WEBVTT

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Ever wonder what really happens behind the scenes

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in construction, real estate, and development?

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We pull back the curtain on the new home construction

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industry, the real estate market, and the trends

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shaping it all. Discover the stories, insights,

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and expertise behind the process of building

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a new home. Join us for Trust the Process Podcast,

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and let's build something great together. Welcome

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back to Trust the Process, the podcast where

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we talk about new home industry, real estate,

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construction, and everything in between. So today's

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kind of fun. We're mixing it up a little bit.

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Shot out a few weeks ago on our social media

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platforms, the request for questions. As we go

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about our days, obviously we work in the real

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estate industry and we are working in the builder

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industry. And so we see a lot of vendors and

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subcontractors and clients and buyers. agents

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and other people that we work with, we get a

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lot of questions. Yeah, so thought it would be

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fun to put that out to you guys and let you lead

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us in some of the questions or topics that you

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wanted to hear. So with that, we got some good

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response and so we're going to jump into some

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of these questions. Maybe if somebody else had

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the question, it's something you might be wondering

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too. So hopefully we can answer some of those.

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So we'll start with, and I just put them on note

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cards. Pull them from the replies and put them

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onto note cards for us. So we'll just start.

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I'll go ahead and let you read the question and

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then offer your reply and I'll chime in on answers

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too if there's some stuff that... But we can

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say this one's for me. It says how did you get

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so handsome? That's good stuff. That's good.

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That's good rebuttal thing and I thought I had

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the corner on the market So this question is

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and this is probably in in line with our trends

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podcast and it is is multifamily the answer to

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our housing shortage I agree that it is a really

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important piece of our housing shortage, both

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multi -family for sale and multi -family for

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rent. More passionate about multi -family for

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sale. I think that you can still get that pride

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of ownership and multi -family product is great

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for entry level and I hate to say it, exit level.

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If you're kind of, maybe that's your last home.

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Sure. You want to be able to travel and still

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be able to travel and you've had many, many homes

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and this is something that you can kind of downsize

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into. Maybe it has amenities and there's zero

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maintenance. And I think that a lot of There's

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a lot of demand in the market for everything,

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especially in fast growing cities. So do I think

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it's the answer? Do I think, I think what they're

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probably getting at is there's something called

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the missing middle. So you have super high density

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and then suburban and that's most US cities.

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We have these, cause that's, you know, housing

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policy is that a favor suburbia like we talked

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about. So we have a missing middle. Whereas when

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you go to Europe, all these. And a lot of the

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East Coast cities, a lot of these cities were

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really vibrant. It's because of that middle housing

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stock, the five story mixed use, parks, that

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type of thing, the walkability that we don't

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have here. And then you get into more low density,

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either suburban or rural. So I think it's that,

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is that missing middle the answer to our housing

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shortage? That would go a long way. I think that

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that's a pipe dream to think that we're going

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to see cities have an about face and suddenly

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allow for this missing middle. and for other

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reasons we already talked about in our zoning

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episode. It's just not politically popular to

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densify around your constituents. So you're always

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going to see a lean towards what's in the area

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already. There is, there has been a push for

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multifamily though in recent years. Years ago

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you didn't see much of it and then there were

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a few builders that pulled out in front with

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kind of taking the lead on doing that. And now

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most all, you know. Most quarters offer some

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sort for purchase. Multi -level product or multi

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-family product and so attached in some way.

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Definitely changing the number of homes that

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we can build. We can put more homes into the

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marketplace because of them. Their question was

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if it's going to turn around the shortage not

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likely but it certainly does make a better dent

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in it It does when one project can deliver 300

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doors that that same piece of land might develop

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80 345 some are delivering over the thousands

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in their door to door counts, right? Right. Yeah

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Okay next question and kind of thumb them through

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them. I should probably just randomly toss them

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at you. This one I love and we hear it all the

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time. So yes. This person did not mince words.

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HOA suck. Why do we need them? Why do we need

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them? So many people who live in an HOA or if

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they're looking for a home, that's one of the

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first things. I have to be in an HOA or I don't

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want an HOA. It's a very polarizing topic. I

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agree and I just had a spirited board meeting.

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for my own HOA for some things that I did to

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my house that weren't approved. So it's fresh

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for me. They make a lot of decisions and you

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live under some pretty strict rules. You do.

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You live with them in some ways and they kind

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of replicate. I'm from the East Coast, right?

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So these small little towns have a lot of authority.

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and they are in your life. So yes, we don't have

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HOAs in upstate New York, but we have a lot of

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little towns that if you paint your porch the

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wrong color, someone from the city or the town

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will come after you. So I was having flashbacks

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when I was fighting with my board, and I promise

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I was not the one that put that question in there,

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but they do suck, I promise you. No, it was a

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conversation. I was fighting with my board, and

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a couple of the improvements I made were... Improvements

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that everyone in my community has made the behind

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the same gates So it was it was frustrating that

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I had to justify these actions But I've never

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felt more under the thumb of an HOA than the

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last couple of weeks So this is a very apropos

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question now. Why do we need them? So it's really

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I Wish that we didn't but if we want the growth

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and we want single -family residential Which

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as much as we like to talk about multifamily

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and the missing middle Why is there a premium

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on single -family versus multi -family? That

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tells you that, yes, they're a little bit more

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expensive as it will, but they are more desirable.

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And usually it is in a multi -family as well.

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Of course, right, of course. But as long as you

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want this single -family residential lifestyle

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and you don't want to live in a apartment block

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and you don't want to live in one of these high

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-dense areas, as long as you want your little

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slice... you're going to have to probably partake

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in the HOA process because cities do not want

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to approve new development that does not have,

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especially larger scale developments, that doesn't

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have an HOA piece with it because they don't

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want the street maintenance, they don't want

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the park maintenance, they want the developer

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to take on those burdens and then they want the

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developer to hand it over to the homeowner. So

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if you have common elements, such as in las vegas

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and most suburban areas especially when the streets

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are gated but even not always uh the streets

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are private they're privately maintained streets

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that the hoa has to do slurry coats over right

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someone's got to do it they have to keep the

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gutters in in good repair they have to repair

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cracks they have to take on liability of someone

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falling on that sidewalk it doesn't fall into

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the city's jurisdiction anymore. So cities love

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HOAs and that's really that I don't feel, yes

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it's polarizing, but I do feel like a lot more

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people don't like HOAs than do like HOAs. Until

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their neighborhood starts to look a wreck and

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then you wish that there was someone governing

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it. There are probably no other mechanisms that

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would be able to enforce neighborhood standards

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that would not be an HOA, because if you give

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somebody power to do that, if you just have a

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community association that's literally just a

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neighborhood pact, you have no legal mechanism,

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so therefore your laws are just recommendations.

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So the states had to give HOAs a lot of authority.

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And trust me, when I'm fighting with the board,

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I want to be able to tell them to do what with

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you know what. But I can't because I know that

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they do have an authority over my property in

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the same way that I can't just decide to go to

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war with the city. I can't just decide to stop

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paying my property taxes. The city has rights

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over my property and the state has rights over

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that. I mean, there's always these layers and

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it's just when you live in an HOA, you have that

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one extra layer. So. That's why we need them

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to continue to grow. Without that, I think our

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property taxes would be significantly higher.

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And I think you would see, although it's very

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sludgy to get development approved, I think it

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would be even slower. And I think you'd probably

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see caps on the amount of permits issued because

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they'd say we have to slow down our growth because

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we're not going to be able to maintain this.

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And it's all fun and games when the cities are

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growing. But when the cities are built out, these

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East Coast suburbs that were post -war suburbs

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in Maryland and Virginia, those were post -war.

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So that was 50s, you know, late. 40s, 50s, those

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are now 75 years old. A lot of those suburbs,

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they are not sustainable. They're almost always

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broke. The taxes are through the roof. They usually

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are in charge of their own school districts.

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So the schools are sucking out a lot of the funding

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and road maintenance, snow removal, things like

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that. It just becomes untenable. So you. because

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they're built out and they're not getting permit

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fees. The housing stock is old, so how much can

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you jack the property taxes up on residents who

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have been there for 40 years? There's only so

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much you can do to increase revenue, but your

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expenses are going up every single year. the

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west coast, the west of the Mississippi and the

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southeast, basically the Sunbelt, cities were

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smart in the 90s from a city preservation standpoint

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to say we want to preserve the books of the city,

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to really mandate HOAs, which is why you see

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a sharp increase in HOAs in the late 90s and

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through the 2000s and into today. So that's why

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we need them. And trust me, I don't like them

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either. I resent the authority that they have,

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but at the end of the day, how do you give them

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any teeth? You have to give them that kind of

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legally mandated authority or state prescribed

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authority. Yep. But it was a good question. So

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thank you. Yes. And it's a good topic. It's an

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interesting topic and one that isn't going anywhere.

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It's funny how it feathers into development so

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much. I mean, you would think, and I get it,

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of course, developers have a big part with HOA,

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but it really isn't. It's not just a developer

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going, do we want an HOA here? Yes or no? It's

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not market driven either. So you would think

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that because there's so many HOAs, it must be

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market driven. People must... Pursue that people

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must favor a choice. It's not that's not really

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the case So I think it's more it's a it's the

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city and you know local governments with their

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finger on the scale to say well Everything's

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gonna have an HOA Okay next oh I don't I don't

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like this one, but I do feel like it's It's one

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that we should probably address. Is it another

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compliment to me? They all are. Are you that

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jealous? That's on the back of each of them.

