Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe wisen't Thal and I'm Tracy Halloway. So, Tracy,
Speaker 1: it's been a long time since I've visited you in
Speaker 1: Hong Kong. But one thing I remember, I know it's
Speaker 1: too long, and as soon as I can, whether like
Speaker 1: after the virus or whatever, I gotta make that happen. Yeah,
Speaker 1: I I totally agree. I just I'm thinking, like I
Speaker 1: haven't left this relatively small area for a year and
Speaker 1: a half now, and I am you're getting stir crazy. Yeah.
Speaker 1: But one thing that I remember like about Hong Kong
Speaker 1: is like people they're like are just obsessed with like
Speaker 1: real estate, right, Like I just remember it just sort
Speaker 1: of like real estate buying, home buying speculation. It just
Speaker 1: seemed to be in the air in Hong Kong. Absolutely,
Speaker 1: it's sort of almost a way of life here. I
Speaker 1: guess the thing everyone aspires to is eventually owning a house.
Speaker 1: House prices are absolutely insane. There's a perpetual shortage of housing,
Speaker 1: although there's a big debate about whether that's in fact
Speaker 1: true or whether it's because of um ill considered government
Speaker 1: policy and things like that. But yes, if you walk
Speaker 1: down the street, almost every other building probably has some
Speaker 1: sort of real estate office in it, and everyone just
Speaker 1: loves to talk about home buying, home prices, speculation. So
Speaker 1: I think in the US it more like goes in waves,
Speaker 1: like obviously two thousand five, two thousand six, that was crazy,
Speaker 1: and then it's sort of crashed for a while. But
Speaker 1: right now I don't think there's any doubt that sort
Speaker 1: of like home buying mania, the desire to own a
Speaker 1: home is absolutely in a full swing in the United States. Yeah.
Speaker 1: So even me over here in Hong Kong, I have
Speaker 1: seen some of these crazy news stories about house prices.
Speaker 1: I saw that about um, someone put in an offer
Speaker 1: for a house and then said they would name their
Speaker 1: child after the seller if they got the house. Um.
Speaker 1: Crazy things like that. Like these are things that you
Speaker 1: would normally or maybe not normally, but you would find
Speaker 1: in the Hong Kong market. They seem to have been
Speaker 1: transferred over to the US, where everyone is clamoring for
Speaker 1: it seems like limited supply. Yeah, very much. So every
Speaker 1: day there's like stories about like someone putting up a
Speaker 1: home for sale and within five minutes they get like
Speaker 1: five offers that are half a million dollars over their ask.
Speaker 1: We are in housing mania here, but we are also,
Speaker 1: you know, basically running out of homes and uh, you know,
Speaker 1: in theory, you just build a lot more, but putting
Speaker 1: that into practice is a lot harder, especially with the
Speaker 1: lumber shortage and the labor shortage and all the other
Speaker 1: shortages that we've talked about several times on this show before. Yeah,
Speaker 1: so I feel like this is going to be another
Speaker 1: episode where we talk a lot about expectations and how
Speaker 1: those sort of feed into our existing reality. So and
Speaker 1: obviously there's the lumber angle to lumber being an important
Speaker 1: component into house prices. So I am looking forward to
Speaker 1: this one. I am very excited about this episode. So
Speaker 1: we're going to be speaking with Allie Wolf. She is
Speaker 1: the chief economist ed Zonda, which is a housing data
Speaker 1: and consultancy firm. I've talked to her on TV a
Speaker 1: few times. She has a fantastic perspective on the sort
Speaker 1: of nitty gritty level of what's really going on in
Speaker 1: the housing market, and we're going to ask her how
Speaker 1: the US ran out of home. So Allie, thank you
Speaker 1: so much for joining us. Hi Joe, Hi Tracy, thanks
Speaker 1: for having me absolutely excited you're here. So before we
Speaker 1: talk about I mean, you know, obviously we're going to
Speaker 1: get into the details of what's going on now and
Speaker 1: how this sort of housing market has gone nuts over
Speaker 1: the last year post COVID, but I'd love for you
Speaker 1: to accept the scene a little bit, the housing market
Speaker 1: pre COVID, because even before all this, there was a
Speaker 1: lot of talk about hell in the wake of the
Speaker 1: Great Financial Crisis, the US was already just under house
Speaker 1: that you could just see in the demographics and the
Speaker 1: volume of houses out there that if people wanted to
Speaker 1: own a home, there wasn't enough housing stock out there
Speaker 1: to absorb it well. And that's a great place to
Speaker 1: pick it up, is because when we think about the
Speaker 1: Great Financial Crisis, there are so many people that are
Speaker 1: scarred from what happened. They remember maybe they lost their home,
Speaker 1: maybe they lost their job, maybe they saw friends or family.
Speaker 1: And I think that's often when we think back to
Speaker 1: the Great Financial Crisis, it's so much about Okay, how
Speaker 1: are the individuals dealing with it? Have they been able
Speaker 1: to get their wealth back after you know, however long
Speaker 1: it's been since then. What we have to remember too,
Speaker 1: is the builders were really at the forefront of that
Speaker 1: crisis and their scarred as well. And they were scarred basically,
Speaker 1: I would say, until there was a lot of fear
Speaker 1: on the builders side. I would hear stories of teams
Speaker 1: that would go from five hundred to five during the
Speaker 1: Great Financial Crisis, and there are division presidents that are
Speaker 1: still around and they would say it was so hard
Speaker 1: to live through those periods. And what that did is
Speaker 1: really change the mindset for a lot of the legacy builders,
Speaker 1: for a lot of the legacy leaders that are in
Speaker 1: the home building industry, where when they were going to
Speaker 1: buy land over the past ten fifteen years, that deal
Speaker 1: had to pencil. You are not going to fudge the numbers.
Speaker 1: You're going to be realistic about I'm going to buy
Speaker 1: this land and I think home price appreciation will be x,
Speaker 1: I think my sales rate will be why, and we're
Speaker 1: going to build this on it, and it had to
Speaker 1: be what would match the market. And the problem with
Speaker 1: that is if you're a land seller and you know
Speaker 1: that during the heyday of last cycle, you could have
Speaker 1: gotten a huge dollar amount. Yes, it's come down. During
Speaker 1: the slowdown, the land sellers were a lot more sticky
Speaker 1: on their prices. Builders weren't going to pay for it.
Speaker 1: Land sellers didn't want to budge. Wait where was that
Speaker 1: When you think about land And this is going to
Speaker 1: be an obvious statement, but when you're thinking about land,
Speaker 1: you can't replace it. And so the land seller says, well,
Speaker 1: I can just sit on this land because I know
Speaker 1: prices are going to come back, and so the land
Speaker 1: seller is going to say, I want this price. And
Speaker 1: there were some builders that were able to make it work,
Speaker 1: some land sellers that were willing to budge their price.
