaker 2: if you're a seller and you have a lot of equity,

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Speaker 2: you don't need, you know, to borrow as much. So

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Speaker 2: that's seven to eight percent rate isn't that bad. If

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Speaker 2: you're a single person, right, but your income levels are

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Speaker 2: higher than what you were in your mid twenties. Maybe

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Speaker 2: now you're buying at thirty seven thirty eight, your incomes

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Speaker 2: are are much different. But when you have a dual

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Speaker 2: household income, that median income is meaningless because you're already

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Speaker 2: probably double that. So a lot of people say, well,

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Speaker 2: Americans only make sixty seven seventy five thousand, You got

338
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Speaker 2: somebody making ninety and seventy thousand together, that meeting income

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Speaker 2: you know that affordability NEX gets a lot better. That's

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Speaker 2: how I try to explain how we got near five

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Speaker 2: million home sales still because there's a lot of dual

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Speaker 2: household incomes now and that alleviates That's why I always

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Speaker 2: say it's really rare to get under four million. So

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Speaker 2: that if you want an explanation how we still have

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Speaker 2: near five million sales, there's a cash as investors. There's

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Speaker 2: a first time home buyers, but the move up and

347
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Speaker 2: move down buyers, a lot of them are dual household

348
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Speaker 2: incomes still sixty percent plus married couples or even people

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Speaker 2: that are going in together without a romantic relationship, those

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Speaker 2: are still two incomes. That changes the affordability issues in America.

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Speaker 2: But again that's two incomes, not one.

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Speaker 1: Do you have your own data set that sort of

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Speaker 1: looks at like household income versus like individual incomes.

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Speaker 2: Yeah, and when you still having sixty percent plus a

355
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Speaker 2: married households buying, that's a double income. Then you take

356
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Speaker 2: the people younger people are actually buying houses, not as

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Speaker 2: romantic partners, but just as you know double occupancy home buyers.

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Speaker 2: You put those together, all of a sudden, housing becomes

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Speaker 2: affordable in that context. If you're a single household, first

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Speaker 2: time home buyer that's young, that's problem, yeah, you know,

361
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Speaker 2: because you don't need to have twenty percent down, But

362
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Speaker 2: if you're putting three or five percent down, you're borrowing

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Speaker 2: a lot. And it's not just the mortgage rates are high,

364
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Speaker 2: property taxes are high, insurances are high, home prices are high.

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Speaker 2: So it makes sense why home sales. I always say

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Speaker 2: this every single time when I go on air. Home

367
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Speaker 2: sales are at the lowest ever in history, right when

368
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Speaker 2: you adjust it to the workforce. But we still have

369
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Speaker 2: that four million core buyer and a lot of them

370
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Speaker 2: either cash or dual household incomes. Every single year they're

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Speaker 2: still purchasing. If that wasn't there and home sales went

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Speaker 2: from four million to two million, you know, then you

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Speaker 2: got something there, because that means you have a double

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Speaker 2: crash in home sales. So are as a country, the

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Speaker 2: US is not as expensive as the UK, Australia, Canada,

376
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Speaker 2: and part of the problem with them is that they

377
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Speaker 2: live off short term rates, so their buying power was

378
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Speaker 2: a lot more when in the run up and prices

379
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Speaker 2: we're thirty year fixes. Our buying power was less compared

380
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Speaker 2: to them. But now now they have to pay the

381
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Speaker 2: piper because there's somebody in Canada right now that's waking up.

382
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Speaker 2: Their mortgage payments doubled because they're tied to short rates.

383
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Speaker 2: They're doing loan modifications, ninety year loan modifications over there,

384
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Speaker 2: just ninety year loan they're trying.

385
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Speaker 1: What does that mean, they're giving them a new loan that's.

386
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Speaker 2: Advertised that's the loan modification because they're tried to short

387
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Speaker 2: term rates. And when we had zero interest rate policy,

388
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Speaker 2: the world was very low. It was fine. But now

389
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Speaker 2: since the world had to deal with inflation, they've kept

390
00:19:23,840 --> 00:19:27,240
Speaker 2: short term rates higher. Here in America, not a problem.

391
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Speaker 2: Majority is everyone's thirty your fixes fixed debt cost rising wages.

392
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Speaker 2: What was the best hedge against inflation was your house

393
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Speaker 2: payment at thirty year mortgage in America right Other countries

394
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Speaker 2: don't have that luxury. So it explains why our home

395
00:19:42,080 --> 00:19:47,200
Speaker 2: prices rebounded, our economies outperforming other countries. Our homeowners, on paper,

396
00:19:47,280 --> 00:19:49,480
Speaker 2: have never looked better. I used to show these credit

397
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Speaker 2: charts and all the events I go do, and when

398
00:19:51,960 --> 00:19:54,720
Speaker 2: people visually see it, the fight go scores the equity

399
00:19:55,320 --> 00:19:57,760
Speaker 2: the total cost of housing that a lot of homeowners

400
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Speaker 2: have you could see why inventory is so low.

401
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Speaker 1: Yeah. I was talking with Jason Hartman kind of about

402
00:20:03,600 --> 00:20:06,680
Speaker 1: this data, and he was saying that with unemployment pay,

403
00:20:07,200 --> 00:20:10,200
Speaker 1: you could technically still qualify for the media and US

404
00:20:10,359 --> 00:20:12,800
Speaker 1: home price, Like obviously you're unemployed, so you wouldn't, but

405
00:20:12,960 --> 00:20:15,480
Speaker 1: on an income basis that you could. So then you

406
00:20:15,560 --> 00:20:17,400
Speaker 1: sort of have like that floor set with that even

407
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Speaker 1: right if.

408
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Speaker 2: It's it would cost more people to rent than to

409
00:20:23,359 --> 00:20:28,160
Speaker 2: leave their house. So let's say one person lost their job,

410
00:20:29,119 --> 00:20:32,520
Speaker 2: if they have another person, you know, working, that person's

411
00:20:32,560 --> 00:20:35,359
Speaker 2: income will called pay the house. If that person's getting

412
00:20:35,400 --> 00:20:38,639
Speaker 2: unemployment bettermits or severance, they can do until they get

413
00:20:38,680 --> 00:20:41,480
Speaker 2: another job. But if they had to rent somewhere now,

414
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Speaker 2: And I think this data line is key to everything

415
00:20:45,280 --> 00:20:47,320
Speaker 2: that not a lot of people know. From nineteen eighty

416
00:20:47,359 --> 00:20:49,000
Speaker 2: five to two thousand and seven, people lived in their

417
00:20:49,000 --> 00:20:51,800
Speaker 2: homes five to seven years. From twenty eight to twenty

418
00:20:51,920 --> 00:20:55,240
Speaker 2: twenty four, that went from eleven to thirteen years. There's

419
00:20:55,280 --> 00:20:57,240
Speaker 2: parts of the country fifteen to eighteen years.

420
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Speaker 1: From seven years up to now fifteen doubles doubled.

421
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Speaker 2: I've lived in my home for twenty years. My income

422
00:21:03,720 --> 00:21:05,960
Speaker 2: at my age is a lot higher than what it was,

423
00:21:06,520 --> 00:21:09,200
Speaker 2: but that thirty year fixed payment, the debt costs stayed

424
00:21:09,200 --> 00:21:11,800
Speaker 2: the same, and then you all those refinancing.

425
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Speaker 1: Well you probably lowered it up.

426
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Speaker 2: Yeah, I mean, it's it's just everyone is in the

427
00:21:14,960 --> 00:21:17,840
Speaker 2: same boat. Everyone has a very low total housing cost.

428
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Speaker 2: So if they move and they buy a house with

429
00:21:21,520 --> 00:21:25,080
Speaker 2: a higher price, higher taxes, higher rates, that changes. But

430
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Speaker 2: the majority of stock is great. Is looking unbelievable. This

431
00:21:30,560 --> 00:21:33,520
Speaker 2: on top of over forty percent of homes in America

432
00:21:33,560 --> 00:21:36,639
Speaker 2: don't even have a mortgage, right, so you're looking at

433
00:21:36,760 --> 00:21:40,240
Speaker 2: the best home profiles in history. So of course people

434
00:21:40,240 --> 00:21:43,080
Speaker 2: aren't going to like Willy nearly sell their houses, you know,

435
00:21:43,320 --> 00:21:48,080
Speaker 2: and do something. So it's a very remarkable period in

436
00:21:48,160 --> 00:21:51,320
Speaker 2: time in our history because all these factors were happening

437
00:21:51,359 --> 00:21:55,400
Speaker 2: in the last ten years and then global pandemic came pandemic,

438
00:21:55,440 --> 00:21:57,920
Speaker 2: inflation rates went up, inflation went up. Homeowners are just

439
00:21:57,960 --> 00:22:01,040
Speaker 2: sitting there going, hey, we're in a good spot here

440
00:22:01,080 --> 00:22:04,800
Speaker 2: because guess what during inflation burst, your wages go up more.

441
00:22:04,960 --> 00:22:09,120
Speaker 2: During inflation. That means your home cost is long less.

442
00:22:09,480 --> 00:22:11,639
Speaker 2: That was the hedge against inflation. That not a lot

443
00:22:11,680 --> 00:22:13,920
Speaker 2: of people knew about because we haven't had to deal with,

444
00:22:14,720 --> 00:22:16,760
Speaker 2: you know, inflation breaking out of control in a very

445
00:22:16,760 --> 00:22:20,480
Speaker 2: short amount of time. So it's an unfair advantage what

446
00:22:20,600 --> 00:22:23,320
Speaker 2: homeowners in America have right now compared to anywhere in

447
00:22:23,359 --> 00:22:24,720
Speaker 2: the world. This is part of the reason the world

448
00:22:24,760 --> 00:22:27,040
Speaker 2: hates us so much is because of the thirty year fix.

449
00:22:27,240 --> 00:22:29,600
Speaker 1: Yeah, and I talk about like the reason why the

450
00:22:29,680 --> 00:22:31,800
Speaker 1: Fed I talk about inflation quite a bit. I mean,

451
00:22:31,840 --> 00:22:34,600
Speaker 1: the Fed's target of two percent inflation is theft. I

452
00:22:34,640 --> 00:22:36,920
Speaker 1: mean they're stealing our purchasing power, if you will. Why

453
00:22:36,960 --> 00:22:39,200
Speaker 1: do the governments want inflation so they can inflate away

454
00:22:39,200 --> 00:22:41,840
Speaker 1: their debt? Well, they inflate await our debt as well.

455
00:22:42,200 --> 00:22:43,680
Speaker 1: So like if you can't beat them, join them. And

456
00:22:43,720 --> 00:22:45,240
Speaker 1: so we have the option to lock in that thirty

457
00:22:45,320 --> 00:22:47,360
Speaker 1: year fixed. And to your point, I'm paying them back

458
00:22:47,359 --> 00:22:49,320
Speaker 1: in twenty years with you know, less dollars than I

459
00:22:49,320 --> 00:22:52,280
Speaker 1: would be today, So we can sort of beat them

460
00:22:52,400 --> 00:22:53,479
Speaker 1: or join them, I suppose.

461
00:22:53,600 --> 00:22:57,520
Speaker 2: Yeah, And it's just it never hit somebody until they've

462
00:22:57,560 --> 00:23:00,800
Speaker 2: seen the data now that you know, like mortgage payment

463
00:23:00,840 --> 00:23:03,120
Speaker 2: as a part of disposable incomes are like near four

464
00:23:03,200 --> 00:23:07,240
Speaker 2: decade loads, and there's just not enough home buyers right

465
00:23:07,320 --> 00:23:10,160
Speaker 2: now that are getting these high mortgages that can change

466
00:23:10,200 --> 00:23:12,240
Speaker 2: that historical data line. On top of the fact that

467
00:23:12,400 --> 00:23:15,720
Speaker 2: forty percent of homes don't have a mortgage, so homeowners

468
00:23:15,760 --> 00:23:18,359
Speaker 2: are set renters. On the other hand, you know a

469
00:23:18,400 --> 00:23:22,399
Speaker 2: little bit a bit of dilemma because rent inflation the

470
00:23:22,520 --> 00:23:25,040
Speaker 2: history of global pandemics, you have this very very burst

471
00:23:25,080 --> 00:23:28,960
Speaker 2: of rental inflation and then disinflation happens after. But they're

472
00:23:29,040 --> 00:23:33,160
Speaker 2: not protected as much as the homeowner was. So if

473
00:23:33,200 --> 00:23:35,120
Speaker 2: you look at in that light the new listings data

474
00:23:35,160 --> 00:23:36,920
Speaker 2: that we talked about that it's been trending at the

475
00:23:36,960 --> 00:23:40,120
Speaker 2: lowest levels ever the last three years, it makes total sense.

476
00:23:40,200 --> 00:23:42,320
Speaker 2: Right now now we're seeing some year over year growth

477
00:23:42,800 --> 00:23:44,720
Speaker 2: in the new listing data, but it's pretty much just

478
00:23:44,840 --> 00:23:47,359
Speaker 2: tracking to where twenty twenty two and twenty twenty one was.

479
00:23:48,560 --> 00:23:50,760
Speaker 1: If we dig into the data, one big trend that

480
00:23:50,880 --> 00:23:52,760
Speaker 1: I've been watching for a long time and I think

481
00:23:52,840 --> 00:23:56,720
Speaker 1: is accelerating is this great migration. So sort of with

482
00:23:56,840 --> 00:23:59,520
Speaker 1: the baby boomer generation which wants to sell their mcmahonson

483
00:23:59,560 --> 00:24:02,159
Speaker 1: and moved down to Sunny Florida or something like that

484
00:24:02,240 --> 00:24:04,120
Speaker 1: and play tennis every day in a small or cheap

485
00:24:04,119 --> 00:24:06,600
Speaker 1: of market. And then I think the COVID pandemic also

486
00:24:06,840 --> 00:24:10,320
Speaker 1: like really accelerated that great migration leaving Blue states to

487
00:24:10,359 --> 00:24:12,879
Speaker 1: go to Red states, leaving you know, or moving somewhere

488
00:24:12,880 --> 00:24:15,160
Speaker 1: they could work remotely, things like that. So how much

489
00:24:15,200 --> 00:24:17,280
Speaker 1: do you look at like this migration data?

490
00:24:18,359 --> 00:24:22,119
Speaker 2: It work from home was the biggest single variable in

491
00:24:22,200 --> 00:24:26,200
Speaker 2: the history of housing ever because everyone had to lift

492
00:24:26,280 --> 00:24:29,400
Speaker 2: somewhat like thirty minutes to ninety minutes near their work

493
00:24:29,640 --> 00:24:33,600
Speaker 2: before before and when you don't have that, why would

494
00:24:33,640 --> 00:24:35,400
Speaker 2: you stay, you know, in an.

495
00:24:35,320 --> 00:24:37,600
Speaker 1: Area Idaho, Montana, Colorado.

496
00:24:37,920 --> 00:24:42,240
Speaker 2: Even before COVID happened. I was looking at this year's

497
00:24:42,280 --> 00:24:44,840
Speaker 2: twenty twenty to twenty twenty four to be a migration period.

498
00:24:44,920 --> 00:24:47,520
Speaker 2: Why I have the same skip everywhere I go for

499
00:24:47,560 --> 00:24:49,880
Speaker 2: the last ten years. We're very easy people. We rent,

500
00:24:49,960 --> 00:24:52,159
Speaker 2: we date, we get we make we get married. Three

501
00:24:52,200 --> 00:24:54,959
Speaker 2: and a half years after marriage, we have kids, home buyers. Right.

502
00:24:55,080 --> 00:24:57,159
Speaker 2: So that's why years twenty twenty to twenty twenty four

503
00:24:57,200 --> 00:24:59,440
Speaker 2: we're gonna be different because we have the biggest housing

504
00:24:59,480 --> 00:25:01,960
Speaker 2: demographic patch ages twenty eight to thirty five. People get

505
00:25:02,040 --> 00:25:04,959
Speaker 2: married at twenty nine, they start having buying homes. At

506
00:25:05,000 --> 00:25:07,360
Speaker 2: thirty three, they start having kids, so you're gonna get

507
00:25:07,359 --> 00:25:12,040
Speaker 2: people migrating out of cities anyway. Then COVID happened, Then

508
00:25:12,200 --> 00:25:15,639
Speaker 2: work from home happened, and oh my god, here we go.