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Yeah, this is a good one. This is a tough one

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and a little painful for you to read because

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it comes right at you or it seems to come right

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at builders as a whole. And they didn't have

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to say that about my hair. Don't read that part.

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It says, why are builders so greedy, especially

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with upgrades? You jerk. No, I get what they're

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saying. I think that especially this, I feel

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like this probably came from a real estate agent,

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because agents are many times on the cutting

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edge of price increases and they're delivering

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that news to their buyers if they're bringing

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a buyer to a builder. It looks like greed, and

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some of it is. Most builders are publicly traded.

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Most builders that build any volume of homes

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are publicly traded. So they have growth as their

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mandate, not just doing business. They have to

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grow, meaning their profits. They don't necessarily

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have to put more homes on the ground. They have

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to grow their profits. So they get there through

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many different, you know, vehicles or modalities.

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So they can either build more homes, which we

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know the constraints on that land and the approval

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of the time, or they can charge more for homes

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or upsell things that are considered extras,

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such as upgrades. So it's not that they're necessarily

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being greedy, but at the end of the day, there

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are no charitable home builders except Habitat

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for Humanity. So every builder has a profit.

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It's a for -profit industry. It's a for -profit

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industry. And you can argue what someone's mission

00:12:34.179 --> 00:12:36.440
is, but at the end of the day, the mission of

00:12:36.440 --> 00:12:38.679
any company is to... increase profits for their

00:12:38.679 --> 00:12:40.399
shareholders. That is just their mission, whether

00:12:40.399 --> 00:12:42.419
their shareholders are publicly traded shareholders

00:12:42.419 --> 00:12:45.960
or the owners of the company. Now the owners

00:12:45.960 --> 00:12:47.580
within the company can have greater missions

00:12:47.580 --> 00:12:50.159
and say, this is my overall goal, but the company

00:12:50.159 --> 00:12:52.899
itself, that is its goal, that is its purpose.

00:12:53.080 --> 00:12:54.960
So it's always going to preserve that. So that

00:12:54.960 --> 00:12:57.360
being said, the larger a builder gets, the more

00:12:57.360 --> 00:12:59.659
disconnected from their buyer pool that the executives

00:12:59.659 --> 00:13:02.700
and their decision makers are. In my opinion,

00:13:02.820 --> 00:13:05.179
I don't want to be inflammatory, but they feel

00:13:05.179 --> 00:13:07.919
more disconnected. So it's easier to say, oh,

00:13:07.960 --> 00:13:11.580
we can make another 10 % on this project if we

00:13:11.580 --> 00:13:13.879
dial down what's included and make people pay

00:13:13.879 --> 00:13:15.440
extra. And because they're doing it through us,

00:13:15.700 --> 00:13:17.279
we can control the pricing because you can't

00:13:17.279 --> 00:13:19.980
shop it. You can't shop how much darker cabinets

00:13:19.980 --> 00:13:21.799
are versus lighter cabinets because you're here.

00:13:21.940 --> 00:13:24.820
You're on our playground. So you play by our

00:13:24.820 --> 00:13:28.200
rules. So I will concede that builders are greedy.

00:13:28.379 --> 00:13:30.659
I will concede that it's a high profit margin

00:13:30.659 --> 00:13:33.740
business, but it is a business with a very high

00:13:33.740 --> 00:13:36.779
barrier to entry and a lot of risk and downside

00:13:36.779 --> 00:13:39.159
to it as well. So it's easy for me to say this

00:13:39.159 --> 00:13:41.740
now, but what if things change in the next three

00:13:41.740 --> 00:13:43.720
to five years and you say, well, I'm glad we

00:13:43.720 --> 00:13:46.799
had that arsenal in our tool chest because we

00:13:46.799 --> 00:13:49.000
were able to weather these storms because we

00:13:49.000 --> 00:13:52.480
were able to increase margins on previous projects

00:13:52.480 --> 00:13:55.600
and weather the storm. It's hard because at the

00:13:55.600 --> 00:13:59.399
same time, you're creating, you can argue, housing

00:13:59.399 --> 00:14:01.659
is a human right for a lot of people. I mean,

00:14:01.700 --> 00:14:03.840
it's definitely a human necessity. So you're

00:14:03.840 --> 00:14:06.919
creating something that's deeply needed. So I

00:14:06.919 --> 00:14:08.740
think that there's a resentment that comes with

00:14:08.740 --> 00:14:10.600
that, just like you might present oil companies,

00:14:10.679 --> 00:14:12.899
because you feel like, well, we need them. We

00:14:12.899 --> 00:14:16.100
need gas. We need gasoline for our car, and you're

00:14:16.100 --> 00:14:17.659
charging this, and your profits for this, and

00:14:17.659 --> 00:14:20.350
you're right. Yes. I get it, they're making something

00:14:20.350 --> 00:14:23.509
that is a necessity, but they are a business

00:14:23.509 --> 00:14:26.629
and it's not a builder's responsibility. I can

00:14:26.629 --> 00:14:28.590
have a mission in my life that I would love to

00:14:28.590 --> 00:14:30.269
put more homes into the ground or change the

00:14:30.269 --> 00:14:32.149
way home building is done, but at the end of

00:14:32.149 --> 00:14:35.149
the day, it's not my responsibility to make the

00:14:35.149 --> 00:14:39.409
real estate market affordable or make it in some

00:14:39.409 --> 00:14:41.230
way better. My responsibility is to my company

00:14:41.230 --> 00:14:43.610
and my company's responsibility is to stay into

00:14:43.610 --> 00:14:48.480
this and to stay a company. So I agree. Yes,

00:14:48.600 --> 00:14:51.190
but I would also argue that some of that You

00:14:51.190 --> 00:14:53.250
know, if you're buying a home, let's just compare

00:14:53.250 --> 00:14:55.389
it to a resale home that isn't anything that

00:14:55.389 --> 00:14:57.029
you want. You have to go in and put in the cupboard.

00:14:57.110 --> 00:14:59.590
So now you have your demo costs, or even if they

00:14:59.590 --> 00:15:01.889
were to buy a home with you, one of our homes

00:15:01.889 --> 00:15:03.590
that's completely finished and it's the wrong

00:15:03.590 --> 00:15:05.710
cabinet color, let's just use that as an example,

00:15:06.009 --> 00:15:07.710
they've got to go in, they've got to do the demo,

00:15:07.750 --> 00:15:09.450
they've got to hire the labor, they have to order

00:15:09.450 --> 00:15:11.570
the product, they have to, so all of those things,

00:15:12.129 --> 00:15:15.429
simplicity in the E's that, sure, sure. So it

00:15:15.429 --> 00:15:17.889
is a real cost, it's a hard cost, it's an absolute

00:15:17.889 --> 00:15:19.750
cost, and it's something that has to be factored

00:15:19.750 --> 00:15:25.919
in either way. So it's a convenience. Green or

00:15:25.919 --> 00:15:28.940
convenience? I don't know, but there is a fine

00:15:28.940 --> 00:15:31.220
walk between. And I think that another thing

00:15:31.220 --> 00:15:34.059
that makes us look greedier is that new homes

00:15:34.059 --> 00:15:37.090
carry... around a 25 % premium over resale homes.

00:15:37.190 --> 00:15:39.830
That's just the market speaking. I can't dictate

00:15:39.830 --> 00:15:42.629
the market, good or bad. So if my homes carry

00:15:42.629 --> 00:15:45.169
an extra 25 % margin or even your average production

00:15:45.169 --> 00:15:48.429
home carries a 25 % margin over a 15 -year -old

00:15:48.429 --> 00:15:51.850
home, it looks like the builder is charging $750

00:15:51.850 --> 00:15:54.139
,000 for the same thing you could get. as a resale

00:15:54.139 --> 00:15:57.500
for $625 ,000 or $600 ,000, but what you're not

00:15:57.500 --> 00:15:58.960
factoring into the equation is that all those

00:15:58.960 --> 00:16:00.419
components are near the end of their functional

00:16:00.419 --> 00:16:02.480
life. All the expensive things are coming up

00:16:02.480 --> 00:16:04.620
due, or if it's a 25 -year -old home, all your

00:16:04.620 --> 00:16:07.100
windows need to be replaced, and components,

00:16:07.659 --> 00:16:09.580
or the floor plans are dated, the market value

00:16:09.580 --> 00:16:12.779
is there at about a 25 % premium. So I think

00:16:12.779 --> 00:16:15.039
that's part of it as well. It's that, yes, we

00:16:15.039 --> 00:16:17.679
are here to maximize our profits, and overall,

00:16:17.759 --> 00:16:19.399
you're good at your business. I feel like if

00:16:19.399 --> 00:16:21.220
you have a mission that's greater than that,

00:16:21.240 --> 00:16:23.000
because that's the passion that people can feel.