Speaker 1: But ultimately, before COVID, I was doing presentations with builders
Speaker 1: and developers and private equity and all we talked about
Speaker 1: was land prices and labor shortages. That those were the
Speaker 1: common themes, and it was all about what do you
Speaker 1: build attainably? What do you build that someone can actually afford?
Speaker 1: And I think starting in that was all of our
Speaker 1: discussions and it's funny to talk about it now, but
Speaker 1: we were just like, work on density, work on what
Speaker 1: you can control, pay attention to the square footage. Those
Speaker 1: were conversations that I'd say, over the past fourteen months
Speaker 1: we haven't had. We are having again though today as
Speaker 1: prices go up as quickly as they are. So this
Speaker 1: is really interesting because you know, one of the themes,
Speaker 1: I mean already you have like hit on like five
Speaker 1: themes that Tracy and I talked about a lot. But
Speaker 1: one of the themes that we sort of talked about
Speaker 1: in the last year is the sort of like great
Speaker 1: acceleration thesis, which is the idea that the post COVID
Speaker 1: economic environment really in many ways has accelerated a lot
Speaker 1: of pre existing trends. And so what you're saying is like,
Speaker 1: you know, we everyone knows now about labor shortages and
Speaker 1: land shortages and housing. Although we'll get more into the details,
Speaker 1: but these were the conversations that was that we're already happening.
Speaker 1: You're saying prior to the virus hitting Yeah, no doubt.
Speaker 1: And basically what you're hitting on too fast forward today
Speaker 1: is that housing is trendy again. Right, for the past
Speaker 1: ten fifteen years, housing wasn't trendy. It was something that
Speaker 1: you bought. But the common thing you would hear I
Speaker 1: would hear among ends, I would hear among people in
Speaker 1: the industry is don't buy your house as a investment tool,
Speaker 1: and that you're wanting it to go up and value,
Speaker 1: and this is a really good bet on where you
Speaker 1: should place your money. You buy the home because that's
Speaker 1: where you want to live, because that's where you want
Speaker 1: to plant roots, and you want to lock in that
Speaker 1: rate that I think that discussion has changed a lot
Speaker 1: since COVID hit. Can we talk about that a little
Speaker 1: bit more, because you know, as I mentioned earlier, I'm
Speaker 1: outside of the States, and I'm kind of wondering, like,
Speaker 1: where did this wave of demand suddenly come from? So
Speaker 1: on the one hand, you have COVID, you have the
Speaker 1: work from home situation, maybe some people moving out of
Speaker 1: the cities. But speaking to that great acceleration theme, you
Speaker 1: also have a wave of I guess elder millennials who
Speaker 1: might be, you know, getting to the point in their
Speaker 1: lives where they have enough money to buy a house.
Speaker 1: Maybe they're looking to start families, things like that. So
Speaker 1: I guess I'm just curious if you can sort of
Speaker 1: disaggregate those different sources of demands. Yes, and there's a lot,
Speaker 1: and you had so many there were so many questions
Speaker 1: in that question that I've heard that you want to answer.
Speaker 1: Um In the first direction I want to go is
Speaker 1: just to to wrap up the before COVID time is
Speaker 1: on the resale side, and this will make sense into
Speaker 1: your question Tracy of why I'm answering it like this.
Speaker 1: So what I want to give the example of is
Speaker 1: I bought my home in sen and when I bought
Speaker 1: my home, all we talked about was how we were
Speaker 1: buying in a limited supply environment. And it's almost a
Speaker 1: joke now because we were talking two or three months
Speaker 1: of supply on the market when I bought equilibriums generally
Speaker 1: four to six. Today in some markets you have point
Speaker 1: five months of supply. So it was a tight inventory
Speaker 1: market in eighteen nineteen twenty for a whole bunch of reasons.
Speaker 1: Um investors actually getting active in the market. Prop thirteen
Speaker 1: in California allows a lot of people to age in place,
Speaker 1: not enough building. If there's no on a new construction,
Speaker 1: then you don't entice people to move. So there were
Speaker 1: all of these factors that were keeping inventory tight before COVID,
Speaker 1: and then you really had the entire buyer spectrum wake up.
Speaker 1: One more thing I want to say is housing did
Speaker 1: slow for if you guys remember it was really four
Speaker 1: to eight weeks March and April of last year, and
Speaker 1: when we started to watch data. We were doing presentation
Speaker 1: store clients on a weekly basis, and we were like
Speaker 1: holding they were holding our hands, we were holding their hands.
Speaker 1: We were just like, hang on, this is gonna be okay.
Speaker 1: We hope this isn't like the Great Financial Crisis. And
Speaker 1: then we started to see sales start to pick up,
Speaker 1: and we've started to wonder, how is this even possible?
Speaker 1: And so this is going now to to Tracy's question,
Speaker 1: which is the first thing was work from home. And
Speaker 1: the reason I say this over demographics is I have
Speaker 1: been doing presentations in industry for years and what I've
Speaker 1: said is, hey, you can continue to build. You can
Speaker 1: feel confidence in the strength of the housing market because
Speaker 1: we have such demographic tail winds and we have low
Speaker 1: interest rates. Again, that was before COVID, So now you
Speaker 1: only have exaggerated demographic tail winds and even lower interest
Speaker 1: rates combined with work from home. And I'm gonna phrase
Speaker 1: this the sleepy gen xers finally woke up. We didn't
Speaker 1: talk about gen xers that much, and I'm saying this
Speaker 1: is generally age sixty. They weren't as active in the
Speaker 1: market as the millennials and as the baby boomers. And
Speaker 1: now all of a sudden, you have your gen xers
Speaker 1: who have saved money, who were scarred from the Great
Speaker 1: Financial Crisis, but who are are feeling enabled to move,
Speaker 1: partly because of their financial situation and partly because their
Speaker 1: lifestyle changed so much over the past year. So we
Speaker 1: have work from home, we have gen xers, we have
Speaker 1: the relocation buyers, which we need to make sure we
Speaker 1: hit on the equity in the house, the stock market,
Speaker 1: the low interest rates, and then the FOMO, which is
Speaker 1: the part that I think makes me the most anxious
Speaker 1: about where the market is is how much of it
Speaker 1: is frenzy. I'm I'm glad you said gen xers. No
Speaker 1: one ever talks about gen xer. But I'm forty and
Speaker 1: so I kind of cause I guess I'm like right
Speaker 1: on the cusp. But I appreciate that our generation gets
Speaker 1: a little gets a little bit of recognition. I just
Speaker 1: want to go back to one last point you made
Speaker 1: before we really get into what's going on now, because
Speaker 1: I'm interested in this idea. I've heard this before. The
Speaker 1: owners of land sort of view it as a bit
Speaker 1: of a call option of sorts that they could sell
Speaker 1: at any time, and so you mentioned that, Okay, the prices,
Speaker 1: maybe the market clearing price of land came down, but
Speaker 1: that didn't induce landowners to sell. Is this like a
Speaker 1: permanent feature of the market that basically people who own
Speaker 1: land just wait. If they can't get the price they want,
Speaker 1: they don't sell at the lower price. They just sort
Speaker 1: of they know that eventually real estate always comes back around,
Speaker 1: and U that allows them to just hold out. Like,
Speaker 1: what is the general mentality of people who are on land?