509
00:25:15,840 --> 00:25:19,200
Speaker 2: Here's all the wealthy you know states and their home

510
00:25:19,400 --> 00:25:21,720
Speaker 2: sellers that are going to buyers. They can do anything,

511
00:25:21,800 --> 00:25:25,000
Speaker 2: like Texas. I remember going to Texas a few years

512
00:25:25,000 --> 00:25:27,280
Speaker 2: ago and I was looking. I was like, oh my god,

513
00:25:27,359 --> 00:25:29,879
Speaker 2: these homes are so cheap, right, like you know, I mean,

514
00:25:30,400 --> 00:25:33,480
Speaker 2: I hate using Irvine, California my neighborhood to compare to aamy.

515
00:25:33,560 --> 00:25:37,840
Speaker 2: But Texas today is still so cheap compared to Coastal California.

516
00:25:37,880 --> 00:25:40,840
Speaker 2: But when you have that kind of money, boy, and

517
00:25:40,960 --> 00:25:43,600
Speaker 2: you can buy a you know, four or five bedroom

518
00:25:43,680 --> 00:25:46,880
Speaker 2: home three thousand square foot for what you could pay

519
00:25:47,520 --> 00:25:50,000
Speaker 2: for a condo in Irvine, you do it, you know,

520
00:25:50,200 --> 00:25:52,080
Speaker 2: especially if you could work from home. So we were

521
00:25:52,119 --> 00:25:54,920
Speaker 2: going to see migration anyway, but boy, it was just

522
00:25:54,960 --> 00:25:58,000
Speaker 2: put on steroids when the work from home came into place.

523
00:25:58,119 --> 00:26:00,680
Speaker 2: So that was a double factor that came in, and

524
00:26:00,760 --> 00:26:04,080
Speaker 2: you just saw a surge of housing inflation in these

525
00:26:04,119 --> 00:26:07,840
Speaker 2: areas because their local population did not ever have to

526
00:26:07,920 --> 00:26:10,840
Speaker 2: deal with that kind of money right there, And that

527
00:26:11,080 --> 00:26:13,720
Speaker 2: was that was part of the savagely unhealthy housing market

528
00:26:13,800 --> 00:26:16,480
Speaker 2: that I used to be worried about home prices escalating.

529
00:26:16,720 --> 00:26:18,840
Speaker 2: People used to think about poor Baron's crash or anything.

530
00:26:18,880 --> 00:26:20,800
Speaker 2: It's like, no, no, we are in a bad spot

531
00:26:20,880 --> 00:26:24,480
Speaker 2: here because mortgage rates this low, with inventory this low,

532
00:26:24,600 --> 00:26:26,359
Speaker 2: and now you get to work from home, so you

533
00:26:26,520 --> 00:26:30,600
Speaker 2: have all this money coming into Bury not a lot

534
00:26:30,640 --> 00:26:33,360
Speaker 2: of homes to buy. So it just pushed prices higher.

535
00:26:33,440 --> 00:26:35,440
Speaker 1: So we had the great migration. So I mean, do

536
00:26:35,520 --> 00:26:37,960
Speaker 1: you recognize you think that baby boom generation is also

537
00:26:38,080 --> 00:26:40,560
Speaker 1: causing some of that. I mean you wanted to leave,

538
00:26:40,840 --> 00:26:43,119
Speaker 1: you know, Indianapolis or Detroit and move down.

539
00:26:43,000 --> 00:26:46,000
Speaker 2: To the baby boomers aren't moving as much as people

540
00:26:46,760 --> 00:26:50,160
Speaker 2: would have thought. I remember. So there's a thing called

541
00:26:50,200 --> 00:26:53,840
Speaker 2: the silver Tsunami. Okay, right. It was created in two

542
00:26:53,880 --> 00:26:57,679
Speaker 2: thousand and eight, and it was designed for twenty fifteen

543
00:26:57,720 --> 00:27:00,359
Speaker 2: to twenty twenty five. All the baby boom We're going

544
00:27:00,440 --> 00:27:03,720
Speaker 2: to sell their McMansions to millennials who couldn't buy avocado toasts,

545
00:27:03,800 --> 00:27:05,440
Speaker 2: and home prices have to crash because it was a

546
00:27:05,520 --> 00:27:08,959
Speaker 2: downsizing model. Because The first baby boomer hit sixty two

547
00:27:09,000 --> 00:27:10,440
Speaker 2: in two thousand and eight. So by the time twenty

548
00:27:10,520 --> 00:27:14,160
Speaker 2: fifteen came, here comes the wave. People are talking about

549
00:27:14,160 --> 00:27:16,840
Speaker 2: active inventory being twenty six to thirty two million. Because

550
00:27:16,840 --> 00:27:19,960
Speaker 2: of that, we're one million today nar data. It never happened.

551
00:27:20,000 --> 00:27:23,280
Speaker 2: Baby boomers are staying their homes. Also, a lot of

552
00:27:23,359 --> 00:27:25,560
Speaker 2: them don't even have a mortgage anymore. Yeah, and what

553
00:27:25,720 --> 00:27:29,359
Speaker 2: happened in COVID. You know where was the highest death was,

554
00:27:30,080 --> 00:27:34,080
Speaker 2: you know, senior shelter. You know, so you got a

555
00:27:34,200 --> 00:27:37,240
Speaker 2: lot of factors that make boomers just want to die

556
00:27:37,320 --> 00:27:37,760
Speaker 2: in place.

557
00:27:38,000 --> 00:27:40,400
Speaker 1: Yeah, it seems that way. I would think, like, man,

558
00:27:40,440 --> 00:27:42,240
Speaker 1: you're whatever, eighty years old, why do you want to

559
00:27:42,280 --> 00:27:45,000
Speaker 1: keep shoveling snow up and then upper Midwest when you

560
00:27:45,040 --> 00:27:46,560
Speaker 1: could just move somewhere warm.

561
00:27:47,480 --> 00:27:50,760
Speaker 2: But here's the thing about like Florida. Florida is a

562
00:27:50,800 --> 00:27:55,200
Speaker 2: great example of climate change now finally hitting them because

563
00:27:55,520 --> 00:27:57,959
Speaker 2: we have a lot of building coming up in Florida

564
00:27:57,960 --> 00:28:01,040
Speaker 2: because of the hurricanes, and now they can't get insurance,

565
00:28:01,160 --> 00:28:03,280
Speaker 2: and the insurance they could get is very expensive. So

566
00:28:03,720 --> 00:28:06,560
Speaker 2: do people want to live in certain parts of Florida

567
00:28:07,040 --> 00:28:10,679
Speaker 2: with the high rates high insurance? If the home has

568
00:28:10,720 --> 00:28:13,320
Speaker 2: the risk of going away, you know. So I think

569
00:28:13,560 --> 00:28:15,440
Speaker 2: Florida is going to be a great test case for

570
00:28:15,960 --> 00:28:18,240
Speaker 2: baby boomers that you know, the East Coast from New

571
00:28:18,320 --> 00:28:21,320
Speaker 2: York and New Jersey coming down there in certain areas,

572
00:28:22,840 --> 00:28:25,919
Speaker 2: have they lost their luster because home insurances I mean

573
00:28:25,960 --> 00:28:28,640
Speaker 2: hearing south of California all of us don't. Right, It's

574
00:28:28,800 --> 00:28:31,359
Speaker 2: expensive and there's part it's hard to get insurance for

575
00:28:31,760 --> 00:28:36,080
Speaker 2: certain areas. So the climate risk is now hitting the fold.

576
00:28:36,119 --> 00:28:38,400
Speaker 2: I think Florida is a good test case. But also

577
00:28:38,480 --> 00:28:42,040
Speaker 2: if you're a boomer boy that insurance, some of those

578
00:28:42,080 --> 00:28:44,880
Speaker 2: insurance costs up in Florida are so high that you

579
00:28:45,080 --> 00:28:48,120
Speaker 2: lose the appeal of cheap shelter when you have that

580
00:28:48,280 --> 00:28:48,960
Speaker 2: kind of inflation.

581
00:28:49,320 --> 00:28:51,160
Speaker 1: Yeah, I mean you definitely have to put that into consideration.

582
00:28:51,240 --> 00:28:54,000
Speaker 1: I mean you use Texas as an example, and like Texas,

583
00:28:54,400 --> 00:28:57,600
Speaker 1: the taxes are triple what we have in California. So

584
00:28:58,320 --> 00:29:00,400
Speaker 1: homes in California a much more expensive, but taxes are

585
00:29:00,400 --> 00:29:01,800
Speaker 1: so much more expensive there, and so you sort of

586
00:29:01,840 --> 00:29:03,760
Speaker 1: have to kind of equal that out of y equal.

587
00:29:03,560 --> 00:29:05,640
Speaker 2: That of course. I mean Texas does that have stadium

588
00:29:05,680 --> 00:29:07,920
Speaker 2: come back, so you know, you pay the piper one

589
00:29:07,960 --> 00:29:10,440
Speaker 2: way or another, you know. But for Texas, my god,

590
00:29:10,520 --> 00:29:13,080
Speaker 2: the people are like, what the hell's going on? You know,

591
00:29:13,200 --> 00:29:16,680
Speaker 2: they're they weren't used to that kind of payment shock

592
00:29:17,240 --> 00:29:20,480
Speaker 2: for property taxes because Texas home prices never really took

593
00:29:20,520 --> 00:29:23,480
Speaker 2: off even during the housing bub. But now all that

594
00:29:23,640 --> 00:29:26,400
Speaker 2: money coming to the Dallas for all these and it's

595
00:29:26,440 --> 00:29:28,720
Speaker 2: just inflated prices. And now they see the tax bill

596
00:29:28,760 --> 00:29:29,080
Speaker 2: and it's like.

597
00:29:29,120 --> 00:29:33,640
Speaker 1: Whoa, you know, so they calculate that when they're doing so.

598
00:29:34,040 --> 00:29:35,720
Speaker 2: We don't have any state in comptext out which you

599
00:29:36,240 --> 00:29:38,959
Speaker 2: pay it one way or another out there, and uh

600
00:29:39,000 --> 00:29:42,000
Speaker 2: here in California, of course Prop thirteen, which they'll never

601
00:29:42,120 --> 00:29:44,680
Speaker 2: really get rid of, you know, outside of maybe trying

602
00:29:44,720 --> 00:29:47,160
Speaker 2: to do a grandfather clause or something like that. Uh,

603
00:29:48,240 --> 00:29:50,200
Speaker 2: you pay a lot of state taxes, but your property

604
00:29:50,280 --> 00:29:54,120
Speaker 2: taxes are still low. And another reason why inventory is

605
00:29:54,400 --> 00:29:58,000
Speaker 2: still low here. Your cost of shelter is very very

606
00:29:58,120 --> 00:29:59,480
Speaker 2: low if you stay in place.

607
00:29:59,680 --> 00:30:01,320
Speaker 1: Now, one thing that we hear all the time is

608
00:30:01,360 --> 00:30:04,240
Speaker 1: that we're still really short housing units. Where you know,

609
00:30:04,320 --> 00:30:06,400
Speaker 1: two thousand and eight we were overbuilt or two thousand

610
00:30:06,400 --> 00:30:08,760
Speaker 1: and six, and now we're way under built. So we

611
00:30:08,880 --> 00:30:11,680
Speaker 1: just don't have enough, there's too much demand. What is

612
00:30:11,720 --> 00:30:14,400
Speaker 1: your data say around that? And is the demand that

613
00:30:14,520 --> 00:30:18,360
Speaker 1: we're short good demand? Meaning like we had whatever. However,

614
00:30:18,400 --> 00:30:20,320
Speaker 1: many millions of migrants came in the country, but they're

615
00:30:20,360 --> 00:30:22,640
Speaker 1: not really homeowners or home buyers. I should say, so

616
00:30:23,480 --> 00:30:26,200
Speaker 1: are we how short are we? What do you think

617
00:30:26,200 --> 00:30:28,080
Speaker 1: about that data? And is it real?

618
00:30:28,440 --> 00:30:31,920
Speaker 2: So I always look at it different. I actually never

619
00:30:32,000 --> 00:30:35,600
Speaker 2: pay attention to the number of shortage they give out there.

620
00:30:35,760 --> 00:30:38,959
Speaker 2: I only look at the active listings. Now. The active

621
00:30:39,040 --> 00:30:42,440
Speaker 2: listings were rising in two thousand and five, six and seven,

622
00:30:43,200 --> 00:30:46,040
Speaker 2: right that mattered. Back then people said, well, there's a

623
00:30:46,120 --> 00:30:48,560
Speaker 2: shortage of houses. Not really, you know.

624
00:30:48,800 --> 00:30:50,520
Speaker 1: In between, well they're saying there's a shortage, there will

625
00:30:50,520 --> 00:30:52,280
Speaker 1: be a shortage based off of the future demand.

626
00:30:52,360 --> 00:30:56,280
Speaker 2: They're based on the future demand. But again, right now,

627
00:30:57,240 --> 00:30:59,800
Speaker 2: if demand stays flat like it is, is there a

628
00:31:00,240 --> 00:31:03,080
Speaker 2: shortage of housing right now? Now? I would argue that

629
00:31:03,800 --> 00:31:06,800
Speaker 2: if we had a million more homes, you know, home

630
00:31:06,840 --> 00:31:09,240
Speaker 2: prices can't rise like they have if demand is this low.

631
00:31:09,920 --> 00:31:14,720
Speaker 2: But with immigration and everything, we never really built enough

632
00:31:14,760 --> 00:31:18,000
Speaker 2: apartments here, or we never built apartments in where people

633
00:31:18,080 --> 00:31:20,920
Speaker 2: are migrating to. So we had an apartment boom for

634
00:31:20,960 --> 00:31:23,719
Speaker 2: a while. That's already ended because rates have gone up

635
00:31:23,720 --> 00:31:26,560
Speaker 2: too much. So a lot of people use the let's

636
00:31:26,560 --> 00:31:30,239
Speaker 2: say it's seven point two million shortages, three point one

637
00:31:30,320 --> 00:31:32,920
Speaker 2: million shortages. I always look at active listings, and what

638
00:31:33,080 --> 00:31:37,560
Speaker 2: I see is that the apartment boom that happened is

639
00:31:37,640 --> 00:31:44,040
Speaker 2: now creating disinflations for the five units. For single family

640
00:31:44,360 --> 00:31:47,560
Speaker 2: not the case. So single family rents are holding firm

641
00:31:47,920 --> 00:31:50,320
Speaker 2: single family pricing for homes or holding firms, So you

642
00:31:50,440 --> 00:31:51,920
Speaker 2: don't have enough supply there.

643
00:31:52,480 --> 00:31:53,760
Speaker 1: So how single family?

644
00:31:53,880 --> 00:31:56,520
Speaker 2: Yeah, for single family, so in that context, you don't

645
00:31:56,520 --> 00:31:59,760
Speaker 2: have the disinflation you have in apartments. So you just

646
00:31:59,800 --> 00:32:03,000
Speaker 2: need active inventory to grow and that will cool itself down.

647
00:32:03,360 --> 00:32:07,400
Speaker 2: But the production of homes single family, you're buying in

648
00:32:07,520 --> 00:32:11,080
Speaker 2: a contract. That home is not unoccupied. Right, here's another

649
00:32:11,320 --> 00:32:13,000
Speaker 2: data line that not a lot of people. I go

650
00:32:13,120 --> 00:32:15,080
Speaker 2: to everyone and say, does anybody know how many new

651
00:32:15,120 --> 00:32:18,520
Speaker 2: homes are available for sale in America? Nobody has a clue,

652
00:32:18,920 --> 00:32:23,280
Speaker 2: and I say eighty eighty thousand. That's it. Builders do

653
00:32:23,440 --> 00:32:26,120
Speaker 2: not have a business model that build and leave their

654
00:32:26,160 --> 00:32:29,440
Speaker 2: homes unoccupied. They take a contract, they build, if those

655
00:32:29,480 --> 00:32:31,200
Speaker 2: people are there they give it to them, so that's

656
00:32:31,320 --> 00:32:32,440
Speaker 2: not unoccupied supply.