00:16:22.830 --> 00:16:26.830
but ultimately you profits have to come first

00:16:26.830 --> 00:16:28.850
otherwise you can't do the project for charity

00:16:28.850 --> 00:16:30.450
right I mean you just can't otherwise I would

00:16:30.450 --> 00:16:36.389
open a charity and I think that's part of it

00:16:36.389 --> 00:16:39.210
it's multifaceted okay but yes are we greedy

00:16:39.210 --> 00:16:41.309
with our upgrades sometimes yes we have to own

00:16:41.309 --> 00:16:44.210
that too you want to have you know we're at dirt

00:16:44.210 --> 00:16:46.169
or at slab and we're at framing and you want

00:16:46.169 --> 00:16:47.750
to add this this and this and well we know we

00:16:47.750 --> 00:16:50.570
have to own that more complex build and we have

00:16:50.570 --> 00:16:53.440
to source it all and we have to now we're customizing

00:16:53.440 --> 00:16:56.019
it for you so if you bow on us and we only get

00:16:56.019 --> 00:16:58.659
$20 ,000 of your deposit we have to maybe take

00:16:58.659 --> 00:17:01.259
a $100 ,000 hit on that house so we have to build

00:17:01.259 --> 00:17:03.700
in that risk as well. I actually had that happen

00:17:03.700 --> 00:17:10.200
somebody put a red quartz throughout the entire

00:17:10.200 --> 00:17:13.180
house. red quartz countertops and then the home

00:17:13.180 --> 00:17:14.740
fell through and they didn't weren't able to

00:17:14.740 --> 00:17:16.539
buy it and so then we had to remarket that we

00:17:16.539 --> 00:17:18.519
actually in that case ended up taking it out

00:17:18.519 --> 00:17:22.279
we did but it was that kind of oh my gosh now

00:17:22.279 --> 00:17:24.119
we're stuck with this and sometimes somebody

00:17:24.119 --> 00:17:25.700
will go to the design studio and you're doing

00:17:25.700 --> 00:17:29.099
exactly that oh gosh i really hope they get this

00:17:29.099 --> 00:17:33.140
house yeah yeah so so there is a risk to be associated

00:17:33.140 --> 00:17:37.960
i have a lot of that too okay so next question

00:17:40.920 --> 00:17:42.980
Thanks for tuning into the Press the Process

00:17:42.980 --> 00:17:46.079
podcast. Make sure to follow us on Spotify to

00:17:46.079 --> 00:17:48.480
stay in the loop with the latest insights, project

00:17:48.480 --> 00:17:51.039
updates, and everything in between. See you next

00:17:51.039 --> 00:18:10.849
time. Next question We kind of covered so oh,

00:18:10.849 --> 00:18:12.710
here's a good one this one actually came up for

00:18:12.710 --> 00:18:16.150
us this week in a client conversation So that

00:18:16.150 --> 00:18:20.670
is oh, yeah This is really good, and I think

00:18:20.670 --> 00:18:23.890
this is a developing situation This is what do

00:18:23.890 --> 00:18:26.069
you think the NAR settlement means for builders

00:18:26.069 --> 00:18:29.690
this could probably be an entire episode? But

00:18:29.690 --> 00:18:31.809
I agree no yeah, it probably could but they're

00:18:31.809 --> 00:18:33.130
probably there's probably so much content out

00:18:33.130 --> 00:18:35.549
there for this But for anyone who's not following

00:18:35.549 --> 00:18:37.869
it, that's maybe in our audience. Essentially,

00:18:38.710 --> 00:18:42.630
the class action lawsuit judgment came down in

00:18:42.630 --> 00:18:47.029
August that said listing brokers can no longer

00:18:47.029 --> 00:18:50.349
advertise buyer -agent commissions, and buyer's

00:18:50.349 --> 00:18:52.049
agents have to negotiate directly with their

00:18:52.049 --> 00:18:54.529
buyer how much they're going to charge. And you

00:18:54.529 --> 00:18:56.809
can ask for that as part of your contract when

00:18:56.809 --> 00:18:59.109
you present your offer. But every offer is going

00:18:59.109 --> 00:19:01.390
to have unique compensation. So that buyer might

00:19:01.390 --> 00:19:04.819
be working for 1 % or 2 % of the buyer's agent,

00:19:04.960 --> 00:19:07.380
I mean. So they might ask for these varying levels

00:19:07.380 --> 00:19:09.380
of commission that is going to affect the offer.

00:19:10.299 --> 00:19:12.200
So when you're a developer, you're a seller more

00:19:12.200 --> 00:19:13.819
than anything, right? I mean, really, I have

00:19:13.819 --> 00:19:16.359
to sell X number of homes this year and next

00:19:16.359 --> 00:19:18.680
year and hopefully for many years to come. So

00:19:18.680 --> 00:19:22.900
I have a policy in place that I have a set number

00:19:22.900 --> 00:19:24.839
that I'm willing to give to someone who brings

00:19:24.839 --> 00:19:28.000
me a buyer. And what I'm doing is I'm rolling

00:19:28.000 --> 00:19:31.460
that into one larger percentage and then the

00:19:31.460 --> 00:19:35.160
buyer let's just call it five percent uh the

00:19:35.160 --> 00:19:36.880
buyer can have that discussion with their agent

00:19:36.880 --> 00:19:38.980
to say hey can we keep three percent of this

00:19:38.980 --> 00:19:41.119
to pay for our closing costs and you have two

00:19:41.119 --> 00:19:44.140
percent compensation that's a conversation between

00:19:44.140 --> 00:19:47.380
them and the buyer the buyer's agent so i am

00:19:47.380 --> 00:19:49.779
not privy to that at all i don't care how it

00:19:49.779 --> 00:19:52.720
goes because i've conceded to this dollar amount

00:19:52.720 --> 00:19:54.500
i was used to paying commissions anyway so i've

00:19:54.500 --> 00:19:56.779
conceded to this dollar amount this percentage

00:19:56.779 --> 00:19:58.559
and it's per house depending on how desirable

00:19:58.559 --> 00:20:01.190
i think the home is or neighborhood So there's

00:20:01.190 --> 00:20:02.769
one neighborhood that I just dialed it up an

00:20:02.769 --> 00:20:04.289
extra percent across the board because we have

00:20:04.289 --> 00:20:06.670
a lot of homes to get rid of in there and it's

00:20:06.670 --> 00:20:08.750
a slow -removing market and I want to get some

00:20:08.750 --> 00:20:10.950
of those off my book so I feel that that's a

00:20:10.950 --> 00:20:14.390
good enticing way for me to drive traffic. So

00:20:14.390 --> 00:20:16.269
I think it's overall a good thing. I think that

00:20:16.269 --> 00:20:18.529
it's forcing buyer's agents to be more transparent.

00:20:19.089 --> 00:20:20.990
It's allowing sellers a lot more flexibility.

00:20:21.789 --> 00:20:24.509
So you're seeing that kind of maybe a not -so

00:20:24.509 --> 00:20:27.349
-good offer is matched with a not -so -good compensation

00:20:27.349 --> 00:20:29.450
because that buyer's agent is bringing you a

00:20:29.450 --> 00:20:31.609
non -phenomenal. As a buyer, you could probably

00:20:31.609 --> 00:20:33.789
get walking out on the street and find that kind

00:20:33.789 --> 00:20:36.369
of buyer. So I like that it's more tied to the

00:20:36.369 --> 00:20:40.730
other terms of the offer. So I think for builders,

00:20:41.089 --> 00:20:42.809
I don't you know, most builders are gonna have

00:20:42.809 --> 00:20:44.730
to come up with some sort of policy and I'm small

00:20:44.730 --> 00:20:46.910
So I can't imagine, you know, these other larger

00:20:46.910 --> 00:20:48.710
builders just said no This is just what we're

00:20:48.710 --> 00:20:50.630
offering out. So I don't think it affects builders

00:20:50.630 --> 00:20:52.269
that much but it is putting downward pressure

00:20:52.269 --> 00:20:56.509
on commissions I feel so I think if I can Still

00:20:56.509 --> 00:20:59.210
have the same amount of traffic or when I keep

00:20:59.210 --> 00:21:02.549
my rates Normal that I'm willing to pay out that

00:21:02.549 --> 00:21:04.170
will maybe drive traffic because everyone around

00:21:04.170 --> 00:21:06.759
me is sure bringing home, holding down their

00:21:06.759 --> 00:21:09.640
rates that they're paying. And when it was first

00:21:09.640 --> 00:21:11.660
announced or when the settlement first came down

00:21:11.660 --> 00:21:14.019
in, I believe it was July of 2004. Yeah, July

00:21:14.019 --> 00:21:17.880
implemented by August, yeah. I think there was

00:21:17.880 --> 00:21:19.940
a fear that surrounded it and everybody kind

00:21:19.940 --> 00:21:21.619
of went into a panic. Builder's World wasn't

00:21:21.619 --> 00:21:24.519
sure how it would affect them on that side. Sellers,

00:21:24.720 --> 00:21:26.400
agents, listing agents, all of that. Everybody

00:21:26.400 --> 00:21:30.339
kind of had a little moment, if you will. But

00:21:30.339 --> 00:21:32.500
overall, I think it's been a pretty non -issue.

00:21:32.559 --> 00:21:36.779
I mean, I agree that it's... causes or it forces

00:21:36.779 --> 00:21:39.160
agents to be more transparent. It's a conversation

00:21:39.160 --> 00:21:41.220
that wasn't being had before, that was being

00:21:41.220 --> 00:21:44.259
had in somewhat, I don't want to say shady, but

00:21:44.259 --> 00:21:48.859
it just wasn't in a pure light. So I think it

00:21:48.859 --> 00:21:51.079
just brings that to the forefront. Commissions

00:21:51.079 --> 00:21:53.880
are real. It's part of the real estate industry

00:21:53.880 --> 00:21:56.519
and part of how homes are transacted. And so

00:21:56.519 --> 00:21:59.759
having that as a forefront conversation with

00:21:59.759 --> 00:22:04.279
your buyer or seller I think is is a value add

00:22:04.279 --> 00:22:06.359
to them and to the whole experience and it creates

00:22:06.359 --> 00:22:08.539
a more professional environment for the industry

00:22:08.539 --> 00:22:10.759
as a whole. I think it makes it more competitive.