Speaker 1: I would say, you know that that's what it is,
Speaker 1: unless you have to sell the land, and then you
Speaker 1: you're gonna take what the market is. And they're going
Speaker 1: to be different reasons why someone needs to sell the
Speaker 1: land and not wait for top dollar. But I was
Speaker 1: talking to a builder the other day and he was saying,
Speaker 1: they're dealing a lot with farmers, and the farmers would
Speaker 1: love the money, but they also would like top dollar,
Speaker 1: and so they're going to wait until they're able to
Speaker 1: get that. It goes back to you can't recreate it.
Speaker 1: And if you own land within forty miles of a
Speaker 1: central business district, don't give that up for a lower
Speaker 1: price because there's no reason you should. So why don't
Speaker 1: we talk a little bit about how crazy it is
Speaker 1: right now. Then I guess my first question is how
Speaker 1: do you measure the deviation from what the normal increase
Speaker 1: in house prices might look like? And how far away
Speaker 1: from that are we right now? Yeah. So, what our
Speaker 1: company does is we track actively selling communities across the
Speaker 1: country and we have what we call the New Homepending
Speaker 1: Sales Index, which is looking at transactions in the housing
Speaker 1: market by two different lenses. Lens one is just how
Speaker 1: many homes have sold. To think of this as a
Speaker 1: census equivalent, So just count the number of home sales. Okay,
Speaker 1: you know we've sold x many. Then we also look
Speaker 1: at the average sales rate per month per community, which
Speaker 1: is a measure of demand on the builder side. And
Speaker 1: historically these two components, the total number of homes so
Speaker 1: old in an index and then the ever sales rate
Speaker 1: per community in an index, have just moved in lockstep
Speaker 1: that you basically can't see the two lines separated from
Speaker 1: each other. We've now seen that completely diverge. So one
Speaker 1: line is going up, one line is going down. You
Speaker 1: can imagine it's the demand component continues to go up,
Speaker 1: the supply is going down. And when we're looking at
Speaker 1: the different deals and we're saying, Okay, you know you
Speaker 1: bought the land for this price, expecting um your homes
Speaker 1: to go up x appreciation. We're having builders say, at minimum,
Speaker 1: the raising prices twenty dollars every month, or we're having
Speaker 1: builders say we're raising prices Joe had talked about like
Speaker 1: five over. We're having builders say, like within a couple
Speaker 1: of months, you're raising prices two. The l A's and
Speaker 1: the San Francisco's and the DCS in Miami's are basically
Speaker 1: going up. I would say, at a level that's on
Speaker 1: the high end of their healthy clip. You're definitely seeing
Speaker 1: prices going above asking. But those are not markets that
Speaker 1: are fundamentally transforming because of our relocation buyers. It's the
Speaker 1: markets that are becoming the hardest to understand become Austin, Dallas, Jacksonville,
Speaker 1: Las Vegas, Phoenix, Salt Lake City, Denver. These are the
Speaker 1: markets where you would expect historically, let's say four to
Speaker 1: six percent home price appreciation, and now you're seeing numbers
Speaker 1: that don't even register. It's going to be Austin your year.
Speaker 1: Home prices are up, So those numbers to us don't
Speaker 1: really match what we're seeing on local incomes. But those
Speaker 1: numbers completely make sense when you have a California income
Speaker 1: moving into Austin. A So, so this is really the
Speaker 1: key thing is the rise of the relocation home buyer.
Speaker 1: How big you know, in a typical year, how much
Speaker 1: would a sort of like relocation from California or New
Speaker 1: York to a Austin or to a Denver or to Montana, Like,
Speaker 1: how much is that typically part of the market? And
Speaker 1: then how much is that part of the market these days? Yeah,
Speaker 1: and I'll have to give it in percents. But what
Speaker 1: we and this comes from a division president survey that
Speaker 1: we do, and we ask the division presidents what are
Speaker 1: your most active buyers and how has that changed? You say, sorry,
Speaker 1: would you say division presidents? These are presidents of homebuilders. Yeah,
Speaker 1: presidents of homebuilders where they're active in Las Vegas. They
Speaker 1: don't just look at one community. They're looking at their
Speaker 1: entire Las Vegas portfolio or their entire Southern California portfolio.
Speaker 1: So they have a good sense of a lot of
Speaker 1: the different communities at a lot of different prices. It's
Speaker 1: not just something very specific. YEA. So the first thing
Speaker 1: I would say to answer your question directly, is that
Speaker 1: the percent in some markets it would be the smile states.
Speaker 1: A lot of the ones I just mentioned, we are
Speaker 1: having division presidents say it can be up to fifty
Speaker 1: of all of their sales right now are coming from
Speaker 1: relow buyers. That's not normal. I don't have the exact
Speaker 1: like for like, I know that the majority of them
Speaker 1: are saying that's increasing. I would say from what we
Speaker 1: heard before pandemic, it was probably closer to ten to
Speaker 1: twenty because you did have people moving before the pandemic,
Speaker 1: just not to the same extent that you're seeing today.
Speaker 1: So that's a huge shift in some markets. But second
Speaker 1: to that, going back to our sleepy gen xers, we
Speaker 1: now have from the division presidents that the move up
Speaker 1: buyers are the most active and they've overtaken the entry level,
Speaker 1: and then the third most active of all the different
Speaker 1: buyer groups relocation. So to me, that's really saying that's
Speaker 1: within well, it's obviously within the top three, but those
Speaker 1: are the buyers that again have transformed the housing market.
Speaker 1: So I have a dumb question, and you just touched
Speaker 1: on it a tiny bit there, but I'm curious what
Speaker 1: what is happening to the people who are actually selling
Speaker 1: their houses. So are they buying new ones and trading
Speaker 1: up to something bigger and better or in a different location,
Speaker 1: or are they all deciding to rent and you know,
Speaker 1: just take advantage of high prices and try to monetize
Speaker 1: their house and then hope for the prices to come down,
Speaker 1: Like where are they all going? Great question, and the
Speaker 1: answer is all of the above. And it's also one
Speaker 1: of the reasons inventory is so low, Tracy, because a
Speaker 1: lot of people are asking the same question. So, Okay,
Speaker 1: I'm gonna sell my home. Everything else has become more expensive.