657
00:32:32,600 --> 00:32:34,840
Speaker 1: Then why In like twenty twenty two and twenty three,

658
00:32:34,960 --> 00:32:38,480
Speaker 1: we saw really this divergence between new home sales versus

659
00:32:38,560 --> 00:32:40,680
Speaker 1: existing home sales, and we could see the home builders

660
00:32:40,720 --> 00:32:43,080
Speaker 1: were drastically marking down new home sales.

661
00:32:43,240 --> 00:32:47,280
Speaker 2: The builders monthly supply spiked on them, the existing homes

662
00:32:47,400 --> 00:32:49,640
Speaker 2: never did. So I would say, the builders aren't the

663
00:32:49,720 --> 00:32:52,400
Speaker 2: March of dimes. They're here to make money. So here

664
00:32:52,480 --> 00:32:55,320
Speaker 2: they are jacking up prices everything. They were milking out

665
00:32:55,360 --> 00:32:57,719
Speaker 2: the margins. What people didn't realize is the builders had

666
00:32:57,720 --> 00:33:01,320
Speaker 2: a lot of profit margins here. So when rates went up,

667
00:33:01,960 --> 00:33:05,000
Speaker 2: all of a sudden, monthly supply spike went up. Builders like, okay,

668
00:33:05,000 --> 00:33:05,880
Speaker 2: we're gonna cut deals.

669
00:33:06,280 --> 00:33:08,640
Speaker 1: But you say monthly supply spike. But you're saying just

670
00:33:08,720 --> 00:33:10,240
Speaker 1: now that they don't build unless they already have a

671
00:33:10,280 --> 00:33:11,760
Speaker 1: contract for it. Supply spike.

672
00:33:11,840 --> 00:33:15,200
Speaker 2: Yeah, those homes when they come to closing, that buyer

673
00:33:15,360 --> 00:33:15,960
Speaker 2: wasn't there.

674
00:33:15,880 --> 00:33:17,680
Speaker 1: Okay, so you had a lot of people can't So

675
00:33:17,720 --> 00:33:20,520
Speaker 1: they were building in for buyers. But then the fiation rates.

676
00:33:20,320 --> 00:33:22,440
Speaker 2: Went up in some sense sixty eight to seventy five,

677
00:33:22,680 --> 00:33:25,840
Speaker 2: which the spikes so then there are builders are like, okay, okay,

678
00:33:26,240 --> 00:33:28,920
Speaker 2: we're lower the rates. So new home sales is growing

679
00:33:29,280 --> 00:33:31,800
Speaker 2: existing home sales now, so why advantage the builders have

680
00:33:31,880 --> 00:33:35,200
Speaker 2: this unbelievable advantage. Come buy our brand new house. We'll

681
00:33:35,240 --> 00:33:36,400
Speaker 2: give you a five percent mortgage.

682
00:33:36,440 --> 00:33:38,000
Speaker 1: Yeah, we'll give you all Yeah.

683
00:33:38,320 --> 00:33:41,440
Speaker 2: And the existing home sales market don't. It doesn't have

684
00:33:41,600 --> 00:33:44,520
Speaker 2: like that. Builders sell as a commodity. So all of

685
00:33:44,560 --> 00:33:46,920
Speaker 2: a sudden, they're like, Okay, we have this big backlog.

686
00:33:47,000 --> 00:33:50,400
Speaker 2: We have more homes under construction and more homes that

687
00:33:50,480 --> 00:33:52,560
Speaker 2: haven't even started yet than we've ever had a history.

688
00:33:52,640 --> 00:33:55,360
Speaker 2: So they are going to keep on buying down rates

689
00:33:56,160 --> 00:33:59,000
Speaker 2: and slowly bring those homes to the market and make

690
00:33:59,080 --> 00:34:02,480
Speaker 2: sure they get sold. But even today, with monthly supply

691
00:34:03,720 --> 00:34:06,680
Speaker 2: at eight months, we only have eighty thousand new homes

692
00:34:06,720 --> 00:34:10,280
Speaker 2: available for sale that are completed because they're whole country.

693
00:34:10,480 --> 00:34:13,600
Speaker 2: Whole country. Yeah, and during the housing crash years, this

694
00:34:13,760 --> 00:34:15,040
Speaker 2: is the one data line that not a lot of

695
00:34:15,080 --> 00:34:17,560
Speaker 2: people do. We never even got to two hundred thousand

696
00:34:18,320 --> 00:34:21,560
Speaker 2: homes available for sale that were completed because the builders

697
00:34:21,640 --> 00:34:24,319
Speaker 2: just don't operate that way. Their profit margins would get killed,

698
00:34:24,640 --> 00:34:27,239
Speaker 2: so they slowly move the homes. Then they go, Okay,

699
00:34:27,400 --> 00:34:30,160
Speaker 2: let's get this person five and a half percent rates. Okay,

700
00:34:30,280 --> 00:34:32,839
Speaker 2: let's get the other construction maybe seven months from now.

701
00:34:33,320 --> 00:34:36,440
Speaker 2: And it's a unique thing is they have such an

702
00:34:36,480 --> 00:34:40,280
Speaker 2: advantage because the active inventory, their main competition, the existing

703
00:34:40,320 --> 00:34:44,640
Speaker 2: home sales market, cannot provide lower mortgage rates like they can.

704
00:34:45,160 --> 00:34:48,640
Speaker 2: So it's not just dealing with less competition. Their competition

705
00:34:48,800 --> 00:34:52,040
Speaker 2: can't do what they can do, so advantage disadvantage. This

706
00:34:52,160 --> 00:34:54,040
Speaker 2: is a very unique time. The builders couldn't do this

707
00:34:54,120 --> 00:34:57,279
Speaker 2: in the previous expansion. Now they can offer a lower

708
00:34:57,400 --> 00:34:59,879
Speaker 2: payment that the existing home seller can't.

709
00:35:02,520 --> 00:35:05,680
Speaker 1: What about so we talked about the Great Migration, what

710
00:35:05,760 --> 00:35:08,880
Speaker 1: about the migrants themselves. I mean, we have a pretty

711
00:35:08,920 --> 00:35:12,560
Speaker 1: big explosion of population coming into the country. They don't

712
00:35:12,640 --> 00:35:15,759
Speaker 1: seem like they're buyers. Potentially, maybe some of them could

713
00:35:15,760 --> 00:35:18,160
Speaker 1: be renters, specifically if they live together. What do you

714
00:35:18,239 --> 00:35:18,800
Speaker 1: think about that?

715
00:35:19,000 --> 00:35:23,000
Speaker 2: And how that it's all renting demands.

716
00:35:22,000 --> 00:35:25,080
Speaker 1: All, but does the rental demand then drive home sales?

717
00:35:25,520 --> 00:35:29,960
Speaker 2: Well, the rental demand can drive single family rents construction

718
00:35:30,080 --> 00:35:33,560
Speaker 2: to keep on going, But it depends on where they're going.

719
00:35:33,600 --> 00:35:36,480
Speaker 2: If they're all going to Los Angeles or San Diego

720
00:35:36,800 --> 00:35:40,640
Speaker 2: or New Mexico. Then you got a lot of people

721
00:35:40,760 --> 00:35:45,239
Speaker 2: living in one home. So builders don't necessarily build off

722
00:35:45,320 --> 00:35:47,719
Speaker 2: of what they don't know what the demand curve is.

723
00:35:48,320 --> 00:35:51,680
Speaker 2: So the apartment permits have been falling for like seven

724
00:35:51,680 --> 00:35:53,839
Speaker 2: eight months now, So the apartment boom that we had

725
00:35:53,960 --> 00:35:57,480
Speaker 2: is over, but the single family rents are still holding

726
00:35:57,560 --> 00:36:01,360
Speaker 2: up well. So whenever you think migration, you think rental

727
00:36:01,440 --> 00:36:05,200
Speaker 2: demand is here. It's not an exact science on one

728
00:36:05,239 --> 00:36:08,240
Speaker 2: to one right because you can have ten people basically

729
00:36:08,360 --> 00:36:10,879
Speaker 2: live in one one one apartment or one house. Yeah.

730
00:36:11,120 --> 00:36:14,880
Speaker 2: Uh so the builders are not thinking about that right

731
00:36:14,920 --> 00:36:18,719
Speaker 2: now because why construction loans are so hot, you know,

732
00:36:18,840 --> 00:36:21,080
Speaker 2: so high right now that the builders are okay, we're done.

733
00:36:21,320 --> 00:36:24,680
Speaker 2: We're done with apartment building for now. Permits are falling.

734
00:36:24,960 --> 00:36:28,000
Speaker 2: Single family permits, no, there's there's your big gap. This

735
00:36:28,160 --> 00:36:30,520
Speaker 2: is the one thing that in this in this period

736
00:36:30,560 --> 00:36:33,040
Speaker 2: of time, it's so obvious. Single family permits.

737
00:36:32,760 --> 00:36:37,160
Speaker 1: Are rising, meaning there's more more supply coming in the pipeline.

738
00:36:36,760 --> 00:36:40,839
Speaker 2: There's more, and then apartments done finished. Once those once

739
00:36:40,920 --> 00:36:44,040
Speaker 2: those apartments are done, those construction workers don't have a job.

740
00:36:44,640 --> 00:36:47,600
Speaker 2: The backlog is still very high. But single family permits

741
00:36:47,640 --> 00:36:50,239
Speaker 2: as long as the builders still cutting rates, so the

742
00:36:50,400 --> 00:36:55,520
Speaker 2: migration does not impact their decision out there. Uh, if

743
00:36:55,600 --> 00:36:58,000
Speaker 2: they in a local area, the cost of building an

744
00:36:58,040 --> 00:37:01,719
Speaker 2: apartment is just too much, so they're backing off. Now,

745
00:37:02,320 --> 00:37:05,200
Speaker 2: Can this be a problem two years from now that

746
00:37:05,280 --> 00:37:07,680
Speaker 2: we're not building any more apartments for a while until

747
00:37:07,760 --> 00:37:09,920
Speaker 2: rates come down, Yes, that could be a problem. But

748
00:37:10,000 --> 00:37:12,720
Speaker 2: for now, thankfully, the single family permits are still rising

749
00:37:13,160 --> 00:37:15,040
Speaker 2: just because the builders are cutting rates.

750
00:37:15,440 --> 00:37:18,720
Speaker 1: In two thousand and six, home starts were down twenty

751
00:37:18,840 --> 00:37:21,640
Speaker 1: six percent to kind of kick that off. And so

752
00:37:21,719 --> 00:37:23,640
Speaker 1: to the point you're making, now, if we contrast those

753
00:37:23,680 --> 00:37:24,920
Speaker 1: two periods, we're still rising.

754
00:37:25,280 --> 00:37:27,880
Speaker 2: Yeah, and we have to remember in two thousand and

755
00:37:28,000 --> 00:37:30,719
Speaker 2: five new home sales were one point four million. It

756
00:37:30,840 --> 00:37:34,400
Speaker 2: had an eighty two percent crash, got downs like a

757
00:37:34,400 --> 00:37:36,200
Speaker 2: little bit above two hundred thousand.

758
00:37:36,600 --> 00:37:38,600
Speaker 1: A crash in the amount of product being sold.

759
00:37:39,000 --> 00:37:42,840
Speaker 2: Yeah, so the builders were builders are flagging recessions in

760
00:37:42,880 --> 00:37:45,719
Speaker 2: two thousand and six, right, we were already losing construction

761
00:37:45,960 --> 00:37:50,040
Speaker 2: jobs and everything, and the history of economic cycles, residential

762
00:37:50,120 --> 00:37:53,759
Speaker 2: construction workers always lose their jobs first before recessions, so

763
00:37:53,960 --> 00:37:54,760
Speaker 2: a lot of people.

764
00:37:55,040 --> 00:38:01,080
Speaker 1: So obviously unemployment. But you're saying specifically, specifically, yeah, residential builders.

765
00:38:02,400 --> 00:38:05,040
Speaker 2: So how does this happen? Everyone says housing leads you

766
00:38:05,200 --> 00:38:07,880
Speaker 2: in the recession and then it leads you out. Okay,

767
00:38:08,000 --> 00:38:13,960
Speaker 2: so what sector gets hit harder with rates rising? Housing? Right,

768
00:38:14,120 --> 00:38:16,440
Speaker 2: So if you're building based on a certain low rate,

769
00:38:16,560 --> 00:38:18,560
Speaker 2: all of a sudden rates go up, you don't have

770
00:38:18,640 --> 00:38:20,840
Speaker 2: to build that much. You're gonna lose your construction workers.

771
00:38:20,840 --> 00:38:22,200
Speaker 2: So a lot of the charts I put up is

772
00:38:22,239 --> 00:38:25,319
Speaker 2: like here, it is residential workers fall and residential workers fall,

773
00:38:25,360 --> 00:38:30,319
Speaker 2: and residential residential workers didn't fall in twenty twenty two. Right,

774
00:38:30,400 --> 00:38:33,920
Speaker 2: there's a backlog of homes builders or cutting rates. There's

775
00:38:34,000 --> 00:38:36,960
Speaker 2: where everyone's recession went wrong in there, and all of

776
00:38:37,000 --> 00:38:39,319
Speaker 2: a sudden, now permits are rising again in the last

777
00:38:39,360 --> 00:38:42,640
Speaker 2: few months, construction jobs are still rising. So there's your

778
00:38:42,800 --> 00:38:46,040
Speaker 2: big deviation in the past. It was really easy to

779
00:38:46,120 --> 00:38:49,680
Speaker 2: see this final recession red flag data that comes in

780
00:38:50,239 --> 00:38:53,880
Speaker 2: where home sales are falling, permits are falling, construction workers

781
00:38:53,960 --> 00:38:56,640
Speaker 2: are losing their jobs. Didn't happen this time around. And

782
00:38:56,760 --> 00:38:59,840
Speaker 2: I think that's the difference in this economic cycle of

783
00:38:59,840 --> 00:39:02,960
Speaker 2: your trying into housing. So even though the apartment boom

784
00:39:03,040 --> 00:39:06,360
Speaker 2: is over. We're still finishing single family homes. Single family

785
00:39:06,360 --> 00:39:08,960
Speaker 2: rents are holding up. Builders are still able to sell

786
00:39:09,280 --> 00:39:12,120
Speaker 2: new homes and growing sales. As long as that continues,

787
00:39:12,400 --> 00:39:15,440
Speaker 2: you could still get production, but it will be terribly slow.

788
00:39:16,200 --> 00:39:18,760
Speaker 2: Their job is here to make money, not to flood

789
00:39:18,840 --> 00:39:20,800
Speaker 2: any marketplace with excess supply.

790
00:39:21,400 --> 00:39:24,080
Speaker 1: There's a lot of talk about the overbuilding of the

791
00:39:24,120 --> 00:39:27,440
Speaker 1: commercial real estate market that specifically you know, multi large, multifamily,

792
00:39:27,800 --> 00:39:30,400
Speaker 1: and how there's this huge backlog that's about to come

793
00:39:30,440 --> 00:39:34,439
Speaker 1: to market is going to cause this massive oversupply. I guess, one,

794
00:39:34,560 --> 00:39:36,640
Speaker 1: do you see that? And two? Then are you saying

795
00:39:36,680 --> 00:39:39,640
Speaker 1: that that would then potentially cause this home builder supply

796
00:39:39,760 --> 00:39:41,680
Speaker 1: in that segment of the market, which would you know

797
00:39:41,719 --> 00:39:43,120
Speaker 1: if we look at the market as a whole or

798
00:39:43,239 --> 00:39:45,600
Speaker 1: I say that segment as a whole, would actually cause

799
00:39:45,640 --> 00:39:46,200
Speaker 1: that to decline.