00:22:11.299 --> 00:22:12.579
Agreed. So anytime you have more competition,

00:22:12.700 --> 00:22:14.400
I think you have better outcomes. Yeah. It might

00:22:14.400 --> 00:22:16.059
be bumpy for a little while in the beginning,

00:22:16.220 --> 00:22:17.539
but I think ultimately it will lead to better

00:22:17.539 --> 00:22:19.500
outcomes. But don't you think that a lot of the

00:22:19.500 --> 00:22:21.519
panic that was, I don't even want to call it

00:22:21.519 --> 00:22:24.759
panic, but a lot of the anxiety that was created

00:22:24.759 --> 00:22:27.880
by that. Yes. I think, do you feel like you've

00:22:27.880 --> 00:22:30.700
seen? Yeah, I think it's subsided. I think that

00:22:30.700 --> 00:22:33.309
it's, the real estate is a high. turnover business

00:22:33.309 --> 00:22:36.369
anyway, so I feel that there's maybe people that

00:22:36.369 --> 00:22:37.730
were on the fence to get out of the industry

00:22:37.730 --> 00:22:39.089
and maybe that forced them out of the industry.

00:22:39.250 --> 00:22:40.390
There are people who would have gotten in but

00:22:40.390 --> 00:22:41.890
didn't because they heard about the terminal

00:22:41.890 --> 00:22:44.210
stuff. Or think it's easy. It's easy to get into

00:22:44.210 --> 00:22:47.410
real estate, but if you don't have all of those

00:22:47.410 --> 00:22:49.230
pieces in place, you're just not going to survive

00:22:49.230 --> 00:22:51.690
it. So it made it more complicated, but I think

00:22:51.690 --> 00:22:53.170
it's a good thing. I agree. I think it will leave

00:22:53.170 --> 00:22:55.190
better agents on the table. I agree. I agree.

00:22:55.480 --> 00:23:03.319
Good question, you know who you are. Next one,

00:23:03.799 --> 00:23:07.789
let's talk about... This one's a little close

00:23:07.789 --> 00:23:10.690
to my heart. I love that one. So yeah, let's

00:23:10.690 --> 00:23:12.930
talk about design. What do you think the future

00:23:12.930 --> 00:23:16.009
of design is? So there's a couple of, I mean,

00:23:16.170 --> 00:23:17.569
this could be home design. I'm just going to

00:23:17.569 --> 00:23:18.930
assume they're talking about everything. Yeah,

00:23:18.990 --> 00:23:22.210
didn't clarify what exactly. So it could be any.

00:23:22.329 --> 00:23:24.750
It could be interior design. It could be functional

00:23:24.750 --> 00:23:27.470
design. Sure. So outside in, I think. Community

00:23:27.470 --> 00:23:29.950
design. Oh, community design. I would love to

00:23:29.950 --> 00:23:32.049
think maybe we see more mixed use. I would love

00:23:32.049 --> 00:23:34.470
to think we have. more walkability but i don't

00:23:34.470 --> 00:23:36.190
know if that's if that's a pipe dream or not

00:23:36.190 --> 00:23:39.750
so uh outside in i think i think there will be

00:23:39.750 --> 00:23:42.289
architecture and design is going to be informed

00:23:42.289 --> 00:23:45.150
by building costs because it is to this day because

00:23:45.150 --> 00:23:47.089
at the end of the day like we said the majority

00:23:47.089 --> 00:23:50.730
of new doors created are from production builders

00:23:50.730 --> 00:23:53.970
so they are penny pinchers and bean counters

00:23:53.970 --> 00:23:57.430
so the extra eve embellishments and things that

00:23:57.470 --> 00:24:00.009
you may have seen in the 90s and early 2000s

00:24:00.009 --> 00:24:02.309
when margins were there to support that, and

00:24:02.309 --> 00:24:05.490
there was more competition back to our, you know,

00:24:06.130 --> 00:24:09.490
that's the other kind of C word, the competition,

00:24:11.190 --> 00:24:13.309
that home building is so much more consolidated

00:24:13.309 --> 00:24:15.049
now, so home builders don't have to do that.

00:24:15.069 --> 00:24:17.829
In the most consolidated markets, for the heck

00:24:17.829 --> 00:24:19.049
of a better word, the homes are the ugliest,

00:24:19.049 --> 00:24:22.130
in my opinion. If you have only five or six publicly

00:24:22.130 --> 00:24:24.410
traded builders that are creating inventory,

00:24:24.730 --> 00:24:28.019
they're the... the pressure is not there to make

00:24:28.019 --> 00:24:29.519
a product that really stands out, especially

00:24:29.519 --> 00:24:31.859
when you're in a housing shortage. So I think

00:24:31.859 --> 00:24:34.680
from the outside in, we'll see cost informing

00:24:34.680 --> 00:24:37.380
a lot of exterior design, simple roof lines,

00:24:37.799 --> 00:24:39.740
a lot of simple footprints that are probably

00:24:39.740 --> 00:24:42.740
too storied to capture land and capture, you

00:24:42.740 --> 00:24:45.000
know, the economies of the building up versus

00:24:45.000 --> 00:24:48.480
building out. A lot of vertical three -story

00:24:48.480 --> 00:24:50.640
to get a 19 on a square foot home and a footprint

00:24:50.640 --> 00:24:53.319
that may have only been a 1200. So we're seeing

00:24:53.319 --> 00:24:55.680
kind of I think those things in form design and

00:24:55.680 --> 00:24:57.319
then builders are doing their best to work within

00:24:57.319 --> 00:25:02.440
those constraints. And then going inside with

00:25:02.440 --> 00:25:05.579
floor plans, I think that the era of the purely

00:25:05.579 --> 00:25:08.099
open floor plan might be drawing to a close.

00:25:08.220 --> 00:25:09.900
I think you might start seeing, especially in

00:25:09.900 --> 00:25:11.599
your larger homes, I think you're going to start

00:25:11.599 --> 00:25:13.180
seeing a little bit more room division again.

00:25:13.470 --> 00:25:15.609
And I've read some blogs and that's some of that

00:25:15.609 --> 00:25:18.210
secondhand information but I'm already feeling

00:25:18.210 --> 00:25:20.849
it from buyers and they're wanting those extra

00:25:20.849 --> 00:25:22.849
spaces, they're wanting those flex rooms where

00:25:22.849 --> 00:25:25.930
they can have pool tables or bars or offices.

00:25:25.930 --> 00:25:27.490
Right, right. Still like the great room. Everybody

00:25:27.490 --> 00:25:29.089
still loves the great room concept. I think the

00:25:29.089 --> 00:25:30.890
great room concept will... But I think additional,

00:25:30.930 --> 00:25:32.730
kind of going back to that formal living or a

00:25:32.730 --> 00:25:34.849
den or a family room. I think those kind of third

00:25:34.849 --> 00:25:36.049
spaces that... So you've got the great room and

00:25:36.049 --> 00:25:38.750
then a separate... Yes, exactly. Those semi -private

00:25:38.750 --> 00:25:41.309
spaces. So I think we're going to see that and

00:25:41.309 --> 00:25:44.089
I think we're going to see... the emphasis on

00:25:44.089 --> 00:25:47.609
large kitchens still being ever -present. And

00:25:47.609 --> 00:25:50.470
I think in the luxury homes, we'll see now more

00:25:50.470 --> 00:25:52.470
than ever the prep kitchens and the mess kitchens.

00:25:55.569 --> 00:25:58.789
We've done some of that and it's been very, very

00:25:58.789 --> 00:26:01.230
well received. So I think we're going to see

00:26:01.230 --> 00:26:04.099
a lot of that. large pantries, we're going to

00:26:04.099 --> 00:26:07.019
see the Costco door maybe, it's a fire nightmare,

00:26:07.539 --> 00:26:09.160
but there are these little doors that go right

00:26:09.160 --> 00:26:11.259
from the garage into the pantry and it's usually

00:26:11.259 --> 00:26:13.839
a small door that only a kid could get through.

00:26:14.700 --> 00:26:17.079
Yes, it's kind of a dreamy thought. They call

00:26:17.079 --> 00:26:19.380
it a Costco door. You put your big water case

00:26:19.380 --> 00:26:21.859
or all those things right into the pantry. Yeah,

00:26:22.019 --> 00:26:23.319
so I think we're going to see the kind of those

00:26:23.319 --> 00:26:25.380
little things in new home construction. I think

00:26:25.380 --> 00:26:27.460
we're going to see an additional push towards

00:26:27.460 --> 00:26:31.250
energy efficiency so you may see. Windows deleted

00:26:31.250 --> 00:26:33.549
and things, you know, those are all perforations

00:26:33.549 --> 00:26:36.309
in your home So you're gonna see that in the

00:26:36.309 --> 00:26:38.490
more middle market homes I think as you go into

00:26:38.490 --> 00:26:40.349
the luxury the indoor outdoor living at least

00:26:40.349 --> 00:26:42.549
in the Sun Valley is really emphasized I think

00:26:42.549 --> 00:26:44.990
that's that's not going anywhere getting bigger.