Speaker 1: Where am I going to move to? So you do
Speaker 1: have some people, and it's kind of increasingly common that
Speaker 1: some people are just worried about the market and they're saying,
Speaker 1: I am going to sell just like what you said.
Speaker 1: I'm going to enjoy my equity and I'm going to
Speaker 1: go into a rental community and I'm going to wait
Speaker 1: for this market to cool down. There are some buyers
Speaker 1: that are going into the new home space, and the
Speaker 1: issue with that is you can't really in a lot
Speaker 1: of markets walk into a new home community and buy
Speaker 1: a home today. A little bit of an exaggeration, but
Speaker 1: there are some communities that have just completely stopped entirely.
Speaker 1: You could also be a seller who's going to try
Speaker 1: to compete in the resale market. The biggest thing that
Speaker 1: I'm hearing though, is don't have a sale contingency so
Speaker 1: you can buy another home. And the theories that are
Speaker 1: I guess the commonly accepted ideas that you're gonna sell
Speaker 1: your home so quickly that you're not going to have
Speaker 1: to worry about whether or not you sell your home
Speaker 1: to move into the other home. But the answer is
Speaker 1: all of the above. Can you explain it? It? Just
Speaker 1: explain that last part real quickly. What do you mean
Speaker 1: don't have a sale contingency? So if you're going into
Speaker 1: the market today and into the resale market, so this
Speaker 1: is not the home market now, but if you're going
Speaker 1: into the resale market and you want to buy a home,
Speaker 1: you basically want to have as few contingencies as possible.
Speaker 1: So obviously, if you're a cash buyer, you're the pre
Speaker 1: the preferred buyer. If you can remove a loone contingency,
Speaker 1: that's important. But if you say, I want to buy
Speaker 1: your house, but for me to close on the transaction,
Speaker 1: I have to sell my house. Historically that was totally acceptable.
Speaker 1: That was yeah, of course, was to buy the house
Speaker 1: if you haven't sold your house yet. But now you
Speaker 1: can't go into the deal and say I need to
Speaker 1: sell my house to buy your house. It needs to
Speaker 1: be I'm ready to buy your house and nothing's gonna
Speaker 1: hold me back. So at what point do buyers start
Speaker 1: to protest the high prices and just say, you know what,
Speaker 1: this is getting too crazy for me and I'm going
Speaker 1: to sit this one out and wait for prices to
Speaker 1: come down. Perfect question, because the answer is we're seeing
Speaker 1: it right now, and I would say May is the
Speaker 1: first time that we've even heard of a big bump
Speaker 1: and buyer hesitancy. What we're hearing is things like the
Speaker 1: buyers are coming in and they're worried about buying at
Speaker 1: the top, or buyers are coming in and they're saying,
Speaker 1: you know, I was looking at this house last month
Speaker 1: and it was thirty dollars below where it was today.
Speaker 1: I don't want to jump in today. Or you guys
Speaker 1: may have seen if you sign a contract with the builder.
Speaker 1: Sometimes if if the builder has written their contract right,
Speaker 1: the builder can come back to you and say our
Speaker 1: prices have gone up and we're not going to cover
Speaker 1: that entire cost, so we're going to split that with you.
Speaker 1: So I know you thought you bought this home for
Speaker 1: three thousand, but I need you to bring thirty or
Speaker 1: forty thousand extra dollars to the table. So that's we're
Speaker 1: seeing a lot of headlines on that, and they're true,
Speaker 1: like this is truly happening. But I think there are
Speaker 1: some people that are saying, oh, I'm not sure I
Speaker 1: want to commit to one price and then have my
Speaker 1: price go up. So we are seeing, and you use
Speaker 1: the right phrase, what we're calling is the buyer's protest.
Speaker 1: We are seeing the start of a buyer's protest for
Speaker 1: the first time. I wouldn't say it's that demand has
Speaker 1: fallen off because we haven't truly seen that impact sales yet.
Speaker 1: It's just when builders are planning forward, they'll say, wow,
Speaker 1: our interest list is one example we heard in the
Speaker 1: Mountain region is two years long. So that two years
Speaker 1: long interest list could become six months long if prices
Speaker 1: go up too much and people are saying no, no, no,
Speaker 1: like the home is not worth it, I'm not gonna buy.
Speaker 1: It's like the first derivative of this or the second
Speaker 1: derivative of demand is starting to slow down. Yeah, yeah,
Speaker 1: you are starting to see that. And I think what
Speaker 1: I'm trying to make sense of, and I don't have
Speaker 1: the full answer, is if you do have so many
Speaker 1: people sitting on the sidelines waiting for prices to come down,
Speaker 1: if prices reset, does it start the frenzy all over again?
Speaker 1: And I guess it depends on where mortgage rates are.
Speaker 1: But again using myself as an example, we want to
Speaker 1: buy a move up house, but I'm not going to
Speaker 1: go into the market right now. But if the market
Speaker 1: slows or softens, I'm going to be the first person
Speaker 1: knocking at that door. So does that make the market
Speaker 1: kind of maybe not permanently higher, but higher longer because
Speaker 1: it is kind of a longer stretched out demand cycle. Well,
Speaker 1: this is something that I wanted to ask you, actually,
Speaker 1: So when we think about the supply demand mismatched, does
Speaker 1: that mean that we have to start thinking differently about
Speaker 1: what constitutes weak or strong housing data? So, for instance,
Speaker 1: if we start to see housing data soften um in May,
Speaker 1: like you just mentioned, because people are sitting out the
Speaker 1: high prices, that doesn't actually mean that the housing market
Speaker 1: is necessarily getting fundamentally weaker. Like I'm not sure how
Speaker 1: to phrase this question, but basically, are you sort of
Speaker 1: rethinking the way you interpret housing data in the current conditions.
Speaker 1: It's one of the hardest things I would say to
Speaker 1: grasp is this idea that we know the demand is
Speaker 1: out there. And I know, Joe, you've seen some things
Speaker 1: on Twitter about this where we see phrases like the
Speaker 1: entry level buyer is left in the dust, the entry
Speaker 1: level buyer has no chance to buy a home in
Speaker 1: today's market. And what we've tried to do every year
Speaker 1: for the past five years, I've done millennial surveys, and
Speaker 1: I don't try to survey an active new home shopper
Speaker 1: and active resale shopper in this survey, I try to
Speaker 1: the way I phrase it is I want to find
Speaker 1: the millennial on the couch who's just scrolling through Facebook
Speaker 1: and who sees the survey and takes the survey to
Speaker 1: get a sense of where their mind is. And what
Speaker 1: we see in that is there're still so many buyers
Speaker 1: that are looking to purchase a home. But um to
Speaker 1: the point earlier about the buyer's protest or just getting
Speaker 1: frustrated in the process they can't find anything in their
Speaker 1: price point. We're trying to think that through, and as
Speaker 1: we work with the builders and as the builders are
Speaker 1: just looking at what land they have, what I keep
Speaker 1: hearing is we cannot assume this is going to last forever.