800
00:39:46,280 --> 00:39:50,719
Speaker 2: Well, you don't traditionally get rental deflation in America. It's

801
00:39:50,920 --> 00:39:53,400
Speaker 2: very very rare, just because most people are working. So

802
00:39:54,080 --> 00:39:57,360
Speaker 2: we're seeing disinflation happen in certain areas like Nashville is

803
00:39:57,440 --> 00:40:01,160
Speaker 2: a good example. They're building like crazy up in Nashville, right,

804
00:40:01,320 --> 00:40:04,320
Speaker 2: So all of a sudden, you can't keep on raising

805
00:40:04,400 --> 00:40:07,239
Speaker 2: rents in those apartments and more suppliers coming in, so

806
00:40:07,880 --> 00:40:11,000
Speaker 2: you don't raise your rent In some cases you offer

807
00:40:11,200 --> 00:40:14,040
Speaker 2: free one or two three months, But that doesn't mean

808
00:40:14,120 --> 00:40:19,160
Speaker 2: a national deflationary events just because most most people are working,

809
00:40:19,239 --> 00:40:22,040
Speaker 2: most people need somewhere to live. If they're not home buyers,

810
00:40:22,160 --> 00:40:24,520
Speaker 2: they're going to be either apartments or single family rent

811
00:40:24,600 --> 00:40:25,760
Speaker 2: So we're gonna see.

812
00:40:25,640 --> 00:40:27,640
Speaker 1: But not on rents. I was talking with specifically on

813
00:40:27,800 --> 00:40:31,479
Speaker 1: the home builders. So if we have all this back

814
00:40:31,800 --> 00:40:34,360
Speaker 1: supply of multi large, multive family finally making it to

815
00:40:34,440 --> 00:40:36,920
Speaker 1: market over the next year, and I think you're already

816
00:40:36,960 --> 00:40:38,560
Speaker 1: kind of saying maybe we'll see a slowdown in the

817
00:40:38,640 --> 00:40:42,759
Speaker 1: mult large, multi family, does that cause the builders segment

818
00:40:42,840 --> 00:40:43,279
Speaker 1: and drive not?

819
00:40:44,200 --> 00:40:47,480
Speaker 2: The apartments don't really impact the single family as much.

820
00:40:47,560 --> 00:40:50,200
Speaker 2: Why because the single family the builders? Yeah, the employee

821
00:40:50,239 --> 00:40:53,480
Speaker 2: data the builders, the people that are buying and renting

822
00:40:53,520 --> 00:40:56,000
Speaker 2: single family homes are kind of in the upper income

823
00:40:56,440 --> 00:40:58,799
Speaker 2: bracket compared to apartments.

824
00:40:59,040 --> 00:41:01,600
Speaker 1: Right, But I was talking about the workforce work for employment.

825
00:41:01,760 --> 00:41:04,040
Speaker 2: Yeah, yeah, the employment's going to come down, right, Yeah,

826
00:41:04,160 --> 00:41:05,960
Speaker 2: that's going to come down regardless, So.

827
00:41:06,040 --> 00:41:08,440
Speaker 1: That would be a bad That's what I said.

828
00:41:08,480 --> 00:41:10,520
Speaker 2: That's what I would say is that there could be

829
00:41:10,560 --> 00:41:13,680
Speaker 2: a leading indicator of a recession is when those jobs

830
00:41:13,719 --> 00:41:16,640
Speaker 2: starts coming off, then guess what we're going to see

831
00:41:16,640 --> 00:41:19,680
Speaker 2: the residential construction workers fall. It's just that we have

832
00:41:19,760 --> 00:41:22,160
Speaker 2: a backlog. We have such a big backlog that they're

833
00:41:22,239 --> 00:41:24,080
Speaker 2: keeping those people employed to make sure to finish.

834
00:41:24,160 --> 00:41:27,600
Speaker 1: When you say residential construction workers, is it like housing

835
00:41:27,680 --> 00:41:30,680
Speaker 1: construction workers, not specifically residential.

836
00:41:30,840 --> 00:41:33,000
Speaker 2: Just apartments and single family That's what.

837
00:41:33,000 --> 00:41:34,480
Speaker 1: I'm trying to get to. So if we see a

838
00:41:34,560 --> 00:41:37,880
Speaker 1: decline in the multi family, which could be you know, probability,

839
00:41:38,400 --> 00:41:39,640
Speaker 1: then that would see that that way.

840
00:41:39,800 --> 00:41:43,399
Speaker 2: Yes, yes, those people will lose their jobs eventually.

841
00:41:43,080 --> 00:41:45,480
Speaker 1: In time, but maybe they could start building single family

842
00:41:45,520 --> 00:41:46,399
Speaker 1: homes if there's enough demand.

843
00:41:46,560 --> 00:41:49,000
Speaker 2: Correct. But the single family homes, they've got enough people

844
00:41:49,000 --> 00:41:53,680
Speaker 2: there right now, it's not exactly booming. But the apartment

845
00:41:53,800 --> 00:41:56,839
Speaker 2: we have so many apartments under construction that haven't closed yet,

846
00:41:57,239 --> 00:41:59,600
Speaker 2: so a lot of the workers there simply when those

847
00:41:59,680 --> 00:42:02,080
Speaker 2: project are done, if there's nothing in them, they're going

848
00:42:02,160 --> 00:42:04,400
Speaker 2: to lose their jobs. So so that's the one thing

849
00:42:04,480 --> 00:42:07,160
Speaker 2: I'm keeping an eye on because the backlog has been

850
00:42:07,280 --> 00:42:11,120
Speaker 2: so hot high these they're they're they're keeping them employed

851
00:42:11,200 --> 00:42:12,960
Speaker 2: longer than they would have in a normal cycle.

852
00:42:13,360 --> 00:42:17,600
Speaker 1: So that's one potential little tropical storm developing that you're

853
00:42:17,600 --> 00:42:19,399
Speaker 1: going to watch. But it's not a big deal yet,

854
00:42:19,400 --> 00:42:20,840
Speaker 1: but could be. So we'll keep an eye on that.

855
00:42:21,120 --> 00:42:25,320
Speaker 2: Every every Job's Friday, we show the residential construction workers.

856
00:42:25,440 --> 00:42:28,040
Speaker 2: And then as long as that thing is rising, you

857
00:42:28,120 --> 00:42:30,800
Speaker 2: still have the and we have so much deficit spending

858
00:42:30,880 --> 00:42:33,600
Speaker 2: right now, there's so many projects. Yeah, the capex spending

859
00:42:33,640 --> 00:42:36,320
Speaker 2: that is going out there that keeping construction workers employed.

860
00:42:36,600 --> 00:42:38,279
Speaker 2: It's a little bit different now than let's say the

861
00:42:38,360 --> 00:42:41,120
Speaker 2: previous cycles. But yeah, that's a that's that's number one

862
00:42:41,200 --> 00:42:43,600
Speaker 2: on my list, is keeping an eye on that residential

863
00:42:43,640 --> 00:42:47,600
Speaker 2: construction because once you lose that part, then it's the builders.

864
00:42:47,760 --> 00:42:50,480
Speaker 2: Right if the builders for some reason can't pay down

865
00:42:50,560 --> 00:42:53,319
Speaker 2: their mortgages, then you get the double impact. Right there,

866
00:42:53,520 --> 00:42:56,920
Speaker 2: there's your recessionary day line. But does a recession mean

867
00:42:57,000 --> 00:42:58,160
Speaker 2: a housing crisis?

868
00:42:59,360 --> 00:43:01,319
Speaker 1: That's that's that's a good question. I like to say.

869
00:43:01,440 --> 00:43:03,400
Speaker 1: You know, the generals always fight the last war, and

870
00:43:03,480 --> 00:43:05,400
Speaker 1: because two thousand and eight was a real estate or

871
00:43:05,440 --> 00:43:07,440
Speaker 1: a banking crisis, we think we're having another one, but

872
00:43:07,640 --> 00:43:10,080
Speaker 1: I don't think that's necessary. We're having So yeah, the

873
00:43:10,200 --> 00:43:13,040
Speaker 1: question is does a recession cause that? And as I

874
00:43:13,080 --> 00:43:15,280
Speaker 1: already kind of laid out a fact from Jason Hartman

875
00:43:15,680 --> 00:43:20,880
Speaker 1: that unemployment would probably still cover your house. So potentially,

876
00:43:21,000 --> 00:43:23,040
Speaker 1: even if we have a recession in mass layoffs, could

877
00:43:23,080 --> 00:43:24,200
Speaker 1: they still afford to keep the house.

878
00:43:24,280 --> 00:43:27,719
Speaker 2: So when we look back in recessionary cycles, going back

879
00:43:27,719 --> 00:43:31,279
Speaker 2: to nineteen eighty one, majority of recessions, prices go up.

880
00:43:32,760 --> 00:43:35,200
Speaker 1: The only time we saw real prices are rent prices.

881
00:43:36,760 --> 00:43:39,520
Speaker 2: Home prices. Okay, right, so home prices. Why do home

882
00:43:39,600 --> 00:43:43,160
Speaker 2: prices go up when a recession happens? Rates fall? What

883
00:43:43,880 --> 00:43:48,879
Speaker 2: sector of the economy gets disproportionately benefited when rates fall? Housing? Yeah,

884
00:43:49,080 --> 00:43:52,359
Speaker 2: so here we're already starting from very low inventory. We're

885
00:43:52,360 --> 00:43:56,040
Speaker 2: already starting from low home sales. So when COVID nineteen happened,

886
00:43:56,120 --> 00:43:58,560
Speaker 2: a lot of people remembering for my COVID nineteen recovery

887
00:43:58,600 --> 00:44:00,640
Speaker 2: model in April seven, twenty twenty, I was like, Okay,

888
00:44:00,920 --> 00:44:03,719
Speaker 2: we're gonna recover this year, and housing is going to

889
00:44:03,760 --> 00:44:06,719
Speaker 2: recover like in a few weeks. You know, as soon

890
00:44:06,760 --> 00:44:09,399
Speaker 2: as people start figuring out that they could live, they'll

891
00:44:09,440 --> 00:44:13,320
Speaker 2: buy home. So after six to seven weeks home demand

892
00:44:13,400 --> 00:44:16,600
Speaker 2: shot up. Why mortgage rates are low? So people tell me,

893
00:44:16,719 --> 00:44:19,200
Speaker 2: a lot of my smart economic friends logan, how could

894
00:44:19,239 --> 00:44:22,680
Speaker 2: home sales rebound? There's twenty to thirty million people unemployed,

895
00:44:22,960 --> 00:44:25,600
Speaker 2: there's five billion in forbearance. I go, oh, that's cute.

896
00:44:26,400 --> 00:44:29,120
Speaker 2: Looking behind me. I have one hundred and thirty three

897
00:44:29,280 --> 00:44:32,840
Speaker 2: million people still working, right, I just need four million

898
00:44:32,920 --> 00:44:35,960
Speaker 2: home sales to be stable. Three percent mortgage rates. As

899
00:44:35,960 --> 00:44:37,640
Speaker 2: soon as they think they're gonna living, they're gonna buy.

900
00:44:37,920 --> 00:44:41,640
Speaker 2: Same thing with renting. Right, If the unemployment rates are

901
00:44:42,040 --> 00:44:44,120
Speaker 2: the highest, are gonna be those who did not finish

902
00:44:44,200 --> 00:44:47,799
Speaker 2: high school, So that first level renter is gonna get

903
00:44:47,880 --> 00:44:52,239
Speaker 2: hit after that, you know, if the economy simply can't

904
00:44:52,360 --> 00:44:55,759
Speaker 2: lose enough people to offset the big rental market or

905
00:44:55,800 --> 00:44:57,759
Speaker 2: the big housing market, so it has to be a

906
00:44:58,000 --> 00:45:01,320
Speaker 2: very very big, long, deep percent session with a credit

907
00:45:01,440 --> 00:45:05,360
Speaker 2: market deteriorating and the FED not doing anything right. And

908
00:45:05,480 --> 00:45:08,239
Speaker 2: that's not happening anymore. Right. The Fed is everybody has

909
00:45:08,280 --> 00:45:11,400
Speaker 2: seen what happens when the government comes in in a

910
00:45:11,440 --> 00:45:14,600
Speaker 2: recession to prevent it from becoming something like two thousand

911
00:45:14,600 --> 00:45:16,400
Speaker 2: and eight, which we didn't do that in two thousand

912
00:45:16,400 --> 00:45:19,480
Speaker 2: and our response was terrible back then. Now I can't

913
00:45:19,520 --> 00:45:22,200
Speaker 2: don't have that anymore. The governments and the FED really

914
00:45:22,320 --> 00:45:25,440
Speaker 2: know they can pull levers now to minimize the damage

915
00:45:25,480 --> 00:45:28,680
Speaker 2: out there. And shelter is such an important factor now

916
00:45:29,239 --> 00:45:33,359
Speaker 2: that everyone will never allow that crisis to happen again.

917
00:45:33,440 --> 00:45:35,759
Speaker 2: Why the the Federal Reserve or the government, they will

918
00:45:35,840 --> 00:45:38,920
Speaker 2: make sure to keep everybody in their homes not homeless

919
00:45:38,960 --> 00:45:42,759
Speaker 2: as much as possible, even at the cost of maybe

920
00:45:42,840 --> 00:45:43,480
Speaker 2: other sectors.

921
00:45:43,719 --> 00:45:46,920
Speaker 1: Yeah, that's my sort of thesis and my research as

922
00:45:46,960 --> 00:45:49,839
Speaker 1: well that Einstein's when he was a professor, he gave

923
00:45:49,880 --> 00:45:51,440
Speaker 1: the same test every year and they said, hey, you

924
00:45:51,480 --> 00:45:53,720
Speaker 1: gave the same test as last year, but the answers changed,

925
00:45:54,000 --> 00:45:55,840
Speaker 1: so like something changed in two thousand and eight. We

926
00:45:55,840 --> 00:46:00,640
Speaker 1: saw Q we saw and so I said six percent

927
00:46:00,800 --> 00:46:02,600
Speaker 1: draw down in home starts in two thousand and six,

928
00:46:02,680 --> 00:46:04,719
Speaker 1: But it wasn't until about thirty months later until we

929
00:46:04,800 --> 00:46:08,600
Speaker 1: sort of got that bellout package. We saw Bear Stearns collapse,

930
00:46:09,040 --> 00:46:11,160
Speaker 1: and which is sort of this trigger of this banking collapse,

931
00:46:11,200 --> 00:46:12,719
Speaker 1: and it took seven months to get a bell out.

932
00:46:12,760 --> 00:46:14,480
Speaker 1: In March twenty twenty three, when the banks collaps we

933
00:46:14,520 --> 00:46:15,239
Speaker 1: got in six days.

934
00:46:15,440 --> 00:46:18,640
Speaker 2: And also Freddy and Fanny had to go to conservatship, right, right,

935
00:46:18,760 --> 00:46:21,120
Speaker 2: So I always say the unsung hero of COVID was

936
00:46:21,160 --> 00:46:24,759
Speaker 2: that Freddy and Fanny were in conservatorship, the credit markets flowed, right.

937
00:46:24,840 --> 00:46:27,000
Speaker 2: So a lot of people say, well, we're bearish on

938
00:46:27,080 --> 00:46:29,319
Speaker 2: housing because the credit markets are going to tighten up.