00:26:45.049 --> 00:26:47.250
I agree in the luxury stuff The windows are only

00:26:47.250 --> 00:26:48.529
getting bigger. The doors are getting bigger.

00:26:48.529 --> 00:26:50.730
The window walls are getting bigger So I think

00:26:50.730 --> 00:26:52.970
that's kind of what we'll continue to see I think

00:26:52.970 --> 00:26:55.150
volume ceilings are going to be here to stay

00:26:55.150 --> 00:26:58.970
but that being said I think the The era of that

00:26:58.970 --> 00:27:01.490
great room. It's just one big room with a 14

00:27:01.490 --> 00:27:03.569
foot ceiling on a single story I think you're

00:27:03.569 --> 00:27:05.069
gonna start to see some more second and third

00:27:05.069 --> 00:27:06.990
spaces in those homes and in those floor plans

00:27:06.990 --> 00:27:10.349
that will give people kind of Refuge away from

00:27:10.349 --> 00:27:13.529
those big hard to hard to climatize hard to control

00:27:13.529 --> 00:27:16.390
rooms. So and then in terms of aesthetics I think

00:27:16.390 --> 00:27:19.930
we're in an era of earth tones and beiges and

00:27:19.930 --> 00:27:21.690
creams and I think we're getting away from the

00:27:21.690 --> 00:27:25.890
stark shiny finishes of the middle 2010s and

00:27:25.890 --> 00:27:28.569
the moderns. Do you agree? I do. That I agree

00:27:28.569 --> 00:27:30.450
with, yes. And that we definitely know is happening.

00:27:30.809 --> 00:27:33.470
So the warmer tones, earthy tones, all of that

00:27:33.470 --> 00:27:36.309
is really... Although we are seeing in design

00:27:36.309 --> 00:27:39.000
right now some... some big pops of color that

00:27:39.000 --> 00:27:41.660
are happening in the kitchen so kind of the brighter

00:27:41.660 --> 00:27:44.940
count you know I just saw one red cabinetry yes

00:27:44.940 --> 00:27:47.200
which I don't have anything against red it was

00:27:47.200 --> 00:27:49.380
just a lot in that particular home and it was

00:27:49.380 --> 00:27:53.339
stitched remember oh my gosh that leather bridge

00:27:53.339 --> 00:27:56.460
that we saw was so pretty but so even in cabinetry

00:27:56.460 --> 00:27:58.559
I saw one the other day that was kind of that

00:27:58.559 --> 00:28:02.660
you know the blue that sort of powdery blue countertop

00:28:02.660 --> 00:28:06.170
or cabinet which so we're seeing a lot of colors

00:28:06.170 --> 00:28:08.589
popping back in so while most it's still a neutral

00:28:08.589 --> 00:28:10.369
it's still going to be those earthy tones you're

00:28:10.369 --> 00:28:13.690
getting into the away from the cold stark colors

00:28:13.690 --> 00:28:16.630
right into the warmer tones and I think we'll

00:28:16.630 --> 00:28:19.349
see more color coming into kitchens moving forward

00:28:19.349 --> 00:28:22.609
colored cabinetry I agree you know still the

00:28:22.609 --> 00:28:24.630
white countertops that's still the clean fresh

00:28:24.630 --> 00:28:27.660
look that most people are going towards so But

00:28:27.660 --> 00:28:30.859
agreed as far as colors. Mm -hmm. Yeah, these

00:28:30.859 --> 00:28:32.299
are the things that it's important to know as

00:28:32.299 --> 00:28:34.839
a developer It is and as you're a builder, you

00:28:34.839 --> 00:28:37.079
know, you're putting we choose the selection

00:28:37.079 --> 00:28:40.299
Every tile has to be selected has to be chosen

00:28:40.299 --> 00:28:42.200
has to be decided and it has to be something

00:28:42.200 --> 00:28:44.539
that's neutral and relevant market and on trend

00:28:44.539 --> 00:28:47.500
exactly with Warrantable you don't put a product

00:28:47.500 --> 00:28:49.440
that's a nightmare to warranty. Good point. Good

00:28:49.440 --> 00:28:52.460
point. Yeah, so That was a good design trends

00:28:52.460 --> 00:28:54.940
are yeah design trends are a big part of it and

00:28:54.940 --> 00:28:56.859
especially as you backed it out into even just

00:28:56.859 --> 00:29:00.740
the exterior design. So, love it. Another good

00:29:00.740 --> 00:29:03.259
one. All right, so I have a couple more here.

00:29:03.380 --> 00:29:04.839
You have time for a couple more? I do, yeah,

00:29:04.960 --> 00:29:09.839
I do. Okay. Ooh, here's one. Ooh, that's a good

00:29:09.839 --> 00:29:13.900
one. That is a good one, AI, and this is something

00:29:13.900 --> 00:29:17.059
in the marketing world that I am up against a

00:29:17.059 --> 00:29:20.339
lot and a topic that is forefront for myself

00:29:20.339 --> 00:29:22.099
and everybody else in the marketing industry.

00:29:22.519 --> 00:29:25.799
I think we're all thinking. This question is

00:29:25.799 --> 00:29:28.240
asking, what do you think AI can do for building?

00:29:28.859 --> 00:29:30.799
I'm going to sub out building with developing

00:29:30.799 --> 00:29:33.200
because building is you could be a project management

00:29:33.200 --> 00:29:37.650
company, you could be doing whatever. constructing

00:29:37.650 --> 00:29:39.750
of the home. So to answer the direct question,

00:29:39.750 --> 00:29:43.289
I think it's going to be challenging to see AI

00:29:43.289 --> 00:29:47.190
improve scheduling and unless you're a really

00:29:47.190 --> 00:29:50.750
well -oiled machine, but construction is a messy,

00:29:51.230 --> 00:29:54.190
think on the fly problem solving in the moment,

00:29:54.329 --> 00:29:57.130
a lot of physical, tangible things that I don't

00:29:57.130 --> 00:29:59.849
think AI is going to do much for the building

00:29:59.849 --> 00:30:02.710
industry. I think the developing industry in

00:30:02.710 --> 00:30:05.529
terms of being a developer, I think maybe some

00:30:05.529 --> 00:30:09.210
of our economic analysis we have one multifamily

00:30:09.210 --> 00:30:11.490
project that's needing an economist to kind of

00:30:11.490 --> 00:30:14.069
give us a pro forma because it's so many units

00:30:14.069 --> 00:30:15.829
and so many doors in order to get the funding

00:30:15.829 --> 00:30:17.910
for it from the banks are going they're wanting

00:30:17.910 --> 00:30:20.329
to see an economist actually sign off on sure

00:30:20.329 --> 00:30:22.869
is it a viable project some of that thought work

00:30:22.869 --> 00:30:25.849
you might see some of the analysis or at least

00:30:25.849 --> 00:30:28.430
a compiling of data might Really be streamlined

00:30:28.430 --> 00:30:31.609
by AI Ultimately, no bank is going to sign off

00:30:31.609 --> 00:30:33.809
on a 50 million dollar loan that was generated

00:30:33.809 --> 00:30:38.890
by an AI chat bot from Microsoft So I think that

00:30:38.890 --> 00:30:40.369
you're always gonna want that human touch to

00:30:40.369 --> 00:30:42.170
do those so it's kind of smooth out those edges

00:30:42.170 --> 00:30:43.930
but I think a lot of the data harvesting and

00:30:43.930 --> 00:30:46.329
the analytics and Just kind of compiling everything

00:30:46.329 --> 00:30:49.069
and getting it into digestible bites is going

00:30:49.069 --> 00:30:52.109
to maybe be streamlined by AI I'm actually gonna

00:30:52.109 --> 00:30:54.990
ping Ping -pong it back to you for the marketing

00:30:54.990 --> 00:30:57.740
piece. What do you think marketing? How do you

00:30:57.740 --> 00:31:01.400
think marketing will be affected by AI? It already

00:31:01.400 --> 00:31:05.480
is affected by AI in so many ways and I was just

00:31:05.480 --> 00:31:08.400
gonna say last year when I went to CES conference

00:31:08.400 --> 00:31:10.880
here in Las Vegas and then the Builder Show,

00:31:11.579 --> 00:31:14.200
National Association of Home Builders. CES' Consumer

00:31:14.200 --> 00:31:16.000
Electronics Show. Consumer Electronics and then

00:31:16.000 --> 00:31:19.500
the Home Builders Association. Two separate shows

00:31:19.500 --> 00:31:22.630
but... hot topics at both were AI and things

00:31:22.630 --> 00:31:24.710
like even just the refrigerators, you know, the

00:31:24.710 --> 00:31:26.609
refrigerators all have that component built into

00:31:26.609 --> 00:31:28.650
them. Now you can connect it to your phone and

00:31:28.650 --> 00:31:30.710
it can tell you temperatures and it can read,

00:31:30.809 --> 00:31:32.789
you know, the wine, the wine we've looked at

00:31:32.789 --> 00:31:34.589
at the builders. Yeah. You can take a photo of

00:31:34.589 --> 00:31:36.829
your wine and you can go to your. Yeah. So I

00:31:36.829 --> 00:31:39.049
think every, you know, your dishwasher and your

00:31:39.049 --> 00:31:42.910
washing machine, everything, all of the supplies

00:31:42.910 --> 00:31:45.130
and accessories that have gone into homes now

00:31:45.130 --> 00:31:48.319
are being. tapped into AI. As far as the marketing

00:31:48.319 --> 00:31:51.039
side, there are things about AI that, again,

00:31:51.279 --> 00:31:54.220
can't be done. I know people who work in the

00:31:54.220 --> 00:31:57.799
interior design industry and they do entire homes

00:31:57.799 --> 00:32:01.940
through AI. And it just is, while yes, it gives

00:32:01.940 --> 00:32:04.880
you a general idea, it's really, really hard

00:32:04.880 --> 00:32:07.460
to narrow in on exacts when you're using AI.

