Speaker 1: So US Treasury Secretary Janet Yellen and Fed Chief J
Speaker 1: Powell are slated to and they may have already just
Speaker 1: looking for some headlines. Uh, there's they were expected to
Speaker 1: talk about the hot US housing market today and the
Speaker 1: risks that could pose to the financial system. Uh. And
Speaker 1: what's interesting is the Treasury Secretary actually this week already
Speaker 1: saying she's worried about housing affordability, but doesn't see the
Speaker 1: same dangers in the housing market as we saw back
Speaker 1: in the two thousands. So let's get into it, um
Speaker 1: when it comes to the housing market. Someone who we
Speaker 1: caught caught up with last uh, and I think we
Speaker 1: talked with in April of hear really how they were
Speaker 1: dealing with the pandemic is Cheryl Palmer. She's chairman and
Speaker 1: see you at Taylor Morrison Home Corporations, a national home
Speaker 1: builder and developer. They're based in Scottsdale, Arizona, and she's
Speaker 1: joining us from Scottsdale, Arizona. Cheryl, So nice to have
Speaker 1: you here with us. How are you well, I'm really
Speaker 1: not really really good, Carol. Thank you so much for
Speaker 1: having me today. Right, it's great to have you here
Speaker 1: because you were such a good check with us in
Speaker 1: terms of what was going in the housing market, Janet
Speaker 1: Yellen saying she doesn't seem, you know, like it's similar
Speaker 1: to the Miltown that we saw going into, you know,
Speaker 1: two thousand nine. How do you see the housing market
Speaker 1: right now? Yeah, I think, um, it's clearly a very
Speaker 1: different time than two thousand nine, Carol. And where I'd
Speaker 1: really spend some energy is understanding really the overall lack
Speaker 1: of supply that we have in the country today. You know,
Speaker 1: depending on what numbers you want to subscribe to, we're somewhere,
Speaker 1: you know, over five million, six million kind of rooftop
Speaker 1: rooftops short in this country today, and we can discuss
Speaker 1: those for rent or for sale housing. I'm just saying
Speaker 1: total shelter. And for the last many years, as I'm
Speaker 1: sure you know, the governor on kind of building has
Speaker 1: been the labor environment and our inability to kind of
Speaker 1: meet demand and rely the household formations, and so yeah,
Speaker 1: we absolutely have seen prices. We've seen some real movement
Speaker 1: in prices these last twelve months, which I think is
Speaker 1: what Jane has been referring to um, and that's absolutely correct.
Speaker 1: But at the same time, we've had a great deal
Speaker 1: of support with interest rates. And when you look at
Speaker 1: affordability today over twelve months ago, the average consumer buying
Speaker 1: a three or four hundred thousand dollar house van, it's
Speaker 1: been less today than they did a year ago on
Speaker 1: their monthly mortgage because by quite as much health. Because
Speaker 1: of the interest rates, you know, arguably, you might not
Speaker 1: buy as much house today as you could buy a
Speaker 1: year ago um. And that's why I think the concern
Speaker 1: has really been on that first time buyer where maybe
Speaker 1: you don't have as many lovers to pull. You know,
Speaker 1: it's not about you know, can I reduce my square
Speaker 1: footage or maybe you know, I'll take a smaller lot um.
Speaker 1: But today, when we look at the overall affordability, given
Speaker 1: the fact that we're still looking at interest rates you know,
Speaker 1: really below three UM, it's it's providing a great deal
Speaker 1: of opportunity for the consumer. All right, So help me
Speaker 1: understand something. I'm taking a look at your share price
Speaker 1: and it's really come under some pressure, uh and down
Speaker 1: a lot from we had to high back in April.