939
00:46:29,840 --> 00:46:32,960
Speaker 2: We're already at the lowest levels of credit Availability index

940
00:46:33,040 --> 00:46:35,239
Speaker 2: for the last ten years. There's nothing going on. As

941
00:46:35,280 --> 00:46:37,560
Speaker 2: long as Freddy and Fanny are in conservatship, they can

942
00:46:37,600 --> 00:46:40,080
Speaker 2: give out thirty year mortgages. Yeah, right, So that's a

943
00:46:40,239 --> 00:46:42,600
Speaker 2: huge difference. Now that wasn't the case back then. A

944
00:46:42,640 --> 00:46:46,040
Speaker 2: lot of people forgot all hell was breaking losing the

945
00:46:46,080 --> 00:46:48,960
Speaker 2: banking system back then. Yeah, and the gss were like

946
00:46:49,040 --> 00:46:51,200
Speaker 2: their stock prices were coming down, so they had to

947
00:46:51,280 --> 00:46:54,439
Speaker 2: spend time putting in conservatorship and all that stuff. None

948
00:46:54,440 --> 00:46:57,719
Speaker 2: of that's here, right, And because of qualified mortgage you

949
00:46:57,800 --> 00:47:01,320
Speaker 2: don't have to worry about mass forklo or delinquencies. So

950
00:47:01,480 --> 00:47:05,640
Speaker 2: we think about the foreclosure delinquency timeline. Right now, thirty day,

951
00:47:05,719 --> 00:47:07,759
Speaker 2: sixty day, ninety y, one hundred and twenty en OD

952
00:47:07,880 --> 00:47:11,200
Speaker 2: filings near all time lows. It would take at minimum

953
00:47:11,480 --> 00:47:14,319
Speaker 2: nine to eighteen months from the start of the job,

954
00:47:14,440 --> 00:47:17,400
Speaker 2: Rossi says to get that supply onto the market. In

955
00:47:17,520 --> 00:47:19,359
Speaker 2: some cases it's going to be like two to three years,

956
00:47:19,520 --> 00:47:22,840
Speaker 2: just because certain states have different judicial laws, so we

957
00:47:22,960 --> 00:47:27,080
Speaker 2: have a completely different foreclosure backdrop as well. Right, the

958
00:47:27,360 --> 00:47:29,839
Speaker 2: whole forbearance like a lot of people, I coined them

959
00:47:29,880 --> 00:47:32,000
Speaker 2: the forbearance crash bros. Right, like a lot of people

960
00:47:32,120 --> 00:47:35,400
Speaker 2: is kept on going on YouTube saying forbearance. By October

961
00:47:35,440 --> 00:47:38,680
Speaker 2: of twenty twenty, majority of people that made over sixty

962
00:47:38,760 --> 00:47:42,040
Speaker 2: thousand got their jobs back. Forbearance was done, was finished. Right,

963
00:47:42,200 --> 00:47:44,200
Speaker 2: It's just going to take law. We have like I

964
00:47:44,280 --> 00:47:48,120
Speaker 2: think zero point three percent of the loans in forbearance

965
00:47:48,160 --> 00:47:50,560
Speaker 2: today compared to what it was at the peak of

966
00:47:50,600 --> 00:47:53,040
Speaker 2: the So we have a different credit markets. When the

967
00:47:53,120 --> 00:47:56,759
Speaker 2: recession happens, just remember rates are going to fall, and

968
00:47:56,840 --> 00:47:59,239
Speaker 2: you got one hundred and fifty eight million people working.

969
00:47:59,280 --> 00:48:01,600
Speaker 1: Right, and they've been on the sidelines for the last

970
00:48:01,600 --> 00:48:03,160
Speaker 1: couple of years waiting having.

971
00:48:02,960 --> 00:48:07,000
Speaker 2: The low sales. My concern is similar to what happened

972
00:48:07,000 --> 00:48:10,000
Speaker 2: in COVID. I'm worried that if rates go down too

973
00:48:10,120 --> 00:48:13,320
Speaker 2: much again and We're already at these low active inventory.

974
00:48:13,440 --> 00:48:16,400
Speaker 2: So let's say a million people lose, there's still one

975
00:48:16,480 --> 00:48:19,239
Speaker 2: hundred and fifty seven million people working, and sales are

976
00:48:19,320 --> 00:48:21,920
Speaker 2: low and inventory is low. That's always going to be

977
00:48:22,000 --> 00:48:24,680
Speaker 2: my concern until we get active inventory higher and higher.

978
00:48:25,000 --> 00:48:27,800
Speaker 2: We don't have a buffer, right, so when just that

979
00:48:28,080 --> 00:48:31,640
Speaker 2: mortgage rate's going down to six percent, you know, from

980
00:48:31,719 --> 00:48:33,560
Speaker 2: seven and a quarter in late twenty twenty two to

981
00:48:33,680 --> 00:48:37,400
Speaker 2: twenty twenty three, it took our seasonal inventory out to

982
00:48:37,520 --> 00:48:40,480
Speaker 2: the longest period ever, right, because when you don't work

983
00:48:40,560 --> 00:48:43,160
Speaker 2: with a lot, it doesn't take much to move the needle.

984
00:48:43,480 --> 00:48:45,480
Speaker 2: And that always will be my concern until we get

985
00:48:45,520 --> 00:48:48,120
Speaker 2: inventory back to a normal level. But when the next

986
00:48:48,200 --> 00:48:52,000
Speaker 2: recession happens, I'm still worried about Oh my god, it's

987
00:48:52,120 --> 00:48:54,400
Speaker 2: three years now that home sales are at the lowest

988
00:48:54,440 --> 00:48:56,959
Speaker 2: levels ever. That's like four point two to four point

989
00:48:57,080 --> 00:49:00,400
Speaker 2: seven million home buyers that should be here aren't here

990
00:49:00,440 --> 00:49:04,640
Speaker 2: because of higher rates. I'm still concerned about housing inflation

991
00:49:05,440 --> 00:49:11,080
Speaker 2: right then major deflationary collapses that we run models showing

992
00:49:11,160 --> 00:49:13,160
Speaker 2: what happened from two thousand and two to two thousand

993
00:49:13,160 --> 00:49:14,759
Speaker 2: and eight, and what happened from two thousand and eight

994
00:49:14,760 --> 00:49:17,200
Speaker 2: to twenty eleven. We don't see that in the data

995
00:49:17,200 --> 00:49:19,759
Speaker 2: because their credit markets are different. Yeah, so we'll be

996
00:49:19,880 --> 00:49:21,960
Speaker 2: the first ones to tell everybody when the new listing's

997
00:49:22,040 --> 00:49:24,680
Speaker 2: data show stress. But we're trying to give context for

998
00:49:24,760 --> 00:49:27,360
Speaker 2: everybody in the next ten years, so everyone kind of

999
00:49:27,520 --> 00:49:28,640
Speaker 2: works off the same page.

1000
00:49:28,800 --> 00:49:32,000
Speaker 1: Yeah. Now, from a macroeconomic standpoint, I think things are

1001
00:49:32,000 --> 00:49:33,759
Speaker 1: also different. As we talked about the way the central

1002
00:49:33,760 --> 00:49:36,280
Speaker 1: banks are sort of interacting, and I think even politically

1003
00:49:36,360 --> 00:49:38,000
Speaker 1: we see that it's a lot different, right. I remember

1004
00:49:38,000 --> 00:49:39,600
Speaker 1: in two thousand and eight, it's like, no, you can't

1005
00:49:39,719 --> 00:49:42,440
Speaker 1: give seven hundred billion dollars for a bailout. And now today,

1006
00:49:42,600 --> 00:49:44,960
Speaker 1: you know, it's like, how about just pay everybody a

1007
00:49:45,040 --> 00:49:46,880
Speaker 1: trillion dollars just to stay at home and work, right,

1008
00:49:47,360 --> 00:49:50,680
Speaker 1: or not to work. Biden just announced it, you know,

1009
00:49:50,719 --> 00:49:52,239
Speaker 1: the new budget of twenty twenty five. He wants to

1010
00:49:52,280 --> 00:49:54,320
Speaker 1: be whatever seven and a half trillion dollars, which is

1011
00:49:54,400 --> 00:49:56,439
Speaker 1: up from whatever four and a half in twenty twenty.

1012
00:49:56,600 --> 00:49:58,680
Speaker 1: It's pretty crazy. And so I think, you know, politically

1013
00:49:59,400 --> 00:50:02,160
Speaker 1: and monetarily, I think we're just in a different regime.

1014
00:50:03,040 --> 00:50:06,520
Speaker 1: I have been forecasting a crash up and not a

1015
00:50:06,600 --> 00:50:09,680
Speaker 1: crash down, right, But let's talk about a crash down.

1016
00:50:09,760 --> 00:50:12,320
Speaker 1: So what would it take. So from a mac cracer

1017
00:50:12,360 --> 00:50:16,520
Speaker 1: next standpoint, the yield curve, that's the one George Gan

1018
00:50:16,640 --> 00:50:20,040
Speaker 1: was hitting on. The guild curves inverted, it's predicted a

1019
00:50:20,120 --> 00:50:23,919
Speaker 1: recession every single time. What about the old curve?

1020
00:50:24,600 --> 00:50:28,920
Speaker 2: So I have a sixth recession red flag model and

1021
00:50:29,280 --> 00:50:32,360
Speaker 2: the conference board that creates the leading Economic Index that

1022
00:50:32,440 --> 00:50:34,800
Speaker 2: gives the information to the White House and to the

1023
00:50:35,280 --> 00:50:38,400
Speaker 2: Federal Reserve. I had to give that presentation to their

1024
00:50:38,480 --> 00:50:42,960
Speaker 2: trustees in July of twenty twenty two. So my sixth

1025
00:50:43,080 --> 00:50:46,600
Speaker 2: research and red flag went off in August. But then

1026
00:50:46,640 --> 00:50:49,680
Speaker 2: one of the flags came down when rates came down

1027
00:50:49,800 --> 00:50:52,799
Speaker 2: and the builder's confidence went up. So when we think

1028
00:50:52,880 --> 00:50:55,960
Speaker 2: about a crash, there's a few things we need to see.

1029
00:50:56,080 --> 00:51:00,400
Speaker 2: Number One, jobs have to be lost, and we're going

1030
00:51:00,480 --> 00:51:02,800
Speaker 2: to have to see the new listings data start to

1031
00:51:02,880 --> 00:51:06,360
Speaker 2: take off again. Don't go into the home price crash

1032
00:51:06,440 --> 00:51:09,439
Speaker 2: without seeing the new listing's data start to escalate higher,

1033
00:51:09,760 --> 00:51:13,600
Speaker 2: which means that demand has to be weak. If rates

1034
00:51:13,760 --> 00:51:16,960
Speaker 2: fall and demand picks up and the new listings data

1035
00:51:17,040 --> 00:51:20,440
Speaker 2: is not escalating, get off of the home price crash thing.

1036
00:51:20,560 --> 00:51:23,759
Speaker 2: So you're going to need to see inventory skyrocket like

1037
00:51:23,880 --> 00:51:26,640
Speaker 2: we do in other places, and you're going to need

1038
00:51:26,719 --> 00:51:30,480
Speaker 2: to see demand stay weak. So in my since home

1039
00:51:30,520 --> 00:51:32,800
Speaker 2: sales are so low right now, is probably not the

1040
00:51:32,920 --> 00:51:37,000
Speaker 2: best backdrop to have sales crash even more. So you're

1041
00:51:37,000 --> 00:51:38,640
Speaker 2: going to need to see sales maybe pick up a

1042
00:51:38,680 --> 00:51:40,440
Speaker 2: little bit to have some kind of leeway to have

1043
00:51:40,680 --> 00:51:44,320
Speaker 2: sales come down. Inventory goes up, people lose their jobs,

1044
00:51:44,440 --> 00:51:47,920
Speaker 2: foreclosure process starts. That's going to take a period of

1045
00:51:48,000 --> 00:51:51,879
Speaker 2: time two to three years, So job loss, new listings data,

1046
00:51:52,040 --> 00:51:56,000
Speaker 2: active inventory, price cut percentages, and there's the key price.

1047
00:51:56,280 --> 00:51:58,640
Speaker 2: One thing that I didn't realize a lot of people

1048
00:51:58,719 --> 00:52:01,840
Speaker 2: didn't know is that one third of all homes in

1049
00:52:01,880 --> 00:52:05,439
Speaker 2: America have price cuts throughout the year, all the time.

1050
00:52:06,280 --> 00:52:08,080
Speaker 2: Not a lot of people knew this. So you see

1051
00:52:08,080 --> 00:52:10,239
Speaker 2: these people take these snapshots of Zillow and red Fan

1052
00:52:10,280 --> 00:52:11,560
Speaker 2: and they go, oh my god, this house is it?

1053
00:52:12,040 --> 00:52:15,359
Speaker 2: So one third has price cuts? Price cut that's historic, Yeah,

1054
00:52:15,440 --> 00:52:18,759
Speaker 2: that's historic. Price cut percentages have to increase when you

1055
00:52:18,840 --> 00:52:22,160
Speaker 2: see that inventory increase. So our Tracker article, we show

1056
00:52:22,239 --> 00:52:25,359
Speaker 2: these slopes like twenty twenty two home prices were falling

1057
00:52:25,360 --> 00:52:28,440
Speaker 2: in a second half, well guess what active inventory was rising?

1058
00:52:28,800 --> 00:52:31,879
Speaker 2: Price cut percentages were rising, right, So those two things

1059
00:52:32,000 --> 00:52:34,759
Speaker 2: have to work together to get prices to fall, and

1060
00:52:34,880 --> 00:52:37,000
Speaker 2: it has to keep on continuing over and over again.

1061
00:52:37,400 --> 00:52:40,600
Speaker 2: So until you see new listing's data grow, active inventory gorow,

1062
00:52:40,640 --> 00:52:44,960
Speaker 2: price cut percentages, grow jobs being lost, don't go into

1063
00:52:45,040 --> 00:52:48,520
Speaker 2: the big national price cut crashes. There are local markets

1064
00:52:48,560 --> 00:52:52,359
Speaker 2: that are different. We see of course Florida, especially by

1065
00:52:52,800 --> 00:52:56,040
Speaker 2: where the hurricanes, where inventory is increasing faster than everyone else.

1066
00:52:56,600 --> 00:53:00,680
Speaker 2: But right now active inventories, we will know we're close

1067
00:53:00,719 --> 00:53:04,000
Speaker 2: to twenty nineteen levels there. So price cut percentages and

1068
00:53:04,160 --> 00:53:07,160
Speaker 2: active inventory and new listings data, that's the key. When

1069
00:53:07,239 --> 00:53:10,759
Speaker 2: those data lines start to get weaker together, there's your

1070
00:53:11,200 --> 00:53:14,400
Speaker 2: prices are declining and then the duration of that, and

1071
00:53:14,520 --> 00:53:17,960
Speaker 2: that duration relies on mortgage rates not going low enough

1072
00:53:18,360 --> 00:53:21,160
Speaker 2: to help demand boost up. That's that supply and demand

1073
00:53:21,200 --> 00:53:23,520
Speaker 2: equilibrium that we try to teach people with the tracker.

1074
00:53:24,040 --> 00:53:26,560
Speaker 2: And here we are last year. I think the data

1075
00:53:26,600 --> 00:53:29,399
Speaker 2: line that nobody talked about. I brought it up every

1076
00:53:29,440 --> 00:53:33,239
Speaker 2: single week and our articles even when mortgage rates were

1077
00:53:33,239 --> 00:53:36,759
Speaker 2: going to eight percent, the price cut percentages were down

1078
00:53:36,960 --> 00:53:40,080
Speaker 2: year over year four percent the entire time, so a

1079
00:53:40,120 --> 00:53:42,920
Speaker 2: lot of people thought home prices are crashing again towards

1080
00:53:42,920 --> 00:53:45,759
Speaker 2: the second half. It wasn't. The price cut percentages were

1081
00:53:45,840 --> 00:53:49,399
Speaker 2: negative right now. So right now, as of this last week,

1082
00:53:49,480 --> 00:53:54,239
Speaker 2: we're basically kind of like flat. But when we see

1083
00:53:54,320 --> 00:53:57,560
Speaker 2: stress in housing pricing, we'll see it in new listings activities,

1084
00:53:57,600 --> 00:54:00,560
Speaker 2: but that price cut percentages will start to escalet and

1085
00:54:00,640 --> 00:54:05,120
Speaker 2: then it all works together. Right, A good story. Mike Simonson,

1086
00:54:05,160 --> 00:54:08,040
Speaker 2: who's the president of Altos, who works with me, he

1087
00:54:08,160 --> 00:54:11,879
Speaker 2: went to Lehman Brothers two thousand and seven, said, hey, listen,

1088
00:54:11,960 --> 00:54:14,320
Speaker 2: I have this whole new data tracking model for inventory.