Speaker 1: We've got to sue whim. It's going to be a
Speaker 1: less frenzied And what we as the building community need
Speaker 1: to do is make sure that we're successful even if
Speaker 1: things slow down. And the only way you can control
Speaker 1: that is by controlling what you bring to the market.
Speaker 1: Maybe it's a more dense product. Maybe it's a what
Speaker 1: we call right size, So right sizes you have a
Speaker 1: slightly smaller square foot but the home is so functional
Speaker 1: it's not that big of a deal and you're able
Speaker 1: to adjust your price. Maybe it's a higher density community.
Speaker 1: Maybe it's a duplex community, you know, or three story.
Speaker 1: So builders are trying to think through all of that
Speaker 1: because I think ultimately they know the answer to your question,
Speaker 1: which is the data is not going to really tell
Speaker 1: us the story about how strong demand is. The conversations
Speaker 1: we're having with people on the ground on a regular
Speaker 1: basis that's telling us that there's so much hunger and
Speaker 1: so much demand, but also so much frustration and frankly
Speaker 1: a price ceiling for some buyers, and you have to
Speaker 1: be able to adjust for that if possible. So this,
Speaker 1: I mean, it's it's just incredible how many like assistant
Speaker 1: themes this discussion hits on. But one of the questions,
Speaker 1: I mean, one of the issues is, obviously is you
Speaker 1: just stated, is the question of whether the boom continues,
Speaker 1: let's say, and and that that dictates or that informs
Speaker 1: builder behavior right now. So if they knew that there
Speaker 1: would be strong demand for the next five years, that's
Speaker 1: a very different picture that if it's going to like
Speaker 1: fade in, is things get normalized, what would they be doing, Like,
Speaker 1: let's say your data was um saying, you know what,
Speaker 1: this is gonna last. There's a lot of people that
Speaker 1: are going to keep buying homes. It's gonna keep coming.
Speaker 1: This is not just phenomenon, It's not this is a
Speaker 1: sustainable boom. What would we see, like would the dealers
Speaker 1: be or the builders be going out and acquiring more
Speaker 1: expensive land, Like what are some of the things that
Speaker 1: that would unlock if the boom continued In terms of
Speaker 1: homebuilder behavior. So I love the question because we don't
Speaker 1: even have to guess, because we just have to look
Speaker 1: at what's happening. Because there is so much enthusiasm around
Speaker 1: the demographic charts that builders are saying it is going
Speaker 1: to continue because we have been under building and there
Speaker 1: aren't enough homes on the market and we are losing
Speaker 1: buyers that are waiting on the sidelines. So to answer
Speaker 1: your question, and and honestly, it's going to be a
Speaker 1: little bit I'm alarmed by the way I'm going to
Speaker 1: answer this question is exactly what you said, and that
Speaker 1: they are paying more money for land. I know this
Speaker 1: is not eloquent, but the way that I hearing it
Speaker 1: is builders are paying stupid prices for land. And I
Speaker 1: have a friend who works in the homebuilding industry and
Speaker 1: he called and said he felt a little bit uncomfortable
Speaker 1: about a land deal he just pushed through. And I said, well,
Speaker 1: why did you do it? And he said, well, you
Speaker 1: can lose your job today by not making the deal happen,
Speaker 1: or you can lose your job in two years by
Speaker 1: making a bad deal happen. And there's conversations like that
Speaker 1: where a builder needs to make a deal. Look profitable
Speaker 1: right now, and you may have to assume today's level
Speaker 1: of appreciation, today's level of heightened demand is going to
Speaker 1: continue for that to make sense. And one thing I
Speaker 1: heard is if you're being realistic when trying to buy land,
Speaker 1: good luck. I think that is probably what makes me
Speaker 1: a little bit anxious. Is there is this idea that, yes,
Speaker 1: this is going to go on forever, and you need
Speaker 1: to tie up the land. And I guess you hope
Speaker 1: that they're able to adjust their price, but we know
Speaker 1: all the other costs are going up. I think there
Speaker 1: is a little bit of a mindset that lumber prices
Speaker 1: aren't going to stay this high for that long. So
Speaker 1: if you pay a little bit more for the dirt,
Speaker 1: but then you have your lumber prices come down, maybe
Speaker 1: you can continue to hit the right price point. But
Speaker 1: the land grab is very, very real. Land development is
Speaker 1: going on across the country. Um, Like I said, I
Speaker 1: don't think that's a hypothetical. I think that's what we're
Speaker 1: seeing right now. So I have another dumb question, or
Speaker 1: maybe this one is more provocative than dumb. But we
Speaker 1: haven't spoken that much about the role of interest rates
Speaker 1: in the market, so obviously interest rates very very low
Speaker 1: at the moment. Is that a lever that could be
Speaker 1: pull pulled to potentially cool down the market? Like, does
Speaker 1: the FED need to keep on buying mortgage backed securities
Speaker 1: if we know that the housing market is going nuts
Speaker 1: in this way? Uh? And I'll have a controversial answer
Speaker 1: is that I don't think they need to continue to
Speaker 1: support the housing market. I think what we're finding is
Speaker 1: if you're pricing out entry level buyers because so many
Speaker 1: investors see that there's a good return and there's a
Speaker 1: reason to jump into the market. I don't know why
Speaker 1: we're incentivizing investors to get in and making it harder
Speaker 1: for actual buyers to purchase their home. So I do
Speaker 1: struggle with that a lot um What builders can do
Speaker 1: back in we would have been probably nineteen, builders would
Speaker 1: have started to do rate buy downs. So if interest
Speaker 1: rates started to go up and a buyer couldn't afford
Speaker 1: the home right, then a builder could step in and say,
Speaker 1: you know, you can't afford it at four percent, but
Speaker 1: could you afford at three point five? And so the
Speaker 1: builder has some tools that they can use via incentives
Speaker 1: where they don't actually lower the average sales price, but
Speaker 1: they're able to give a little bit of assistance on
Speaker 1: the mortgage rate front. Um. The issue will be interest
Speaker 1: rates have been so low for so long, and home
Speaker 1: prices are based on where the monthly payment is and
Speaker 1: where the interest rates are. And the concern is if
Speaker 1: interest rates go up too much, can those home prices
Speaker 1: hold and that that poses some some risks to the
Speaker 1: prices go forever, to prices actually come down the interest
Speaker 1: rates really are, I think should be everyone's concern when
Speaker 1: you're trying to look at the sustainability of the housing market.