Speaker 1: Why is that? Why do you think that is? Is
Speaker 1: it because you guys can't build fast enough, can't find
Speaker 1: the materials or what is it now fair question? UM? So,
Speaker 1: a couple of things. One, I think the industry's seen,
Speaker 1: you know, has been under some pressure over the last
Speaker 1: few weeks, and I think that points to just some
Speaker 1: of the concerns not just with housing but just in
Speaker 1: general on inflation. And you know, is this environment we're in,
Speaker 1: is this kind of the new normal or is this
Speaker 1: more transitory? Um? And at the same time, we've seen
Speaker 1: housing prices move now on average over the last year
Speaker 1: something around twenty percent. I mean, that's that's significant. Once again,
Speaker 1: as I as I shared, you've got we are so undersupplied.
Speaker 1: But I think the market is trying to digest what
Speaker 1: is this you know, rapid price movement mean for the
Speaker 1: industry and most importantly, what does it mean for that
Speaker 1: first time buyer that maybe it's stretching into homeownership, you know,
Speaker 1: and it's probably worth an honorable mentioned, Carol, I think, Um,
Speaker 1: I don't think we talked about it last time you
Speaker 1: when I were on the zone, but you know, about
Speaker 1: two years ago we entered into the build to rent space.
Speaker 1: Homeownership isn't for anyone, and we announced a strategic partnership
Speaker 1: with UM Christopher Todd Communities which really allows us to
Speaker 1: kind of address that missing middle. And so we're excited
Speaker 1: about one are our least are leasing projects that we're building,
Speaker 1: our build to rent Christopher Todd communities and what that
Speaker 1: does to meet the demand of folks at ount or
Speaker 1: don't want to buy today as well as what it
Speaker 1: does for um just the overall business as people look
Speaker 1: for a step into homeownership. Well, what's the demand for
Speaker 1: the bill to rent? Is that outpacing the traditional uh
Speaker 1: individuals who are coming up to buy our bill to buy?
Speaker 1: You know, it's such a small piece of the overall
Speaker 1: pipes to day took Okay, I mean across the country
Speaker 1: we have something like sixteen just over I think sixteen
Speaker 1: million homes of the inventory are not individually owned, so
Speaker 1: you would say those are there available for rent. And
Speaker 1: when we look at what we're building on an annual basis,
Speaker 1: you know, it's generally been about five percent of starts
Speaker 1: and so that's been around fifty thou but once again
Speaker 1: go back to that, you know, we're five to six
Speaker 1: million rooftop short fifty thousand, and we have a long
Speaker 1: way to go. And the reason we remain you know,
Speaker 1: relatively optimistic and not that there won't be some bumps
Speaker 1: on the road. Is you know, the governor for building
Speaker 1: is just how many homes we can build in our
Speaker 1: current environment with regulatory demands, with labor to actually meet
Speaker 1: the need of what's out there today. Hey Cheryl, um,
Speaker 1: what's interesting is I'm looking at your website. What's the
Speaker 1: most lucrative building that you guys do? Is it individual homes?
Speaker 1: Is that those communities? Is it's you know, where along
Speaker 1: the spectrum of the world that you work in do
Speaker 1: you find it to be the most beneficial to the
Speaker 1: bottom line. Um. I don't think I would point to
Speaker 1: one product type. I think it's really culmination of you know,
Speaker 1: we're a community building builder where we built communities. Obviously
Speaker 1: in our communities we build homes. UM. As I look
Speaker 1: across the consumer groups, one of the areas that's really
Speaker 1: done well for the organization is what I would call
Speaker 1: our lifestyle communities. And those are gem really targeted who
Speaker 1: you know, you could call it active adults or plus
Speaker 1: um where it's that kind of stage in life where
Speaker 1: my kids have left and you know, it's kind of
Speaker 1: about me now. And those can be welf course communities,
Speaker 1: as can be water communities as could be country clubs.