1089
00:54:14,360 --> 00:54:16,640
Speaker 2: I think you want to listen to this. I see

1090
00:54:16,719 --> 00:54:20,320
Speaker 2: the markets being stressed right now. Lehman Brothers like, oh whatever,

1091
00:54:20,440 --> 00:54:23,440
Speaker 2: I have eighty five analysts. Yeah, okay, all right, fine.

1092
00:54:23,920 --> 00:54:28,000
Speaker 2: Mike went twenty feet down saw Golden Sacks. Told Goldman

1093
00:54:28,080 --> 00:54:29,719
Speaker 2: Sacks the same thing. You know what Goldman Sacks did.

1094
00:54:30,200 --> 00:54:33,360
Speaker 2: They shorted the housing market. So we always say we

1095
00:54:33,520 --> 00:54:37,160
Speaker 2: have the best raw, freshest data in the United States

1096
00:54:37,200 --> 00:54:39,080
Speaker 2: of America. Mike has the inventory side, I have the

1097
00:54:39,160 --> 00:54:42,360
Speaker 2: macroeconomic data side. We'll put it together. But when we

1098
00:54:42,520 --> 00:54:44,640
Speaker 2: see stress in housing, we'll be able to see it

1099
00:54:44,719 --> 00:54:47,640
Speaker 2: first because we're all looking out thirty to ninety days

1100
00:54:48,040 --> 00:54:51,640
Speaker 2: our data so fresh. Everything else is three to four

1101
00:54:51,680 --> 00:54:54,120
Speaker 2: months behind us. So by the time the case Shiller

1102
00:54:54,160 --> 00:54:56,880
Speaker 2: index you see it, we're already like months ahead of that.

1103
00:54:57,400 --> 00:55:00,120
Speaker 2: So we'll keep everyone informed. But we do need to

1104
00:55:00,200 --> 00:55:03,560
Speaker 2: see new listings data, grow active inventory, growth, price cut percentages,

1105
00:55:03,600 --> 00:55:07,400
Speaker 2: grow jobs being lost, credit deterioration. All those things combined

1106
00:55:07,960 --> 00:55:10,560
Speaker 2: gives you a national home price crash data.

1107
00:55:11,080 --> 00:55:13,880
Speaker 1: So let's talk about like how to play this. So

1108
00:55:14,160 --> 00:55:16,800
Speaker 1: like you have homeowners and they're thinking about is it

1109
00:55:16,840 --> 00:55:19,480
Speaker 1: the right time to buy? And then we have like investors,

1110
00:55:20,160 --> 00:55:23,360
Speaker 1: so you provide this data, it gives you an advantage

1111
00:55:23,480 --> 00:55:25,320
Speaker 1: golden sacks short of the market. So it's like this

1112
00:55:25,440 --> 00:55:28,320
Speaker 1: investor mindset. So one, who is the data for and

1113
00:55:28,440 --> 00:55:30,560
Speaker 1: how should these two different groups of people be thinking

1114
00:55:30,600 --> 00:55:31,160
Speaker 1: about the data.

1115
00:55:31,320 --> 00:55:35,160
Speaker 2: For investors, we have every single zip code in America,

1116
00:55:35,800 --> 00:55:37,719
Speaker 2: and it's an unfair advantage. I always say, it's not

1117
00:55:37,880 --> 00:55:40,200
Speaker 2: fair that they gave me this. Like when Mike Simonson

1118
00:55:40,200 --> 00:55:41,759
Speaker 2: and Alto has joined us and I went in there

1119
00:55:41,800 --> 00:55:44,080
Speaker 2: for the first weekend, I was like doctor Frankenstein. I

1120
00:55:44,160 --> 00:55:45,600
Speaker 2: was like, oh my god, this is not fair. I

1121
00:55:45,640 --> 00:55:48,560
Speaker 2: feel like a god now. But we have every single

1122
00:55:48,760 --> 00:55:51,920
Speaker 2: zip code in America basically, So if you're an investor,

1123
00:55:52,800 --> 00:55:54,919
Speaker 2: what you have is you're gonna have the fastest data.

1124
00:55:55,160 --> 00:55:58,560
Speaker 2: To Listen, do I really want to pay for this

1125
00:55:59,080 --> 00:56:01,239
Speaker 2: baked home that's not going to cost me a lot?

1126
00:56:01,680 --> 00:56:04,840
Speaker 2: Do I have the actual ability to put money in

1127
00:56:05,120 --> 00:56:08,360
Speaker 2: and sell this for a flip right away? Well, we have.

1128
00:56:08,760 --> 00:56:11,839
Speaker 2: We have a model designed specifically for investors to give

1129
00:56:11,840 --> 00:56:14,680
Speaker 2: you weekly pricing power, so you have an idea for.

1130
00:56:14,760 --> 00:56:17,840
Speaker 1: That now that will give you an idea of potentially

1131
00:56:17,880 --> 00:56:19,600
Speaker 1: where's the shifts of the marketplace.

1132
00:56:19,680 --> 00:56:22,600
Speaker 2: Yes, I mean Mike Get's really nerdy and geeky when

1133
00:56:22,600 --> 00:56:24,680
Speaker 2: he gives it to his private investors or Wall Street

1134
00:56:24,680 --> 00:56:27,839
Speaker 2: firms and everything, because they get the live data lines

1135
00:56:27,880 --> 00:56:30,919
Speaker 2: because we're working with the current other people just working

1136
00:56:30,960 --> 00:56:33,760
Speaker 2: with data so old. So that is good for the investors,

1137
00:56:33,840 --> 00:56:36,120
Speaker 2: just to get a localized market. And if it's a hey,

1138
00:56:36,200 --> 00:56:39,000
Speaker 2: it's still a seller's market, boy, that pricing is there.

1139
00:56:39,160 --> 00:56:41,800
Speaker 2: If it's a buyer's market, you got to watch what

1140
00:56:41,880 --> 00:56:45,120
Speaker 2: you're doing. Homeowners. On the other hand, I always say

1141
00:56:45,200 --> 00:56:47,920
Speaker 2: like people ask me. When people say should should I

1142
00:56:47,960 --> 00:56:52,520
Speaker 2: buy a home? No, I say that. I say this

1143
00:56:52,719 --> 00:56:55,440
Speaker 2: every single day because I say, if you're asking me,

1144
00:56:55,840 --> 00:56:58,000
Speaker 2: I don't know you, right, but you have to ask

1145
00:56:58,120 --> 00:57:01,760
Speaker 2: me to buy a thirty year fixed payment. You're not ready.

1146
00:57:02,200 --> 00:57:04,640
Speaker 2: Millions of people buy homes all the times they're ready.

1147
00:57:04,960 --> 00:57:08,320
Speaker 2: But if you're worried about pricing or anything like that,

1148
00:57:08,800 --> 00:57:11,360
Speaker 2: here's the data. This is the active inventory. This is

1149
00:57:11,400 --> 00:57:14,120
Speaker 2: the historical data. Here it gives people some kind of

1150
00:57:15,040 --> 00:57:17,280
Speaker 2: you know, calmness, I guess, But to me, it's like

1151
00:57:17,640 --> 00:57:20,880
Speaker 2: millions of people buy homes every single year. They're ready.

1152
00:57:20,880 --> 00:57:22,960
Speaker 2: It's a thirty year fixed payment grant or your own.

1153
00:57:23,080 --> 00:57:26,960
Speaker 2: Nobody goes homeless, right, So that data lins. What I

1154
00:57:27,040 --> 00:57:28,680
Speaker 2: do is I try to bring the credit work because

1155
00:57:28,840 --> 00:57:30,800
Speaker 2: I have to convince people it's not two thousand and eight,

1156
00:57:31,000 --> 00:57:33,560
Speaker 2: which I love doing because it's the easiest argument for me.

1157
00:57:34,080 --> 00:57:36,120
Speaker 2: When I show that data line to people, they go,

1158
00:57:36,280 --> 00:57:38,880
Speaker 2: oh my god, it isn't right. It is in two

1159
00:57:38,880 --> 00:57:41,000
Speaker 2: thousand and eight, so they feel a little bit more comfortable.

1160
00:57:41,040 --> 00:57:43,400
Speaker 2: So on the home buyer side, you get at least

1161
00:57:43,560 --> 00:57:47,760
Speaker 2: this kind of data line to show okay, when things

1162
00:57:47,840 --> 00:57:50,640
Speaker 2: crash Okay, here we go. This starts to happen. If

1163
00:57:51,120 --> 00:57:53,960
Speaker 2: that changes your mind, so be it. That's your choice.

1164
00:57:54,400 --> 00:57:57,280
Speaker 2: But we give people the freshest data, not just on

1165
00:57:57,360 --> 00:58:00,160
Speaker 2: the inventory side, but on the macroeconomic side to give

1166
00:58:00,160 --> 00:58:02,360
Speaker 2: people kind of an idea. Now, Investors, of course, are

1167
00:58:02,400 --> 00:58:04,760
Speaker 2: here to make money. Other people are just trying to

1168
00:58:04,760 --> 00:58:06,600
Speaker 2: buy a house to live in and start their families

1169
00:58:06,640 --> 00:58:07,000
Speaker 2: out there.

1170
00:58:07,440 --> 00:58:08,960
Speaker 1: Yeah, I mean, that's why I tried to break those

1171
00:58:08,960 --> 00:58:11,280
Speaker 1: two buckets apart. I mean, and that's just a broad category.

1172
00:58:11,360 --> 00:58:13,880
Speaker 1: But I bought a new house for my family in

1173
00:58:13,960 --> 00:58:17,560
Speaker 1: twenty twenty one, and I talk about macroeconomics, so I

1174
00:58:17,680 --> 00:58:19,720
Speaker 1: know that a maybe it wasn't the best time, could

1175
00:58:19,720 --> 00:58:21,520
Speaker 1: have been the peak of the market, et cetera. But

1176
00:58:21,920 --> 00:58:23,440
Speaker 1: I didn't care if the price of that home drop

1177
00:58:23,480 --> 00:58:26,520
Speaker 1: by fifty percent. I wasn't buying it to flip the home.

1178
00:58:26,880 --> 00:58:29,160
Speaker 2: How Yeah, housing is the cost of shelter to your

1179
00:58:29,200 --> 00:58:31,720
Speaker 2: own capacity to own a debt exactly. Look at as

1180
00:58:31,760 --> 00:58:34,600
Speaker 2: the cost of shelter. Then, all of a sudden, every

1181
00:58:34,760 --> 00:58:37,200
Speaker 2: year that we have millions and millions of people buying home,

1182
00:58:37,240 --> 00:58:39,280
Speaker 2: it starts to make sense. Yeah, if you think that

1183
00:58:39,520 --> 00:58:42,640
Speaker 2: everyone is an investor, and all they care about is price,

1184
00:58:42,800 --> 00:58:45,560
Speaker 2: not payment. You're gonna be lost. Yeah, And this is

1185
00:58:45,600 --> 00:58:48,240
Speaker 2: why I always try to get stock traders to understand

1186
00:58:48,280 --> 00:58:50,800
Speaker 2: that this is not the stock market. You're not going

1187
00:58:50,840 --> 00:58:53,000
Speaker 2: to get a margin call on your home. Right. You

1188
00:58:53,080 --> 00:58:55,240
Speaker 2: don't just simply sell your home to be homeless. Why

1189
00:58:55,320 --> 00:58:57,600
Speaker 2: because if you're a father or mother, you have kids,

1190
00:58:57,880 --> 00:58:59,200
Speaker 2: your kids are going to go home as the cops

1191
00:58:59,240 --> 00:59:01,440
Speaker 2: are going to take your kids way. You need somewhere

1192
00:59:01,480 --> 00:59:04,360
Speaker 2: to live. Thirty year fixed payment there it is, So

1193
00:59:04,480 --> 00:59:07,400
Speaker 2: it's a it's easy for people because during COVID, people go,

1194
00:59:07,720 --> 00:59:10,960
Speaker 2: why are people buying in COVID? The total cost of

1195
00:59:11,120 --> 00:59:14,840
Speaker 2: housing was basically theft, right, That's how cheap it was

1196
00:59:15,320 --> 00:59:18,120
Speaker 2: back then. And all these homeowners are sitting there, then

1197
00:59:18,160 --> 00:59:20,480
Speaker 2: their wages grew even faster. So they're doing really good.

1198
00:59:20,520 --> 00:59:21,960
Speaker 2: And that's an environment.

1199
00:59:22,040 --> 00:59:24,200
Speaker 1: But now so if it's cheaper to rent or cheaper

1200
00:59:24,240 --> 00:59:24,640
Speaker 1: to buy.

1201
00:59:24,600 --> 00:59:28,160
Speaker 2: Yeah, and that's that. And then there's just there's a

1202
00:59:28,200 --> 00:59:30,800
Speaker 2: certain group of people that just traditionally just buy homes

1203
00:59:30,880 --> 00:59:33,680
Speaker 2: where especially when they're having kids and raising families, they

1204
00:59:33,800 --> 00:59:35,720
Speaker 2: just buy a house. They typically buy single family homes.

1205
00:59:35,800 --> 00:59:37,720
Speaker 1: Yeah, I mean as a father and having kids, like

1206
00:59:37,720 --> 00:59:39,320
Speaker 1: I don't want to move my kids all around all

1207
00:59:39,360 --> 00:59:40,720
Speaker 1: the time, Like I want them to have a house

1208
00:59:40,760 --> 00:59:42,080
Speaker 1: to grow up in and able to grow up in.

1209
00:59:42,160 --> 00:59:44,800
Speaker 2: And you're not buying apartments right right, And that's the thing.

1210
00:59:44,960 --> 00:59:47,400
Speaker 2: That's why I always say, we rent, we date, we make,

1211
00:59:47,560 --> 00:59:49,560
Speaker 2: we get married. Three and a half years after marriage,

1212
00:59:49,600 --> 00:59:52,360
Speaker 2: we have kids. Voila. Guess what. There's your home buyers

1213
00:59:52,640 --> 00:59:55,240
Speaker 2: that every generation we've had going post World War Two,

1214
00:59:55,440 --> 00:59:57,200
Speaker 2: there they are. We do it a little bit later

1215
00:59:57,240 --> 00:59:59,959
Speaker 2: in life now, right, It's not like we get married

1216
01:00:00,120 --> 01:00:02,520
Speaker 2: in our young twenties have kids in our mid mid twenties.

1217
01:00:02,760 --> 01:00:04,840
Speaker 2: People are getting married later to having kids later. So

1218
01:00:05,280 --> 01:00:08,040
Speaker 2: the shift of the demographic pool moves that later. But

1219
01:00:08,280 --> 01:00:12,200
Speaker 2: everyone's the same, right, were not complicated people to to

1220
01:00:12,480 --> 01:00:16,280
Speaker 2: try to decipher, and housing is just the cost of shelter.

1221
01:00:17,080 --> 01:00:19,440
Speaker 1: I have two more questions, and maybe they're kind of

1222
01:00:19,480 --> 01:00:21,080
Speaker 1: the same. We'll start with the first one, which is

1223
01:00:21,280 --> 01:00:24,600
Speaker 1: long term outlook. So it looks like just real estate

1224
01:00:24,680 --> 01:00:26,680
Speaker 1: overall in the United States has really benefited from the

1225
01:00:26,720 --> 01:00:32,440
Speaker 1: Baby boom generation. Massive demand outstripped the supply that was available.