00:32:07.460 --> 00:32:09.339
What about that human touch? The other thing

00:32:09.339 --> 00:32:11.900
about AI is that you can't really use it for

00:32:11.900 --> 00:32:15.599
spoken. It's not good with fair housing. So it

00:32:15.599 --> 00:32:17.920
can say all these elaborate things. But there

00:32:17.920 --> 00:32:20.059
are things in fair housing that we can't say

00:32:20.059 --> 00:32:23.119
or that you would want to steer away from because

00:32:23.119 --> 00:32:25.380
we're not trying to pose the home to one buyer

00:32:25.380 --> 00:32:27.740
segment versus another. And AI doesn't necessarily

00:32:27.740 --> 00:32:30.700
have that intuitive language to determine that

00:32:30.700 --> 00:32:34.259
on its own. So while it can create great descriptions

00:32:34.259 --> 00:32:36.279
and things like that, they always have to be

00:32:36.279 --> 00:32:37.619
read. They always have to be run through the

00:32:37.619 --> 00:32:40.589
filter of a otherwise you're not getting the

00:32:40.589 --> 00:32:43.109
human touch. I think so much is being lost through

00:32:43.109 --> 00:32:45.769
AI that now people are beginning to get that

00:32:45.769 --> 00:32:48.269
kind of washed out feeling and we're all kind

00:32:48.269 --> 00:32:52.710
of craving that bring it back to the real. So

00:32:52.710 --> 00:32:57.430
I hope we get back to real. I do had some you

00:32:57.430 --> 00:33:00.150
know there was a time where years ago if you

00:33:00.150 --> 00:33:03.009
didn't jump in on the computer you were getting

00:33:03.009 --> 00:33:06.099
left behind right? Computer was here and you

00:33:06.099 --> 00:33:07.440
have to get on the internet. We were all going

00:33:07.440 --> 00:33:09.440
to be using email someday I mean years ago when

00:33:09.440 --> 00:33:11.460
people were going through that I'm sure there

00:33:11.460 --> 00:33:13.559
was some resistance, but those people that never

00:33:13.559 --> 00:33:17.319
got a website Are no longer in business. So if

00:33:17.319 --> 00:33:20.180
our competitors are using it or they got into

00:33:20.180 --> 00:33:22.059
the group, right? They had to either, you know,

00:33:22.059 --> 00:33:25.700
do it or be out. So I think AI is that same thing.

00:33:25.839 --> 00:33:27.940
It was that moment where I kind of had to realize

00:33:27.940 --> 00:33:30.220
this doesn't feel good to me, but I know all

00:33:30.220 --> 00:33:31.920
my competitors are using it. Every other builder

00:33:31.920 --> 00:33:33.660
in the industry is using it. All the real estate

00:33:33.660 --> 00:33:36.170
agents in the world are using it. There has to

00:33:36.170 --> 00:33:38.609
be some piece of it that can streamline and help

00:33:38.609 --> 00:33:42.069
us too. So it's, it's in my opinion, it's gotta

00:33:42.069 --> 00:33:44.950
be a fine balance. And I think it's been so overused

00:33:44.950 --> 00:33:47.569
and so mass produced and every, every, everywhere

00:33:47.569 --> 00:33:49.950
that people are now beginning to crave that.

00:33:49.970 --> 00:33:52.069
Let's get back to the human touch again. Do you

00:33:52.069 --> 00:33:55.650
think we went too early? Do you think AI should

00:33:55.650 --> 00:33:58.190
have been tweaked and honed a little bit more

00:33:58.190 --> 00:34:01.509
before it kind of was thrusted onto the public?

00:34:01.569 --> 00:34:05.529
And now we kind of have this I see a lot of AI

00:34:05.529 --> 00:34:08.150
imagery is very hollow, and you can spot it a

00:34:08.150 --> 00:34:09.690
mile away. You can see it a mile away. And when

00:34:09.690 --> 00:34:13.289
you read it a mile away, you see these auto replies

00:34:13.289 --> 00:34:15.409
from different people in different industries,

00:34:15.849 --> 00:34:18.570
and you can tell the email was AI. And now I

00:34:18.570 --> 00:34:21.989
guess there's AI email extensions that will draft

00:34:21.989 --> 00:34:24.349
responses to emails that come in, and then you

00:34:24.349 --> 00:34:26.010
can just go into your drafts and hit send, send,

00:34:26.070 --> 00:34:27.690
send. And I've been on the receiving end of some

00:34:27.690 --> 00:34:29.949
of those as recently as last week. And then you

00:34:29.949 --> 00:34:32.969
read and go. Yeah, or even the chat box online.

00:34:33.090 --> 00:34:34.650
If you're on somebody's website and you're trying

00:34:34.650 --> 00:34:36.210
to get a question answered and you end up with

00:34:36.210 --> 00:34:38.570
this chat box, you're like, this is clearly not

00:34:38.570 --> 00:34:40.610
a real person. I'm going to pick up the phone

00:34:40.610 --> 00:34:42.989
and call because I just need to talk to someone

00:34:42.989 --> 00:34:45.510
who can actually understand what I'm asking.

00:34:45.809 --> 00:34:48.590
Right. And we're asking this in early part of

00:34:48.590 --> 00:34:53.190
2025. So maybe this is like asking about the

00:34:53.190 --> 00:34:55.449
internet in 1989. I don't know. I don't know.

00:34:55.650 --> 00:34:58.639
So maybe it will get better. I don't see. I just

00:34:58.639 --> 00:35:02.659
updated our sales contract for our new home builds

00:35:02.659 --> 00:35:06.039
for what I call a piano disclosure. So a house

00:35:06.039 --> 00:35:09.260
is not a piano. It is imperfect. It's built on

00:35:09.260 --> 00:35:11.579
site by human hands out of imperfect, mostly

00:35:11.579 --> 00:35:14.099
natural materials. And as I was writing that,

00:35:14.219 --> 00:35:15.760
I realized, you know, it's one of those things

00:35:15.760 --> 00:35:18.960
that's why people love homes. It's so human.

00:35:19.920 --> 00:35:22.440
And everything is a little flawed. It is part

00:35:22.440 --> 00:35:25.300
of its charm, right. It's good, good. Yes. Because

00:35:25.300 --> 00:35:27.559
imagine an AI image of your house. It would feel

00:35:27.559 --> 00:35:30.659
hollow, but you know your house has dog scratches

00:35:30.659 --> 00:35:32.599
on it or whatever. Right. It's like an artist.

00:35:32.760 --> 00:35:34.679
You would much rather have a hand -painted versus

00:35:34.679 --> 00:35:37.760
computer -generated image. Right. And it could

00:35:37.760 --> 00:35:40.039
be partial here. Philith homes are art, and I

00:35:40.039 --> 00:35:43.619
think that it's not going to... I've seen AI

00:35:43.619 --> 00:35:45.260
make architectural floor plans. And again, we

00:35:45.260 --> 00:35:47.199
might be talking about the internet in 1989.

00:35:47.239 --> 00:35:50.320
It has a long way to go. But it is an absolute...

00:35:50.320 --> 00:35:53.579
train wreck. It just cannot be an AI doesn't

00:35:53.579 --> 00:35:55.199
know how humans live and how humans want to live

00:35:55.199 --> 00:35:57.380
and you can't train that. Very hard. I mean,

00:35:57.519 --> 00:35:59.940
I'm no AI expert. I barely know how to work my

00:35:59.940 --> 00:36:02.219
phone. So take what I say with a grain of salt.

00:36:02.599 --> 00:36:04.719
And when you say, did we release it too soon?

00:36:05.039 --> 00:36:07.219
I don't know if they expected it to take off

00:36:07.219 --> 00:36:09.280
the way that it did. I think when they just brought

00:36:09.280 --> 00:36:12.400
level one chat GPT to the world, they thought,

00:36:12.400 --> 00:36:15.059
let's just see what happens. And it got so much

00:36:15.059 --> 00:36:17.500
response and so much momentum. And then it became

00:36:17.500 --> 00:36:20.019
a Wall Street darling. Yes, I think it's taken

00:36:20.019 --> 00:36:23.650
off from a life of its own. maybe it did grow

00:36:23.650 --> 00:36:26.030
too much too fast and get incorporated into too

00:36:26.030 --> 00:36:29.409
many other places that now there isn't, you know,

00:36:29.670 --> 00:36:32.969
it's just all washed out. This person also had

00:36:32.969 --> 00:36:35.869
another question. I'm starting to think these

00:36:35.869 --> 00:36:40.909
were written by robots. So this is Regulation

00:36:40.909 --> 00:36:44.809
Bot wrote this. Regulation Bot 2000. Why are

00:36:44.809 --> 00:36:47.010
you so anti -regulation? This person's got an

00:36:47.010 --> 00:36:51.550
axe to grind with me. I am not anti -regulation.