Speaker 1: So I kind of said both answers, is like, you
Speaker 1: don't want to continue to support the housing market, but
Speaker 1: you also need to be careful because if if interest
Speaker 1: rates scope too much, that really will put a wet
Speaker 1: blanket on on demand. That makes sense, So let's talk
Speaker 1: a little bit more about constraints on supply. And so
Speaker 1: obviously we've talked a lot about land costs, and as
Speaker 1: you said, some home builders have decided to bite the
Speaker 1: bullet and pay quote stupid amounts for land. But there's
Speaker 1: also the materials that you need, and you know, the
Speaker 1: lumber conversation is well known, and but also you know
Speaker 1: you hear about like windows shortages and gutter shortages and
Speaker 1: all that stuff, and then of course labor. And as
Speaker 1: you mentioned, a lot of these home building companies, they
Speaker 1: saw their workforces get obliterated and people went on to
Speaker 1: other things after the Great Financial Crisis, and maybe they
Speaker 1: haven't come back into the home building trade yet. So
Speaker 1: can you talk a little bit more about these other
Speaker 1: constraints on creating new homes besides land and how much
Speaker 1: of a factor that is on limiting supply. Yeah, And
Speaker 1: I think the best stat I can give you on
Speaker 1: this comes from the National Association of Homebuilders and they
Speaker 1: have a team of economists that have run this stat
Speaker 1: and to me, this is the the wow stat of
Speaker 1: how far can housing go and how fast can it go?
Speaker 1: So we finished with one point four million total housing starts,
Speaker 1: and there are some forecasts that this year we're going
Speaker 1: to get to one point seven million total housing starts.
Speaker 1: For us to get from one point four to one
Speaker 1: point seven we would need four hundred thousand more workers.
Speaker 1: And right now residential construction is up forty three thousand,
Speaker 1: not four hundred thousand, and builders are trying to hire
Speaker 1: and what we just keep hearing is that, um, there's
Speaker 1: not enough cruise to keep up with building. And so
Speaker 1: I do think the labor issue, which has been on
Speaker 1: the back burner because of all of the different supply
Speaker 1: issues we can talk about in a moment, you're finally
Speaker 1: starting to hear that all of a sudden, the workers
Speaker 1: are becoming a bigger frustration and harder to get on
Speaker 1: the site than some of even the building materials. So
Speaker 1: it is pushing prices up. Um. We've heard a lot
Speaker 1: of stories about how builders are willing to pay over
Speaker 1: time if you're going to come on the weekend so
Speaker 1: that you can continue to build the homes and try
Speaker 1: to catch up, but you ultimately just don't have enough.
Speaker 1: And and frankly, from both sides, on the construction side
Speaker 1: and on the office side, workers are getting burnt out.
Speaker 1: We are working so hard at all hours because we're
Speaker 1: trying to make sense of the market, trying to forecast
Speaker 1: the market, trying to build for the market, trying to
Speaker 1: handle the whack a mole on the supply chain. And
Speaker 1: that's really what it is. It's when when one issue
Speaker 1: become solved. Now tubs are a problem. When tubs get better,
Speaker 1: then it's steel studs. When steel studs get better. Now
Speaker 1: you have nail problems, and you've got to hope that
Speaker 1: they're not all hitting at the same time. But right
Speaker 1: now it does feel like there's enough components that go
Speaker 1: into building a home that are becoming increasingly harder to
Speaker 1: get builders for them to get their hands on, and
Speaker 1: more expensive, which is just making it an absolute headache. Finally,
Speaker 1: I would say too that just on the government side,
Speaker 1: is we're looking at the time from a contract sale
Speaker 1: to a start, and historically that'd be sixty days, and
Speaker 1: now it's closer to ninety days for a bunch of
Speaker 1: different reasons. But one of them will be just a
Speaker 1: slow permitting process as the cities are in a data
Speaker 1: with requests as well. Arthur, you mentioned a bunch of
Speaker 1: potential supply shortages in components that you need to build
Speaker 1: a house. Are there idiosyncratic reasons for those supply shortages?
Speaker 1: Like would the reason that you can't get enough tubs
Speaker 1: be different to the reason that you can't get enough windows,
Speaker 1: or is it all being driven by the sort of
Speaker 1: same COVID related chaos. A lot of it is related
Speaker 1: to going back before the pandemic, builders and suppliers would
Speaker 1: have created their forecast for the next few years, and
Speaker 1: we were part of the forecasting process, and we know
Speaker 1: that it was not for thirty percent jump. It would
Speaker 1: have been for maybe a five percent jump and starts,
Speaker 1: and so everyone would have communicated that down the line, Hey,
Speaker 1: we're gonna need five percent more windows, and we're gonna
Speaker 1: need this, and we're you need that, And it seems
Speaker 1: like a lot of it just comes down to everyone
Speaker 1: was caught flat footed. No one knew this was going
Speaker 1: to happen, and now you are running into just COVID
Speaker 1: issues with um oh and Wells, COVID issues with getting
Speaker 1: items in and out of the states, with different issues.
Speaker 1: We saw for sure on the production line that this
Speaker 1: is not as big of an issue now, but if
Speaker 1: if one person gets COVID and you're in a factory,
Speaker 1: they shut it down for two weeks. But also, the
Speaker 1: truckers are in short supply, and I don't I don't
Speaker 1: think they were in as short of supply before or
Speaker 1: demand got so heightened. But what we're hearing is that
Speaker 1: that impacts two different directions. It impacts getting your raw
Speaker 1: materials to the factory, but then getting it out of
Speaker 1: the factory. You need the truckers on both ends, and
Speaker 1: so that's impacting it. So I think it becomes more
Speaker 1: of a common story. I'm sure there are more idiosyncratic
Speaker 1: things as you look at the specifics, but it is
Speaker 1: really this common theme that no one knew what to
Speaker 1: plan for. Do you see any signs of these things
Speaker 1: easy yet? I mean we're always sort of like on
Speaker 1: the lookout across all areas whether some of these bottlenecks
Speaker 1: and shortages are starting to ease. Is there any evidence
Speaker 1: of that yet? I would not say, Actually no, from
Speaker 1: our most recent survey, which was conducted last week, it
Speaker 1: actually has gotten worse. When we ask builders, are you
Speaker 1: having any supply shortages? It's actually that's become I think
Speaker 1: it's like nine percent of builders are now saying that's
Speaker 1: a huge issue compared to the slight made up number.