Speaker 1: So we we we provide that lifestyle living at really
Speaker 1: any an all price point. But it's really much right
Speaker 1: for the individual. UM. But when we look at that
Speaker 1: particular consumer group, generally they're at a place in life
Speaker 1: where they know what they want, they have the resources
Speaker 1: to pay for it, and it's just a it's a tremendous,
Speaker 1: tremendous part of our overall portfolio. Well, and I do wonder,
Speaker 1: you know, it's interesting we watch what's going on in
Speaker 1: terms of climate change. You know, the Pacific Northwest right
Speaker 1: seeing extreme temperatures. Um are there, Florida. You're in Florida
Speaker 1: big time. You know, do you factor that in? Do
Speaker 1: you think about that in terms of location? I'm assuming
Speaker 1: of course you do. But I mean, is it starting
Speaker 1: to maybe shape some of bigger, broader strategy in terms
Speaker 1: of future longer term developments. Well? Absolutely, I mean when
Speaker 1: we if you look at our portfolio and you listed
Speaker 1: the markets, um that we build in across the country,
Speaker 1: and generally you'll see a theme of larger you know,
Speaker 1: larger macro um markets that you know, the employment bases there, UM,
Speaker 1: affordability is there. It's really there's not one thing that
Speaker 1: drives a good market. Um. You know, it's just like
Speaker 1: our strategy on core locations. You know the basic rules
Speaker 1: of home ownership and being close to services and close
Speaker 1: to good schools and transportation, all of that climate, all
Speaker 1: of that comes into play as we think about what
Speaker 1: is the consumer want and where they're going to raise
Speaker 1: their family or where they individually want to live. So UM,
Speaker 1: I'm very pleased with our portfolio across the country right
Speaker 1: now and the fact that we build really for that
Speaker 1: first time buyer. UM is about a third of our
Speaker 1: business that kind of first time move up and then,
Speaker 1: like I said, our active adult business, our lifestyle community.
Speaker 1: So we really are able to meet the demand market
Speaker 1: by market based on what the consumer wants to need
Speaker 1: right and spread out, you know, your your exposure right
Speaker 1: to those different markets. Hey, talk to us about the
Speaker 1: leading in of digital increasingly. Uh, you've got a new
Speaker 1: digital to be built reservation system. How does this work?
Speaker 1: Can can you basically now just go online pick your house,
Speaker 1: design your house, have it built, almost do everything digitally.
Speaker 1: That's exactly right, Carol. Um. You know when we spoke
Speaker 1: eighteen months ago be pre covid, I would tell you
Speaker 1: that it absolutely helped advance the industry because everyone beyond
Speaker 1: demand system was very, very different, and certainly I would
Speaker 1: tell you that our industry was probably the last to
Speaker 1: subscribe to kind of new technology, and the way that
Speaker 1: we've been doing it in the home building world hadn't
Speaker 1: really advanced over the decades. But it's really about giving
Speaker 1: the consumer eve simplicity when they're shopping and allowing them
Speaker 1: to in to engage with the brand in a way
Speaker 1: that makes sense for them. So Taylor Morrison, I believe
Speaker 1: it's been very progressive and leading the pack in this
Speaker 1: elevated virtual shopping experience. We have a online scheduling tool.
Speaker 1: We have self guided tours where we'll send you a
Speaker 1: four digit code and you can go walk through a
Speaker 1: home on your own time, on your own You can
Speaker 1: you know, online home reservations. That's what we introduced. I
Speaker 1: think that was last summer, where and you could go
Speaker 1: into an inventory home. I think that's just perfect for
Speaker 1: me to go back home and put it in your
Speaker 1: shopping cart and then we would send you a contract.
Speaker 1: So amazing, and then in the last it's it's truly
Speaker 1: who would have thought, you know, two years ago you
Speaker 1: could buy a house online, and now we're selling hundreds
Speaker 1: and hundreds of homes entirely virtually with no physical contact.
Speaker 1: It's it's remarkable. Well and just go ahead, No, I
Speaker 1: just got about fifteen seconds. Our most recent tool, which
Speaker 1: is the most exciting them all, is being able to
Speaker 1: match somebody. They can go pick their lot, pick their
Speaker 1: floor plants and do all that virtually as well. Yeah,
Speaker 1: and like with cameras and things, you can really get
Speaker 1: a good, good picture of everything. Cheryl, thank you so much,
Speaker 1: great good check on housing. She's chairman CEO Taylor Morrison
Speaker 1: Home Corporation, joining us on the phone from Scottsdale.