00:36:51.849 --> 00:36:54.849
I am frustrated by a lot of regulations, but

00:36:54.849 --> 00:36:58.090
I understand their place in the world. And we

00:36:58.090 --> 00:37:01.170
had a kind of a whole episode on this. And I'm

00:37:01.170 --> 00:37:03.429
sad if that was the takeaway from that episode,

00:37:03.530 --> 00:37:05.289
that I was anti -regulation because I thought

00:37:05.289 --> 00:37:09.090
I was pretty emphatic. Appreciate regulation.

00:37:09.230 --> 00:37:11.130
Thank you. Yeah, I think you covered both sides

00:37:11.130 --> 00:37:13.489
of it and it isn't an anti -regulation Necessarily

00:37:13.489 --> 00:37:16.489
as much as the just like our regular put in place.

00:37:16.630 --> 00:37:18.829
Yeah, and the fact that regulations never been

00:37:18.829 --> 00:37:20.949
down They only camp up and only beef up they

00:37:20.949 --> 00:37:23.309
only get thicker sludge here. Mm -hmm So I think

00:37:23.309 --> 00:37:26.090
those are the things so and that's a real part

00:37:26.090 --> 00:37:27.849
of home -building It's a part of any industry,

00:37:27.869 --> 00:37:29.750
but I think it's really a part of what you do

00:37:29.750 --> 00:37:32.210
and so there is the obstacles that are put in

00:37:32.210 --> 00:37:34.469
place and being transparent about that and admitting

00:37:34.469 --> 00:37:37.829
that This isn't easy and jumping through all

00:37:37.829 --> 00:37:39.730
of these hurdles and trying to, you know, cut

00:37:39.730 --> 00:37:41.989
all of these red tape and all of the things that

00:37:41.989 --> 00:37:44.550
you have to... What's so challenging about it

00:37:44.550 --> 00:37:46.750
is that it's so fragmented because building is

00:37:46.750 --> 00:37:49.969
largely dictated by the lowest form of your government.

00:37:50.130 --> 00:37:52.789
So whether it's a town, township or even an HOA,

00:37:52.909 --> 00:37:54.789
the first clearance I have is within a, if I'm

00:37:54.789 --> 00:37:57.849
building an existing HOA, my first step is getting

00:37:57.849 --> 00:37:59.650
it cleared with the lowest rung of government,

00:37:59.809 --> 00:38:02.699
the first, you know, circle. So you're clearing

00:38:02.699 --> 00:38:04.000
that, then you're clearing that, then you're

00:38:04.000 --> 00:38:05.260
clearing that, then you're clearing that. So

00:38:05.260 --> 00:38:07.960
there's just so many layers of it. Whereas I

00:38:07.960 --> 00:38:10.880
feel like if I were building cars, you're dealing

00:38:10.880 --> 00:38:12.659
with mostly federal agencies, you're dealing

00:38:12.659 --> 00:38:15.260
with maybe I'm sure several. Again, I don't know

00:38:15.260 --> 00:38:19.559
how to build cars, but I can't even change my

00:38:19.559 --> 00:38:23.519
own oil or work my phone. But I just feel like

00:38:23.519 --> 00:38:25.679
what's so uniquely frustrating about developing

00:38:25.679 --> 00:38:28.159
and about housing and about building is just

00:38:28.159 --> 00:38:31.739
the layers of it and how it starts with... One

00:38:31.739 --> 00:38:35.280
person on a design review board can curtail area

00:38:35.280 --> 00:38:38.019
can definitely derail your entire project and

00:38:38.019 --> 00:38:40.300
I've had it happen before one rogue board member

00:38:40.570 --> 00:38:44.230
on an HOA just didn't like me and made everything

00:38:44.230 --> 00:38:47.329
really challenging. And the reason I know it

00:38:47.329 --> 00:38:49.170
was them is because when they left the board,

00:38:49.489 --> 00:38:51.869
my life got a lot easier. Interesting. So it

00:38:51.869 --> 00:38:53.510
was going from six -month approvals to three

00:38:53.510 --> 00:38:55.909
-month approvals. And some of that regulation,

00:38:56.130 --> 00:38:59.849
I feel like, is that just regulation for regulation's

00:38:59.849 --> 00:39:01.389
sake. And that was what we talked about. And

00:39:01.389 --> 00:39:04.349
there's a difference between regulations and

00:39:04.349 --> 00:39:07.210
codes, which would be a totally different question.

00:39:07.369 --> 00:39:09.750
But maybe just answer that quickly if you want

00:39:09.750 --> 00:39:14.210
to. because I think people are confused by the

00:39:14.210 --> 00:39:16.829
structure that's put in place. So a regulation

00:39:16.829 --> 00:39:20.590
would be, you can have this many homes per acre,

00:39:20.869 --> 00:39:23.750
or every 10 homes per acre you have to have one

00:39:23.750 --> 00:39:25.849
quarter acre of community space. That's more

00:39:25.849 --> 00:39:27.650
of a regulation. You could call that a development

00:39:27.650 --> 00:39:30.170
code, but it's more of a regulation. All codes

00:39:30.170 --> 00:39:32.269
are regulations, but not all regulations are

00:39:32.269 --> 00:39:34.829
codes. So every code is a regulation on the building

00:39:34.829 --> 00:39:39.219
industry. But a building code would be, Egress

00:39:39.219 --> 00:39:41.599
windows have to be 44 inches from the floor and

00:39:41.599 --> 00:39:44.199
have to be at least 30 inches wide and 30 and

00:39:44.199 --> 00:39:46.159
24 inches tall or whatever enough for a person

00:39:46.159 --> 00:39:49.900
to get out of So that's a building code a fire

00:39:49.900 --> 00:39:52.000
door going into garage. It's a building code

00:39:52.000 --> 00:39:55.000
versus a regulation so but those are also regulations,

00:39:55.019 --> 00:39:57.900
but a regulation that's not a code is something

00:39:57.900 --> 00:40:01.440
like my park space or The fact that you need

00:40:01.440 --> 00:40:03.139
an HOA versus not. The fact that you have to

00:40:03.139 --> 00:40:05.960
have a hillside overlay study done. That's a

00:40:05.960 --> 00:40:07.460
regulation. The fact that you need a signature

00:40:07.460 --> 00:40:09.760
on this document. Yeah, the water district has

00:40:09.760 --> 00:40:11.440
to sign off and a public works has to sign off

00:40:11.440 --> 00:40:13.699
on a traffic study. All those things. For even

00:40:13.699 --> 00:40:15.539
a five home subdivision has to have a traffic

00:40:15.539 --> 00:40:19.099
study. That's a regulation. That's, I mean there

00:40:19.099 --> 00:40:21.119
can be, you could just have a house party and

00:40:21.119 --> 00:40:22.440
there'd be more people. You know what I mean?

00:40:22.960 --> 00:40:24.780
Versus a five home subdivision has to have a

00:40:24.780 --> 00:40:26.719
traffic study. But that's the study. there's

00:40:26.719 --> 00:40:29.239
only five homes and this is only this much traffic.

00:40:30.159 --> 00:40:32.280
But we got to count the number of cars that are

00:40:32.280 --> 00:40:34.500
on on that road and how many trips are going

00:40:34.500 --> 00:40:37.179
to be generated by these homes. It's part of

00:40:37.179 --> 00:40:38.920
it, but those are the regulations that really

00:40:38.920 --> 00:40:41.579
slow things down and cost a ton of money. And

00:40:41.579 --> 00:40:43.679
there's just not a lot of smartness to it. There's

00:40:43.679 --> 00:40:45.920
not a lot of surgical precision to say, well,

00:40:46.260 --> 00:40:48.500
if it's under 50 homes, you don't need this,

00:40:48.519 --> 00:40:50.719
this, this, this. That'd be a way of deregulating

00:40:50.719 --> 00:40:54.619
some of the industry. There's a lot of other

00:40:54.619 --> 00:40:57.840
regulations on street widths and you're looking

00:40:57.840 --> 00:40:59.980
at a regular residential street might have a

00:40:59.980 --> 00:41:04.460
45 foot wide street and all that does is promotes

00:41:04.460 --> 00:41:06.940
on -street parking, clutters up the street, makes

00:41:06.940 --> 00:41:09.579
it hard for kids to play because we know the

00:41:09.579 --> 00:41:11.219
wider the street the faster the car goes. We

00:41:11.219 --> 00:41:14.019
just know that. That's why back east or in small

00:41:14.019 --> 00:41:15.800
European towns where there's trees on both sides

00:41:15.800 --> 00:41:17.579
and the streets only 14, they barely have speed

00:41:17.579 --> 00:41:19.500
limits because you're going to go 20 miles an

00:41:19.500 --> 00:41:22.480
hour anyway. your mind is gonna slow your car

00:41:22.480 --> 00:41:24.659
down. So I just feel like those are the regulations

00:41:24.659 --> 00:41:28.480
that do nothing in fact make suburbia less livable.

00:41:29.019 --> 00:41:31.239
And of course take up a ton more land. Every

00:41:31.239 --> 00:41:32.900
single street being 15 feet wider than it needs

00:41:32.900 --> 00:41:35.559
to be adds up over an entire just neighborhood

00:41:35.559 --> 00:41:39.000
let alone a city. So those are the kind of regulations

00:41:39.000 --> 00:41:41.440
that are really hard to get behind because I

00:41:41.440 --> 00:41:45.619
don't see the logic to them. So. Next question.