1226
01:00:32,680 --> 01:00:35,240
Speaker 1: In addition, we saw rates plummet for the last whatever

1227
01:00:35,320 --> 01:00:37,640
Speaker 1: three four or five decades, So it seemed like that

1228
01:00:37,720 --> 01:00:41,000
Speaker 1: supply demand imbalance really got outstripped. Then you had a

1229
01:00:41,040 --> 01:00:43,680
Speaker 1: lot of policies that got passed to increase home ownership.

1230
01:00:43,720 --> 01:00:46,120
Speaker 1: Like I said, rates falling and real estate has turned

1231
01:00:46,120 --> 01:00:47,800
Speaker 1: out to be a pretty good investment for a lot

1232
01:00:47,840 --> 01:00:51,000
Speaker 1: of people. What do you think the outlook is moving forward?

1233
01:00:51,040 --> 01:00:53,720
Speaker 1: It seems like rates sort of bought and I believe

1234
01:00:53,760 --> 01:00:56,880
Speaker 1: we're sort of going back into an inflationary maybe decade.

1235
01:00:58,920 --> 01:01:03,480
Speaker 1: The millennial generation, which wall it's large, isn't really equipped

1236
01:01:03,520 --> 01:01:06,360
Speaker 1: properly like the Baby boomer was, Like to your point,

1237
01:01:06,440 --> 01:01:08,200
Speaker 1: you have to have two incomes now instead of one

1238
01:01:08,280 --> 01:01:11,400
Speaker 1: back then. So I'm not sure that real estate is

1239
01:01:11,480 --> 01:01:13,720
Speaker 1: as good of an investment over the next twenty thirty

1240
01:01:13,800 --> 01:01:15,600
Speaker 1: years as it was for the last twenty thirty years.

1241
01:01:15,640 --> 01:01:16,320
Speaker 1: What's your take on that.

1242
01:01:16,440 --> 01:01:21,520
Speaker 2: Well, the last three decades, you had the Baby Boomers

1243
01:01:21,920 --> 01:01:24,920
Speaker 2: in the late seventies early eighties, you had Gen X,

1244
01:01:24,960 --> 01:01:29,520
Speaker 2: which wasn't that big. You have the millennials, which were massive, right,

1245
01:01:30,080 --> 01:01:33,920
Speaker 2: the millennials started to buy in twenty thirteen, So what

1246
01:01:34,120 --> 01:01:36,000
Speaker 2: is one thing there's a there's a buyer in a

1247
01:01:36,080 --> 01:01:38,480
Speaker 2: selling most sellers are buyers, so that inventory is a wash.

1248
01:01:38,920 --> 01:01:41,040
Speaker 2: What is one buyer that doesn't provide you a house.

1249
01:01:41,400 --> 01:01:44,640
Speaker 2: It's the first time home buyer, so they're typically financed

1250
01:01:44,680 --> 01:01:49,480
Speaker 2: ninety percent of their mortgages. Gen Z is massive. But

1251
01:01:50,480 --> 01:01:54,200
Speaker 2: down the line, eventually the baby boomers are going to

1252
01:01:54,280 --> 01:01:57,000
Speaker 2: die and no one's dory and gray. No one's taking

1253
01:01:57,000 --> 01:01:59,680
Speaker 2: their homes with them. So I always say that in

1254
01:01:59,760 --> 01:02:03,040
Speaker 2: the decade, not in not this decade, but then the

1255
01:02:03,160 --> 01:02:06,280
Speaker 2: next decade, probably usually back like twenty thirty three or

1256
01:02:06,360 --> 01:02:09,200
Speaker 2: twenty twenty four, there's gonna be a there's gonna be

1257
01:02:09,280 --> 01:02:13,880
Speaker 2: like trillions and trillions of dollars transferred from baby boomers

1258
01:02:13,920 --> 01:02:17,560
Speaker 2: to Gen X and even to millennials or even to

1259
01:02:18,040 --> 01:02:22,120
Speaker 2: Gen Z. What they do with their homes can change

1260
01:02:22,160 --> 01:02:25,640
Speaker 2: the supplying demand equilibrium and pricing for housing. That is

1261
01:02:25,680 --> 01:02:27,880
Speaker 2: something that's gonna be kind of down the line to

1262
01:02:27,960 --> 01:02:30,720
Speaker 2: think about. We don't know how families are going to,

1263
01:02:31,000 --> 01:02:33,200
Speaker 2: you know, react to their homes. There's always a natural

1264
01:02:33,320 --> 01:02:36,640
Speaker 2: death process. Even every single year. We had a little

1265
01:02:36,640 --> 01:02:39,280
Speaker 2: bit of bump during COVID because we had more older

1266
01:02:39,320 --> 01:02:43,840
Speaker 2: people dying. But they're coming and they're gonna give their

1267
01:02:43,880 --> 01:02:45,840
Speaker 2: homes to the kids. What their kids do with the

1268
01:02:45,880 --> 01:02:48,920
Speaker 2: house is going to be really interesting. That's the next decade.

1269
01:02:49,080 --> 01:02:51,000
Speaker 2: So if you want to make a not the best

1270
01:02:51,080 --> 01:02:55,200
Speaker 2: investment for pricing, it would be that. I'm a big

1271
01:02:55,280 --> 01:02:58,400
Speaker 2: demographics guy. Sex and death are so important to my

1272
01:02:58,560 --> 01:03:02,240
Speaker 2: economic work, and that's coming down the line, and I

1273
01:03:02,320 --> 01:03:04,200
Speaker 2: think that's something we all have to be mindful of.

1274
01:03:04,640 --> 01:03:08,120
Speaker 2: On what what does it mean when we have gen

1275
01:03:08,240 --> 01:03:12,320
Speaker 2: Z coming in, when we have Jena, immigration, everything. Our

1276
01:03:12,360 --> 01:03:16,440
Speaker 2: demographics are different than Japan, different than China, different than Europe.

1277
01:03:16,120 --> 01:03:17,280
Speaker 1: Because we had the Echo boom.

1278
01:03:17,800 --> 01:03:19,920
Speaker 2: Yeah, we have a lot of young people still here

1279
01:03:20,000 --> 01:03:23,520
Speaker 2: in this country, so I call them replacement consumers and workers.

1280
01:03:23,960 --> 01:03:27,120
Speaker 2: Other countries don't have that, So I think the next decade.

1281
01:03:27,280 --> 01:03:30,360
Speaker 1: But if we take that one, the baby boomers, which

1282
01:03:30,440 --> 01:03:33,080
Speaker 1: is the largest or maybe about equals the millennials, So

1283
01:03:33,160 --> 01:03:36,160
Speaker 1: they're gone and the millennials are about the same size,

1284
01:03:36,200 --> 01:03:38,160
Speaker 1: but they're in the market already, so we have a

1285
01:03:38,360 --> 01:03:42,080
Speaker 1: lot of demand go away. In addition, again kind of

1286
01:03:42,120 --> 01:03:43,720
Speaker 1: going back to the last thirty four years, we always

1287
01:03:43,760 --> 01:03:47,240
Speaker 1: had this shortage of properties and maybe now we're sort

1288
01:03:47,280 --> 01:03:48,880
Speaker 1: of built out, So does that change it?

1289
01:03:49,160 --> 01:03:50,960
Speaker 2: I think the next decade, it should change.

1290
01:03:51,120 --> 01:03:53,760
Speaker 1: Yeah, And I asked that question as like a long

1291
01:03:53,840 --> 01:03:56,240
Speaker 1: term investor when I think about buying long term rental

1292
01:03:56,280 --> 01:03:58,160
Speaker 1: properties long term cash flow, I want to know how

1293
01:03:58,200 --> 01:03:59,720
Speaker 1: this is probably going to perform twenty, you know, ten

1294
01:03:59,760 --> 01:04:01,960
Speaker 1: to thirty years from now, not just you know, I.

1295
01:04:01,960 --> 01:04:06,520
Speaker 2: Mean, you'll always have somebody living in a house, either

1296
01:04:06,560 --> 01:04:10,120
Speaker 2: a homeowner or a renter. But but the next decade

1297
01:04:10,160 --> 01:04:12,480
Speaker 2: has a different variable than this. We're going to have

1298
01:04:12,600 --> 01:04:16,000
Speaker 2: more supply just because of death. Yeah, so you don't

1299
01:04:16,160 --> 01:04:18,960
Speaker 2: We didn't have this backdrop the last three four decades,

1300
01:04:19,280 --> 01:04:21,800
Speaker 2: but now we do, and people are living longer. So

1301
01:04:21,880 --> 01:04:25,560
Speaker 2: the thing is that you got a twenty year age

1302
01:04:25,720 --> 01:04:29,000
Speaker 2: advancement than you did maybe five decades ago. So the

1303
01:04:29,080 --> 01:04:31,600
Speaker 2: boomers still have a lot of years left in him.

1304
01:04:32,000 --> 01:04:35,840
Speaker 2: We don't know when that equilibrium breaks, but you'll have

1305
01:04:35,960 --> 01:04:38,959
Speaker 2: more supply next in the next decade for sure.

1306
01:04:39,480 --> 01:04:43,160
Speaker 1: Okay, So then probably the next twenty three thirty years

1307
01:04:43,160 --> 01:04:44,640
Speaker 1: are not like they were the last place.

1308
01:04:44,960 --> 01:04:47,840
Speaker 2: It can't be. It can't be. But we're also starting

1309
01:04:47,920 --> 01:04:51,080
Speaker 2: from such a low level of inventory that we didn't have,

1310
01:04:51,240 --> 01:04:53,160
Speaker 2: like in the in the early eighties, we had two

1311
01:04:53,200 --> 01:04:55,760
Speaker 2: and a half to three million active listings. Yeah back then.

1312
01:04:55,880 --> 01:04:58,320
Speaker 2: You know, here it's a million still using the NAR data.

1313
01:04:58,440 --> 01:05:02,200
Speaker 2: So eventually that works itself out, but we only have

1314
01:05:02,360 --> 01:05:06,320
Speaker 2: replacement consumers and buyers. Immigration will change a lot of

1315
01:05:06,400 --> 01:05:09,000
Speaker 2: this if it happens or not, so we keep an

1316
01:05:09,040 --> 01:05:12,680
Speaker 2: eye on that. But that's again investment that's down the line.

1317
01:05:12,760 --> 01:05:15,160
Speaker 2: The next decade. You don't have the same backdrop as

1318
01:05:15,200 --> 01:05:19,520
Speaker 2: you did. Mortgage rates fell two percent plus after every cycle.

1319
01:05:20,160 --> 01:05:23,000
Speaker 2: It's not happening anymore. Yeah, you know, so you lose that.

1320
01:05:23,360 --> 01:05:27,080
Speaker 2: The housing inflation factor is here just because the laws

1321
01:05:27,120 --> 01:05:30,520
Speaker 2: and math prevent mortgage rates from going low, but the

1322
01:05:30,600 --> 01:05:32,480
Speaker 2: supply and demand equilibrium is still key.

1323
01:05:33,440 --> 01:05:35,520
Speaker 1: Let me ask you another question out of left field

1324
01:05:35,520 --> 01:05:38,240
Speaker 1: that you probably have been asked, what do you think

1325
01:05:38,240 --> 01:05:38,840
Speaker 1: about bitcoin?

1326
01:05:39,680 --> 01:05:44,000
Speaker 2: Bitcoin? I look at it as a asset to make money, Okay,

1327
01:05:44,240 --> 01:05:45,560
Speaker 2: I don't. I don't look at it as as a

1328
01:05:45,640 --> 01:05:46,480
Speaker 2: currency or anything.

1329
01:05:46,520 --> 01:05:48,400
Speaker 1: I just look at that as an asset, Yeah, as

1330
01:05:48,400 --> 01:05:50,200
Speaker 1: an asset to make money. Don't. Don't you buy assets

1331
01:05:50,200 --> 01:05:51,360
Speaker 1: to make money, So it's just you look at as

1332
01:05:51,360 --> 01:05:51,720
Speaker 1: an asset.

1333
01:05:51,880 --> 01:05:54,120
Speaker 2: I look at it as a as a as a

1334
01:05:54,280 --> 01:05:57,320
Speaker 2: trading vehicle that has a lot of velocity. Okay, and

1335
01:05:57,480 --> 01:06:01,080
Speaker 2: if you look at bitcoins pricing, a lot of volatility,

1336
01:06:01,160 --> 01:06:03,520
Speaker 2: a lot of volatility. But you also look at there's

1337
01:06:03,560 --> 01:06:05,920
Speaker 2: not a lot of bitcoin out there, right, I mean

1338
01:06:06,560 --> 01:06:10,320
Speaker 2: it's like like a thousand people own majority of all there.

1339
01:06:10,480 --> 01:06:12,040
Speaker 1: There will never be more than twenty one million. There's

1340
01:06:12,040 --> 01:06:14,640
Speaker 1: about nineteen million in free circulating supply in nineteen and

1341
01:06:14,680 --> 01:06:17,120
Speaker 1: a half, of which about six percent of that supply

1342
01:06:17,240 --> 01:06:20,240
Speaker 1: is lost for good estimates are but you only have

1343
01:06:20,320 --> 01:06:23,240
Speaker 1: about a million and a half free floating in circulation.

1344
01:06:23,360 --> 01:06:27,160
Speaker 1: The rest hasn't moved in its very very thinly traded market.

1345
01:06:28,480 --> 01:06:29,600
Speaker 2: Something that can go like.

1346
01:06:29,920 --> 01:06:34,000
Speaker 1: This and yes and no. Right, So, because bitcoin is

1347
01:06:34,080 --> 01:06:37,840
Speaker 1: infinitely divisible, the float it gets bigger. Right, So like

1348
01:06:37,920 --> 01:06:41,080
Speaker 1: a dollar is one hundred cents, a bitcoin is one

1349
01:06:41,160 --> 01:06:45,120
Speaker 1: hundred million SATs, right, So because of that, like you

1350
01:06:45,160 --> 01:06:46,800
Speaker 1: don't have to buy a gold bar, foreign renounces you

1351
01:06:46,840 --> 01:06:48,960
Speaker 1: can buy a gram of gold, So it's sort of

1352
01:06:49,000 --> 01:06:51,120
Speaker 1: inflating the visible So it makes the float bigger, but

1353
01:06:51,280 --> 01:06:54,280
Speaker 1: it's still, Yeah, there's what forty six million millionaire there's

1354
01:06:54,280 --> 01:06:55,760
Speaker 1: forty six million millionaires.

1355
01:06:55,440 --> 01:06:58,200
Speaker 2: You can't get you can't get that kind of investment

1356
01:06:58,280 --> 01:07:00,920
Speaker 2: through gold it's just there's just there's not a lot

1357
01:07:00,920 --> 01:07:03,520
Speaker 2: of people who own gold anyway, and the trading vehicles

1358
01:07:03,520 --> 01:07:06,280
Speaker 2: aren't that. But when you look at the types of

1359
01:07:06,400 --> 01:07:11,680
Speaker 2: moves bitcoins MA, you're talking about centuries of price appreciation

1360
01:07:11,880 --> 01:07:13,200
Speaker 2: in a very short amount of time.

1361
01:07:13,240 --> 01:07:15,160
Speaker 1: It's the best performing asset in Austria.

1362
01:07:15,320 --> 01:07:19,080
Speaker 2: It's not there's there's you can't gold can't compete with that.

1363
01:07:19,480 --> 01:07:21,880
Speaker 2: It's never going to there's not there's not a lot of.

1364
01:07:21,880 --> 01:07:24,680
Speaker 1: Gold out there anyway, Goldman, sax JP, Morgan City Bank.

1365
01:07:24,680 --> 01:07:26,840
Speaker 1: I'll put out guidance say say bitcoin will overtake gold,

1366
01:07:27,640 --> 01:07:29,360
Speaker 1: So that's you know, but I mean, it's just it's

1367
01:07:29,680 --> 01:07:32,160
Speaker 1: thirteen actual for this to move.

1368
01:07:32,600 --> 01:07:35,160
Speaker 2: The volatility in the movements, you just you don't have

1369
01:07:35,320 --> 01:07:36,320
Speaker 2: this with other things.