Speaker 1: But it's something like seven percent last month, So that's
Speaker 1: gotten worse. What I would say on the lay birth side,
Speaker 1: this is not every market, so don't take it as that,
Speaker 1: but it's definitely happening in that you have some suppliers
Speaker 1: labor and let's say like a plumbing crew or a
Speaker 1: painting crew where their owner had been through the last
Speaker 1: cycle and knew what it was like to enjoy the
Speaker 1: boom and what was like to do the bust. You know,
Speaker 1: they're getting a little bit older and they're saying, I'm
Speaker 1: gonna retire, I'm gonna sit this one out, I'm gonna
Speaker 1: I'm gonna get out of the industry. And that's causing
Speaker 1: issues where people are like, well, you can't retire because
Speaker 1: we don't even have enough crew as it is, and
Speaker 1: then you have people leaving. So I don't think that's
Speaker 1: going away anytime soon either. So one of the things
Speaker 1: that keeps coming up in the discussion of the housing
Speaker 1: market and also lumber and Allie you touched on this before,
Speaker 1: but this idea of the scarring from the Great Financial Crisis.
Speaker 1: Things were so bad that you know, people pulled back
Speaker 1: on supply for years and years and years, and we're
Speaker 1: more cautious if we get a hot market now, which
Speaker 1: clearly we have. Do you think that results in a
Speaker 1: permanent change in behavior by the housing industry or is
Speaker 1: it just a case of you know, bad things tend
Speaker 1: to lead you to be more cautious, and it takes
Speaker 1: like you're not as incentivized by a positive thing happening
Speaker 1: that one's interesting. What I would share is you basically
Speaker 1: can't be on a call with a bunch of people
Speaker 1: in the industry without them looking for the boogeyman and
Speaker 1: they think he's coming, and they think he's right behind them,
Speaker 1: And you definitely hear this constant angst of is this
Speaker 1: is sugar high? Is this too good to be true? Jeez,
Speaker 1: we're all competing for the same land. Land is getting
Speaker 1: so expensive. Um And I should say the publics are
Speaker 1: way better positioned than anyone else than any of the privates.
Speaker 1: But what we're hearing from the privates is it's grow
Speaker 1: or die if you want to compete with the publics,
Speaker 1: who are getting stronger, more powerful, who are able to
Speaker 1: get the laborers easier than anyone else. Because if you're
Speaker 1: you know, a framer, you're going to support Lenar over
Speaker 1: one of the smaller guys because he's gonna give you
Speaker 1: more consistent work. We're definitely hearing there's this you gotta
Speaker 1: do it, you gotta grow, you gotta figure out a
Speaker 1: way to make it happen. But I would say almost
Speaker 1: everyone is very spooked out about Oh we are we
Speaker 1: setting ourselves up for last cycle to look like last cycle,
Speaker 1: though the lending standards look nothing like that. I want
Speaker 1: to ask sort of like a one really big, sort
Speaker 1: of big picture questions. So like you're in the data
Speaker 1: business or a big part of what you're you do
Speaker 1: is collect data and present data to your clients. And
Speaker 1: you mentioned that when COVID hit, we had this like
Speaker 1: four to six week collapse in the housing market and
Speaker 1: then it was really the entire economy. Everything kind of
Speaker 1: went to zero in a way, and then things started
Speaker 1: picking up. And I remember like at the time, like
Speaker 1: things started picking up, and I was kind of into
Speaker 1: disbelief about the data. Like it's one thing to say like, oh,
Speaker 1: we're gonna I'm gonna be cool and data dependent, but
Speaker 1: it's like I didn't really believe it because like everyone
Speaker 1: seemed to be like in their homes and everyone seemed
Speaker 1: to be terrified, and the stock market had crashed and
Speaker 1: so forth. They just felt like deja vu all over again.
Speaker 1: And I'm curious, like, you know, like thinking back to
Speaker 1: last spring, when you saw how quickly the housing market
Speaker 1: started to rebound, how long it took, Like you know,
Speaker 1: you mentioned people always think, oh the booge mads right
Speaker 1: around the quarter, Like did people believe the data, Like,
Speaker 1: did you believe the data at first or did it
Speaker 1: take a while before people started to accept that the
Speaker 1: numbers they were seeing on their screen or other places
Speaker 1: actually reflected this improved reality. It's an important question for
Speaker 1: a whole bunch of different reasons. So the first reason
Speaker 1: it's important is if you're going to pause on land deals.
Speaker 1: From a builder's point of view, the market was slow
Speaker 1: in March, the second half of March and then through
Speaker 1: the end of April, but there were a lot of
Speaker 1: land deals that were still on pause going into May
Speaker 1: because there was this disbelief and I hate to see it.
Speaker 1: But like I said, we were doing presentations weekly. The
Speaker 1: data was turning, and we we were cautioning this could
Speaker 1: be not true. Like I remember so vividly. I remember
Speaker 1: showing a chart that one of the questions we asked
Speaker 1: is have your sales increase? In that case, it was
Speaker 1: have your sales increased month over months, sorry, week over week,
Speaker 1: And we were showing it and we were like, well, yeah,
Speaker 1: they're saying an increased week over week, but it was
Speaker 1: from this really low level, So like, don't take this
Speaker 1: as this huge shift in the market. It's just that
Speaker 1: you're not at rock bottom anymore. And I'm embarrassed to
Speaker 1: say it, but we did, like we were like, this
Speaker 1: is not happening, Like there are twenty million people out
Speaker 1: of work, the unemployment is crazy. How you no. One
Speaker 1: of my biggest regrets in looking back is if you
Speaker 1: think about Seattle. Seattle had the COVID cases earlier than
Speaker 1: the rest of the country, and I think had shut down,
Speaker 1: like Amazon sent people home before the rest of the country.
Speaker 1: And I remember Wall Street Journal they posted a story
Speaker 1: about how how Seattle had come back and how the
Speaker 1: housing market was really strong, and I remember sending it
Speaker 1: to my team, going, what are they talking about? Like
Speaker 1: the market is crushed. But our early warning sign was
Speaker 1: Seattle that said you put people in your home, and
Speaker 1: people want bigger space because now they're stuck in their
Speaker 1: home and because interest rates are rock bottom. So there
Speaker 1: were some writing on the wall that I think not
Speaker 1: just we ignored, but I think the industry ignored because
Speaker 1: we just didn't believe it was true. What would make
Speaker 1: you think that the housing market was turning now? Like,
Speaker 1: what would you be watching out for? Will depend it
Speaker 1: will depend on the market. I'm not we are starting
Speaker 1: to see that depending on where the seller had priced
Speaker 1: the home, we're sometimes seeing that the seller isn't getting
Speaker 1: full ask. This is the minority versus the norm. But
Speaker 1: this is the first time we've really seen that start
Speaker 1: to shift where it's not, of course it's going to
Speaker 1: go fifty over. You're starting to see a little bit
Speaker 1: of that bump. So I would say that's for a
Speaker 1: normal market, for relocation market. Some of those relocation buyers
Speaker 1: were able to push up those prices, and that group
Speaker 1: is finite. And at the end of the day, if
Speaker 1: you're in Las Vegas, Las Vegas incomes have not increased
Speaker 1: in the same way home prices have increased. So to me,
Speaker 1: it's when you strip away some of the COVID additional demand,
Speaker 1: how well suited are the local buyers to continue to
Speaker 1: purchase those homes. And so we're going to keep a
Speaker 1: close eye on well we're seeing because we obviously just
Speaker 1: ask builders about demand and their model traffic. We're going
Speaker 1: to check what's happening with model traffic. We're going to
Speaker 1: check clicks on a new home builder websites, will check
Speaker 1: what's happening with inventory, which inventory going up is not
Speaker 1: necessarily assigned the market slowing. It could just mean that
Speaker 1: more people are able to move now, but it would
Speaker 1: be some combination. To me, it's the early indications. We
Speaker 1: own a company that I guess we partner with a
Speaker 1: company that is able to track new home clicks online,
Speaker 1: and I think that's that was a good indicator because
Speaker 1: that was actually showing an increase. Back to Joe's question,
Speaker 1: that was showing an increase early on earlier than what
Speaker 1: we saw in contract sales. Ellie, that was that was amazing.