00:41:46.139 --> 00:41:49.300
Next question. Next question. I'm tired of this

00:41:49.300 --> 00:41:51.860
chat bot asking me questions. We probably ask

00:41:51.860 --> 00:41:58.099
the greedy one too. Let's see. All right. How

00:41:58.099 --> 00:42:02.269
about... This is a great one. I did touch on

00:42:02.269 --> 00:42:04.130
it a little bit, but you can circle back on that

00:42:04.130 --> 00:42:07.230
the yeah Yeah, it circles back on what we talked

00:42:07.230 --> 00:42:08.889
about a little earlier We kind of we kind of

00:42:08.889 --> 00:42:09.989
touch on this every time because it's something

00:42:09.989 --> 00:42:11.849
I'm really passionate It is and it's a question

00:42:11.849 --> 00:42:14.090
people have because we're all affected by and

00:42:14.090 --> 00:42:16.869
it is out there And the question is what do you

00:42:16.869 --> 00:42:18.989
think the biggest factor affecting them? They

00:42:18.989 --> 00:42:24.449
can't see it What do you think is the biggest

00:42:24.449 --> 00:42:26.980
factor so they're asking for one? I can't give

00:42:26.980 --> 00:42:30.139
a multifaceted 20 -minute answer here. What do

00:42:30.139 --> 00:42:31.739
you think the biggest factor affecting home prices?

00:42:34.880 --> 00:42:37.760
It's supply. I mean, it's supply. So that's the

00:42:37.760 --> 00:42:39.320
bottom line. There's just not enough supply.

00:42:39.480 --> 00:42:41.940
We know that we're under building in Las Vegas

00:42:41.940 --> 00:42:44.000
alone by about 8 ,000 rooftops, I think we figured,

00:42:44.500 --> 00:42:47.659
based on household generation. So that is the

00:42:47.659 --> 00:42:50.190
biggest factor. How do you fix that is the zoning

00:42:50.190 --> 00:42:52.130
and the regulation and cutting that kind of thing.

00:42:52.369 --> 00:42:55.210
And maybe incentivizing building instead of disincentivizing

00:42:55.210 --> 00:42:58.590
building and construction. Maybe tightening up

00:42:58.590 --> 00:43:02.510
some of the laws that consumers can sue builders

00:43:02.510 --> 00:43:05.429
for years after it disincentivizes builders.

00:43:07.250 --> 00:43:09.989
City governments can block development and ask

00:43:09.989 --> 00:43:12.030
for extra things and there's development fees.

00:43:12.090 --> 00:43:13.750
Those are all things that construct supply. But

00:43:13.750 --> 00:43:16.170
the simple answer is supply. When we had more

00:43:16.170 --> 00:43:19.570
supply, homes were cheaper. So, and is it just

00:43:19.570 --> 00:43:22.590
supply construction? No, there's also a lot of

00:43:22.590 --> 00:43:25.130
homes kept off the market owned by hedge funds,

00:43:25.369 --> 00:43:27.489
owned second homes. There's a lot of reasons

00:43:27.489 --> 00:43:29.789
we have constrained supply. And then a housing

00:43:29.789 --> 00:43:31.530
market is something that becomes obsolescent.

00:43:31.889 --> 00:43:33.809
There's an obsolescence to the housing supply,

00:43:33.869 --> 00:43:35.809
right? I mean, the homes can only go for so long

00:43:35.809 --> 00:43:37.849
without either needing massive improvement or

00:43:37.849 --> 00:43:42.409
not fitting the bill anymore. We're starting

00:43:42.409 --> 00:43:44.929
to see some tear downs in our city where the

00:43:44.929 --> 00:43:48.320
land value has become... More than the home justifies

00:43:48.320 --> 00:43:52.239
or maybe a densification in other cities So if

00:43:52.239 --> 00:43:54.119
you look at I think the National Association

00:43:54.119 --> 00:43:56.039
homebuilders assumes the functional life of a

00:43:56.039 --> 00:43:58.659
house is around 70 years So it doesn't mean that

00:43:58.659 --> 00:44:00.260
they fall down at 70 years, but it just means

00:44:00.260 --> 00:44:02.340
they would need such a substantial investment

00:44:02.889 --> 00:44:05.730
the original home is basically zero, because

00:44:05.730 --> 00:44:06.889
it requires so much investment. And the chance

00:44:06.889 --> 00:44:09.829
of it still being over time, somebody has done

00:44:09.829 --> 00:44:11.309
the upgrades numerous times by that point, sure.

00:44:11.309 --> 00:44:14.150
Yeah, does it ever go a full 70 years? No, probably

00:44:14.150 --> 00:44:15.969
not. But then it only takes it back to 1950 when

00:44:15.969 --> 00:44:18.769
you think of 55. So that's not really, 70 years

00:44:18.769 --> 00:44:20.409
sounds like a long time. I'm picturing in my

00:44:20.409 --> 00:44:22.969
head a home from the 1920s, but that could be

00:44:22.969 --> 00:44:26.099
a 1955 Rambler, a little ranch home. Yeah. you

00:44:26.099 --> 00:44:29.340
know that yeah somebody's redone the roof somebody

00:44:29.340 --> 00:44:32.739
has ideal yeah but the thought is that over 70

00:44:32.739 --> 00:44:35.139
years they become basically worth zero they require

00:44:35.139 --> 00:44:38.440
so much so if you've not been maintaining okay

00:44:38.440 --> 00:44:42.139
so that affects supply as well okay and we'll

00:44:42.139 --> 00:44:46.719
take one more of the questions um and this one

00:44:46.719 --> 00:44:50.690
i i i like the thought on this one As we talk

00:44:50.690 --> 00:44:53.789
about your role as a developer and some of the

00:44:53.789 --> 00:44:55.849
obstacles that you face, what's the most challenging?

00:44:56.070 --> 00:44:58.210
What's the most challenging aspect of developing

00:44:58.210 --> 00:45:02.389
slash home building? It's the time. It's just

00:45:02.389 --> 00:45:04.849
the amount of time to bring something to market

00:45:04.849 --> 00:45:08.710
is the single greatest. And that is not just

00:45:08.710 --> 00:45:11.030
because of Regulate. It's just the time to build,

00:45:11.130 --> 00:45:14.530
the time to conceptualize. You're herding cats

00:45:14.530 --> 00:45:17.739
in many ways, right? Just to get my architect

00:45:17.739 --> 00:45:20.119
to deliver on time and then that over to my engineers

00:45:20.119 --> 00:45:22.039
and get everyone talking and those things just

00:45:22.039 --> 00:45:23.880
take time even if there were no regulations.

00:45:24.320 --> 00:45:26.300
So it's not just regulations that slows things

00:45:26.300 --> 00:45:29.099
down. These aren't really complicated projects

00:45:29.099 --> 00:45:32.000
that we do. And we even if it's just an inside

00:45:32.000 --> 00:45:33.659
of an existing each way, it's still a house.

00:45:33.820 --> 00:45:35.659
It's going to be there for. Yeah. Functionally

00:45:35.659 --> 00:45:40.480
just 70 years. Right. So I think that's the biggest

00:45:40.480 --> 00:45:42.440
challenge is just the time and the patience.

00:45:42.820 --> 00:45:46.000
It's. requires an astounding amount of patience.

00:45:47.079 --> 00:45:53.019
So that's my biggest kind of frustration slash

00:45:53.019 --> 00:45:55.480
thorn in my side. It's just the amount of time

00:45:55.480 --> 00:45:58.760
it takes to do anything. And the time requires

00:45:58.760 --> 00:46:00.760
patience. And the time requires patience and

00:46:00.760 --> 00:46:03.579
requires a lot of grit. That you have to have

00:46:03.579 --> 00:46:06.420
the stones to... to invest all this money up

00:46:06.420 --> 00:46:08.559
front or take on all this debt or a combination

00:46:08.559 --> 00:46:10.320
of both. You usually have a lot of money invested

00:46:10.320 --> 00:46:13.139
in and a lot of debt. And you just say, I hope

00:46:13.139 --> 00:46:17.900
this works because it's too far in now. So that's

00:46:17.900 --> 00:46:19.719
the next challenge. Oh good. I love it. And thank

00:46:19.719 --> 00:46:24.480
you guys for... Far in now. Well good, I love

00:46:24.480 --> 00:46:26.719
it and thank you guys for sending the questions

00:46:26.719 --> 00:46:29.320
really good conversation that we were able to

00:46:29.320 --> 00:46:31.960
start here We'll do others So if you have questions

00:46:31.960 --> 00:46:33.420
or if there's something on your mind, you'd like

00:46:33.420 --> 00:46:36.300
us to address feel free to send it You can shoot

00:46:36.300 --> 00:46:39.300
it over to any of our online platforms and I

00:46:39.300 --> 00:46:41.440
will get those and we'll rally them together

00:46:41.440 --> 00:46:44.239
and address them in a future episode So thank

00:46:44.239 --> 00:46:47.679
you so much. Thank you shade it and we'll see

00:46:47.679 --> 00:46:51.199
you guys again next time on another episode of

00:46:51.199 --> 00:46:53.940
trust the process See you then. Bye bye.