1370
01:07:36,600 --> 01:07:39,640
Speaker 1: Sure well, because it's a it's a brand new technological revolution.

1371
01:07:39,800 --> 01:07:42,280
Speaker 1: And as the asset gets bigger, then naturally the volatility

1372
01:07:42,320 --> 01:07:44,000
Speaker 1: goes down. So you can already see the volatility has

1373
01:07:44,000 --> 01:07:46,760
Speaker 1: been trending down. But you know, it's it's still a

1374
01:07:46,880 --> 01:07:48,560
Speaker 1: very small, thinly traded it's.

1375
01:07:48,440 --> 01:07:51,280
Speaker 2: An extremely it's extremely small, I don't think.

1376
01:07:51,320 --> 01:07:53,360
Speaker 1: But if it goes from one trillion to five trillion

1377
01:07:53,400 --> 01:07:55,520
Speaker 1: to tensially and then the volatility would naturally go down.

1378
01:07:55,640 --> 01:07:59,439
Speaker 2: Yeah the laws of that. Sure, big numbers will slow

1379
01:07:59,520 --> 01:08:01,920
Speaker 2: things down, but like right now, there's just not a

1380
01:08:01,960 --> 01:08:05,000
Speaker 2: lot out there, so you can have these moves like this. Sure,

1381
01:08:05,200 --> 01:08:07,720
Speaker 2: like we just had like we broke through seven, Like

1382
01:08:07,800 --> 01:08:11,800
Speaker 2: when did that happen? Just like that? Yeah, gold can't

1383
01:08:11,840 --> 01:08:14,680
Speaker 2: do that gold adjusting to inflation, but.

1384
01:08:14,760 --> 01:08:16,640
Speaker 1: You also have then you also have the downside of

1385
01:08:16,680 --> 01:08:17,280
Speaker 1: the volatility.

1386
01:08:17,479 --> 01:08:19,160
Speaker 2: Well there's the down and upside, but I mean the

1387
01:08:19,320 --> 01:08:23,720
Speaker 2: volatility just makes that much more appealing than gold, which

1388
01:08:23,760 --> 01:08:27,439
Speaker 2: hasn't done anything for decades, adjusting to inflation for thirty

1389
01:08:28,160 --> 01:08:31,000
Speaker 2: there's no real returns there. Yeah, So it's just and

1390
01:08:31,439 --> 01:08:32,920
Speaker 2: gold is an old man's story.

1391
01:08:33,400 --> 01:08:36,400
Speaker 1: Yeah, and it's just not well, if you look at money,

1392
01:08:36,640 --> 01:08:39,200
Speaker 1: if you look at money a medium of exchange, we

1393
01:08:39,200 --> 01:08:40,920
Speaker 1: don't want the money, We want the goods and services

1394
01:08:40,960 --> 01:08:43,360
Speaker 1: that ad buys us, right, and gold was that money

1395
01:08:43,400 --> 01:08:45,559
Speaker 1: for five thousand years. We got into a fiat money standard,

1396
01:08:45,600 --> 01:08:48,519
Speaker 1: so the dollars divided by all the gold. Some gold

1397
01:08:48,560 --> 01:08:49,920
Speaker 1: bugs still think we're going to go back to a

1398
01:08:49,960 --> 01:08:51,960
Speaker 1: gold standard, where we take all the fiat currency divided

1399
01:08:51,960 --> 01:08:55,240
Speaker 1: by all the gold eighty trillion dollars of US currency

1400
01:08:55,280 --> 01:08:57,439
Speaker 1: divided by eight thousand tons of gold, you know, brings

1401
01:08:57,520 --> 01:08:59,719
Speaker 1: to like seventy seven thousand dollars per ounce or something

1402
01:08:59,760 --> 01:09:02,680
Speaker 1: like that. Yeah, it's probably not gonna happen, and it's

1403
01:09:02,680 --> 01:09:05,000
Speaker 1: old technology because we live in an information age today

1404
01:09:05,040 --> 01:09:07,439
Speaker 1: and you can't send gold across the internet obviously. My

1405
01:09:07,600 --> 01:09:10,000
Speaker 1: question is, so you recognize it as an asset, a

1406
01:09:10,120 --> 01:09:14,479
Speaker 1: highly specuative trading asset, but it's an asset. I think

1407
01:09:14,520 --> 01:09:16,160
Speaker 1: bitcoin is going to be a lot of things, but

1408
01:09:16,439 --> 01:09:18,400
Speaker 1: one thing that it is today is sort of taking

1409
01:09:18,479 --> 01:09:21,760
Speaker 1: this store of value narrative, and so really it's not

1410
01:09:21,840 --> 01:09:24,719
Speaker 1: competing against other technology, it's just competing against other stores

1411
01:09:24,760 --> 01:09:28,880
Speaker 1: of value. So gold being one of those. Right, if

1412
01:09:28,920 --> 01:09:32,799
Speaker 1: you look at all the store of value assets, gold, bonds,

1413
01:09:33,520 --> 01:09:36,559
Speaker 1: offshore bank accounts, things like that. Real estate is also

1414
01:09:36,600 --> 01:09:38,760
Speaker 1: a store value asset, right, but it's about three hundred

1415
01:09:38,760 --> 01:09:42,160
Speaker 1: and fifty trillion dollars in real estate. So you know,

1416
01:09:42,240 --> 01:09:43,400
Speaker 1: the way that I look at it sort of like

1417
01:09:43,439 --> 01:09:45,800
Speaker 1: as a VC investor, you go, well, what markets am

1418
01:09:45,840 --> 01:09:49,080
Speaker 1: I disrupting and what percentage of those markets could I acquire?

1419
01:09:49,560 --> 01:09:51,639
Speaker 1: So if I put money into any other asset, there's

1420
01:09:51,680 --> 01:09:55,040
Speaker 1: a cost to own that, right, So gold has an inflation,

1421
01:09:55,320 --> 01:09:58,200
Speaker 1: plus it has a management storage cost. Real estate has

1422
01:09:58,240 --> 01:10:02,599
Speaker 1: property taxes, maintenance, businesses, et cetera. You know, in part

1423
01:10:02,680 --> 01:10:04,840
Speaker 1: of my thesis in regards to bitcoin, I think bitcoin

1424
01:10:04,920 --> 01:10:08,040
Speaker 1: and real estate are used together as a multi asset strategy.

1425
01:10:08,760 --> 01:10:11,160
Speaker 1: But I'm just curious maybe your thoughts and you're not

1426
01:10:11,439 --> 01:10:14,000
Speaker 1: as far down this, but if it's competing against a

1427
01:10:14,040 --> 01:10:18,040
Speaker 1: store of value, and then we have these bonds, fiat currency, gold,

1428
01:10:18,120 --> 01:10:21,720
Speaker 1: et cetera, real estate, and I have all the I

1429
01:10:21,840 --> 01:10:24,240
Speaker 1: have all the challenges of owning real estate, like I said,

1430
01:10:24,280 --> 01:10:27,840
Speaker 1: the maintenance, the taxes, et cetera. Do you think that

1431
01:10:27,960 --> 01:10:31,320
Speaker 1: bitcoin could capture a portion of that real estate market,

1432
01:10:31,360 --> 01:10:32,439
Speaker 1: that store of value market?

1433
01:10:32,760 --> 01:10:38,920
Speaker 2: Well, it cannot just capture it. It could provide more, okay,

1434
01:10:39,880 --> 01:10:42,760
Speaker 2: just because the value of it can go so much

1435
01:10:42,840 --> 01:10:45,400
Speaker 2: more than real estate. Real estate, of course, is a

1436
01:10:45,479 --> 01:10:48,479
Speaker 2: real asset because somebody has to live in there. A

1437
01:10:48,680 --> 01:10:52,760
Speaker 2: bitcoin and unless you're everyone has a legal tender and

1438
01:10:52,840 --> 01:10:55,760
Speaker 2: everyone's using it as a currency, right, and then you

1439
01:10:55,960 --> 01:10:59,160
Speaker 2: use when when the currencies get used, it naturally goes

1440
01:10:59,200 --> 01:11:02,280
Speaker 2: down on value. We're not doing that with bitcoins. So

1441
01:11:02,400 --> 01:11:04,719
Speaker 2: the ability for this to keep on going price wise

1442
01:11:05,000 --> 01:11:07,920
Speaker 2: is there where a home has a certain kind of

1443
01:11:07,960 --> 01:11:11,719
Speaker 2: functional limit of value, but it is that that house

1444
01:11:11,840 --> 01:11:15,080
Speaker 2: is still there always right right, There's there's a value there.

1445
01:11:15,160 --> 01:11:18,080
Speaker 2: You don't have homes go to zero right in that

1446
01:11:18,280 --> 01:11:20,960
Speaker 2: sense the volatility I think.

1447
01:11:21,040 --> 01:11:22,679
Speaker 1: I don't know. I see some cities are giving homes

1448
01:11:22,680 --> 01:11:23,200
Speaker 1: away for free.

1449
01:11:23,680 --> 01:11:26,840
Speaker 2: Detroit still yeah, five thousand dollars, you know.

1450
01:11:27,400 --> 01:11:29,240
Speaker 1: I think I saw Baltimore is getting away for free

1451
01:11:29,280 --> 01:11:31,760
Speaker 1: if you fix it for a couple of years something.

1452
01:11:31,840 --> 01:11:35,320
Speaker 2: But just in general and function error is yeah, there's

1453
01:11:35,360 --> 01:11:39,920
Speaker 2: still some value there. But to me, that's boy, you

1454
01:11:40,120 --> 01:11:45,519
Speaker 2: can't get that kind of value action in real estate.

1455
01:11:45,680 --> 01:11:49,560
Speaker 2: And and and my my observation over the years is

1456
01:11:50,479 --> 01:11:54,559
Speaker 2: as bitcoin prices went up, there's a lot more interest

1457
01:11:54,800 --> 01:11:57,439
Speaker 2: in my work for housing because I think a lot

1458
01:11:57,520 --> 01:12:00,760
Speaker 2: of people that have excess bitcoins wanted to buy a

1459
01:12:00,840 --> 01:12:05,519
Speaker 2: home with it. You know, in the future, there can

1460
01:12:05,600 --> 01:12:10,320
Speaker 2: be a lot of institutions that can facilitate that. So

1461
01:12:10,479 --> 01:12:12,880
Speaker 2: a reel to reel or a boatstore of value to

1462
01:12:12,960 --> 01:12:17,000
Speaker 2: a real asset ten years from now, things might look

1463
01:12:17,000 --> 01:12:17,639
Speaker 2: a lot different.

1464
01:12:18,920 --> 01:12:21,599
Speaker 1: Especially today, it's a lot easier than ever, because now

1465
01:12:21,640 --> 01:12:23,840
Speaker 1: I could buy it through an ETF, through Black Rock

1466
01:12:23,920 --> 01:12:27,519
Speaker 1: or Fidelity. It's an equity in my brokerage account, and

1467
01:12:27,560 --> 01:12:29,760
Speaker 1: then I could easily borrow against my equities in my

1468
01:12:29,840 --> 01:12:32,360
Speaker 1: brokerage account to then pay a down payment on a house.

1469
01:12:32,439 --> 01:12:35,240
Speaker 1: For example, it's been averaging a two hundred percent compounded

1470
01:12:35,240 --> 01:12:37,240
Speaker 1: annual growth rate, which, of course, like I said, will

1471
01:12:37,360 --> 01:12:40,240
Speaker 1: slow down as it gets bigger. But if it's compounding

1472
01:12:40,280 --> 01:12:43,240
Speaker 1: at two hundred percent, if it's compounding at twenty percent,

1473
01:12:43,479 --> 01:12:45,160
Speaker 1: it's easy just to borrow a little piece of that

1474
01:12:45,280 --> 01:12:47,160
Speaker 1: for a down payment on a house. I look at

1475
01:12:47,160 --> 01:12:52,360
Speaker 1: it the other way. So, thanks to Trump's accelerated depreciation,

1476
01:12:53,439 --> 01:12:54,920
Speaker 1: if I could buy if I have a million dollars

1477
01:12:54,960 --> 01:12:57,080
Speaker 1: of tax taxable income, I could buy a million dollar

1478
01:12:57,160 --> 01:13:00,000
Speaker 1: property for two hundred grand, keep the eight hundred gred

1479
01:13:00,120 --> 01:13:01,600
Speaker 1: a profit, and then I could have more money to

1480
01:13:01,600 --> 01:13:03,120
Speaker 1: put into bitcoin. So I think of it as like

1481
01:13:03,120 --> 01:13:05,880
Speaker 1: a layered strategy like that. But yeah, so some of

1482
01:13:05,960 --> 01:13:08,559
Speaker 1: my thought processes, like, we have all these store value assets,

1483
01:13:08,560 --> 01:13:10,360
Speaker 1: if we capture five percent of this one, ten percent

1484
01:13:10,400 --> 01:13:13,280
Speaker 1: of this one does it get if we capture five

1485
01:13:13,320 --> 01:13:15,040
Speaker 1: percent of the store of value assets, which are about

1486
01:13:15,080 --> 01:13:19,439
Speaker 1: nine hundred trillion. Five percent of that ten percent of that,

1487
01:13:19,520 --> 01:13:24,080
Speaker 1: it's a pretty big number. My thesis is eventually sixty

1488
01:13:24,160 --> 01:13:27,240
Speaker 1: eighty years from now it becomes a unit of account

1489
01:13:27,400 --> 01:13:29,920
Speaker 1: and then you the cap is you just divide the

1490
01:13:30,000 --> 01:13:33,120
Speaker 1: value of the world by the bitcoin. So there is

1491
01:13:33,200 --> 01:13:34,840
Speaker 1: a cap at some point of where it would go.

1492
01:13:35,000 --> 01:13:38,040
Speaker 1: But anyway, just curious that a lot of people in

1493
01:13:38,040 --> 01:13:41,439
Speaker 1: the bitcoin space talk about a demonetizing other assets, and

1494
01:13:41,520 --> 01:13:43,719
Speaker 1: a lot of people talk about a demonetizing real estate

1495
01:13:43,800 --> 01:13:46,519
Speaker 1: for that purpose. So as a single family home, I

1496
01:13:46,600 --> 01:13:48,320
Speaker 1: need a place for shelter to your point that you

1497
01:13:48,400 --> 01:13:51,880
Speaker 1: made earlier. But when I think about investing into other assets,

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01:13:51,960 --> 01:13:53,439
Speaker 1: then you know, where does it go? Kind of a thing?

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01:13:54,720 --> 01:13:56,920
Speaker 2: I mean, real estate has limits to what you could do.

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01:13:57,320 --> 01:14:00,280
Speaker 2: So as an investment, that's you know, just cash flowing thing.

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01:14:00,400 --> 01:14:05,320
Speaker 2: There's real economic variables within each city or demographics or

1502
01:14:05,360 --> 01:14:11,479
Speaker 2: something that limits that. Where something like bitcoin in about hours,

1503
01:14:11,880 --> 01:14:16,719
Speaker 2: you know where five lifespans can you know, get wiped

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01:14:16,720 --> 01:14:19,160
Speaker 2: out in terms of putting in a sore value. There's

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01:14:19,479 --> 01:14:21,840
Speaker 2: you can't get that kind of action anywhere else.

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01:14:22,680 --> 01:14:25,920
Speaker 1: Cool, all right, anything else that we missed to talk about?

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01:14:26,120 --> 01:14:28,880
Speaker 2: Oh no, just kind of my tagline. Economics done right

1508
01:14:28,960 --> 01:14:31,559
Speaker 2: should be very boring, you know, be careful of when

1509
01:14:31,640 --> 01:14:34,839
Speaker 2: people try to make it too sexy exciting, and always

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01:14:34,880 --> 01:14:36,400
Speaker 2: be the detective, not the troll.

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Speaker 1: Got it all right, Logan, thanks so much pleasure.

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Speaker 2: It's great