Speaker 1: I learned so much talking to you, and I really
Speaker 1: appreciate you coming on out lot. Thanks so much for
Speaker 1: having means and that was fantastic. Take care Ale. So Tracy,
Speaker 1: I guess, don't come back to the US. Huh Yeah,
Speaker 1: well I'm now. Well it's not like I was ever
Speaker 1: going to buy property in New York City, but I
Speaker 1: am worried that I'll never be able to afford anything.
Speaker 1: But I gotta say so. We spoke about this a
Speaker 1: lot already. But clearly this whole discussion fits into our
Speaker 1: wider supply shortage themes, this idea that everything comes back
Speaker 1: to expectations and we seem to be not that great
Speaker 1: at making forecasts. So at the beginning of COVID, everyone
Speaker 1: was freaking out. Everyone thought the housing market was going
Speaker 1: to just crash, and instead we saw it surge, and
Speaker 1: now we're dealing with the consequences of getting that be wrong.
Speaker 1: The other thing that I was thinking a lot about
Speaker 1: is just that data question and this idea that even
Speaker 1: if we start to see housing data soften, is that
Speaker 1: or slow, is that actually a sign of weakness or
Speaker 1: is that just a sign of you know, price out
Speaker 1: stripping supply in the short term. Yeah. Yeah, Like this
Speaker 1: idea that essentially like and and Ellie described herself in
Speaker 1: this boat, which is like, Okay, she's not really she
Speaker 1: doesn't want to buy a step up house right now
Speaker 1: because the market is crazy, but if there's some softening,
Speaker 1: she'll be back in kind of reminded me of like
Speaker 1: what Stinson was telling us in the lumber episode, which
Speaker 1: is like, we're probably at some sort of like new
Speaker 1: pire equilibrium such that okay, like maybe you know, the
Speaker 1: prices come down a little bit lately, but such that
Speaker 1: there is this sort of like new baseline level of
Speaker 1: demand for lumber that's going to keep prices just like
Speaker 1: to keep the market at a higher state than it
Speaker 1: was prior to all this. Yeah, that feels right to me. No,
Speaker 1: it really just feels like to your point though, like
Speaker 1: the housing story is like the some of all stories,
Speaker 1: isn't it. Like every macro thing and even microw thing
Speaker 1: that we talked about kind of was brought up in
Speaker 1: that episode in some way, whether it's the scarring, whether
Speaker 1: it's the supply chain issues, whether it's FED policy and
Speaker 1: the impact of interest rates demographics, Like that's that episode
Speaker 1: feels like the error episode everything all in one. You know,
Speaker 1: it would be fun to do, and we should ask
Speaker 1: someone at Bloomberg to do this, but do a graphic
Speaker 1: explainer where you have like a picture of a house
Speaker 1: and here are all the things that go in it,
Speaker 1: from the land to the labor of building it to
Speaker 1: individual components like lumber or bathtubs or windows and things
Speaker 1: like that, and just talk about the supply challenges or
Speaker 1: shortages for each one of those components and how they're affecting.
Speaker 1: So the next yes, I love it, Like let's get
Speaker 1: a bathtub maker on Okay, I'm serious, Like our listener,
Speaker 1: we'll love it, like we just gotta like we'll just
Speaker 1: go super micro and we'll just like let's talk about
Speaker 1: the economics of bathtubs for an hour and it will
Speaker 1: be a huge hit. I would love to do that.
Speaker 1: But this is the other thing we're sort of figuring
Speaker 1: out this year is everyone is sort of grappling with
Speaker 1: the same issues, but within that, it feels like every
Speaker 1: market is incredibly uh individual and distinct. So like, you know,
Speaker 1: sawmills are grappling with things like restrictions on Canadian lumber
Speaker 1: um and maybe semiconductors are grappling with you know, water
Speaker 1: restrictions and all these idiosyncratic things as well. Yeah. No, absolutely,
Speaker 1: it's all like it's like this, it's like compounding everything compounds.
Speaker 1: I think two episodes we need to do, So we
Speaker 1: need to do a bathtub macer episode. Just get like
Speaker 1: super micros, like let's talk about the economics of making
Speaker 1: bathtubs on an industrial scale. But actually, one other really
Speaker 1: big part of this that I don't think we've really
Speaker 1: done is we should do a truck driver episode. Oh
Speaker 1: I would love that because I think that like that's
Speaker 1: such a big, huge part of the labor market, a
Speaker 1: huge part of the economy, huge part of the supply chain.
Speaker 1: It's being disrupted by all kinds of like tech, all
Speaker 1: kinds of interesting things are There were booms and busts
Speaker 1: even on the few years leading up to COVID. So
Speaker 1: let's let's do a big trucking episode soon. Yeah, let's
Speaker 1: do that. I will confess when I was young, I
Speaker 1: always wanted to be a truck driver. So yes, I'm
Speaker 1: totally into that. Okay, cool, we'll do that. Okay, shall
Speaker 1: we leave it there? Let's leave it there? Okay. This
Speaker 1: has been another episode of the All Thoughts podcast. I'm
Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy Alloway,
Speaker 1: and I'm Joe wi Isn't All. You can follow me
Speaker 1: on Twitter at the Stalwart. And you should follow our
Speaker 1: guest on Twitter, Allie wolf She's great. She's at Ellie
Speaker 1: wolf E con Follow our producer on Twitter, Laura M. Carlson.
Speaker 1: Follow the Bloomberg head of podcast Francesco Levi at Francesca Today,
Speaker 1: and check out all of our podcasts at Bloomberg under
Speaker 1: the handle at podcasts and Alright. Be sure to check
Speaker 1: out the Odd Lots blog for Tracy. I have been
Speaker 1: writing about all this stuff, supply chain shortages, all these
Speaker 1: different kinds of things. Bloomberg dot Com slash odd lots.
Speaker 1: Thanks for listening to