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and let's build something great. together. Welcome
back to another episode of trust the process.
I'm Krista joined again by Michael. We're going
to talk today about seasonality. So right now
peak in the spring selling season, you may have
heard that if you're shopping for a home or building
homes or In the industry, yeah, in the industry
of any kind. It's a topic that we can dive into
regardless of where you sit in the builder -seller
world because it affects us all and there is
definitely an ebb and a flow to the seasonality
of how things move and how real estate changes
and how the industry as a whole absorbs things
throughout the year. So I thought that would
be an interesting topic to discuss. Yeah, and
it's definitely fitting for the time of year.
It is, and I know you've got a lot to share too
because this has been a unique season. This spring
season in particular has brought some things
that, you know. Yeah, some more macro economic
factors that have thrown off what would have
been normally a really great spring in a really
otherwise stable real estate market. So generally,
every market, you can't argue just based on the
data, every market has a seasonal component to
it. Here in Las Vegas, we have very little precipitation,
you know snow we really don't have seasons. It's
kind of hot and December and We have but we do
see a seasonality and I think it just comes down
to the cadence and rhythm of life I think holidays
kids school schedules and just Certain factors.
We still have brokerage clients, right and one
thing you'll hear me say is it don't underestimate
the amount of daylight we get at certain times
of year and how your home is going to show at
five o 'clock in April versus five o 'clock in
November when it's dark already or even say twilight
and sometimes twilight in this city and our time
zone is sometimes early at four o 'clock depending
on the time of year. Sure, even in the builder
world where you get they change their summer
hours, winter hours, their open hour longer in
the sun, sometimes two hours with some builders
are open longer in the summer because it's late
lighter. I mean it's light later. It stays light
later in the day that it allows you that extra
couple of hours. So not only do you have more
people out looking, now you've expanded your
hours to accommodate that and so tends to breed
higher sales. Even now, we're having a really
kind of bumpy spring honestly between the economic
news and the tariffs and all the uncertainty
there. I think that You're still seeing a lot
of traffic though. So it's just apprehension
around pulling the trigger, but the traffic is
still there. So I know our sales team like Las
Vegas, I mean, you guys, you guys are seeing
a lot of traffic on our bills, a lot of inquiries
on our other projects and any of our brokerage
listings. pretty busy. And even on the resale
side we have sometimes multiple offers and things
are percolating. One thing to always remember
and counsel our clients on this on our brokerage
side is that with that buyer traffic comes a
lot of extra inventory, though. So a lot of sellers
are planning on taking advantage of that traffic,
so a lot of great inventory comes in those same
months. So you have a higher likelihood, but
you also have more competition. So in a spring
like this, in 2025, we're seeing buyer trepidation
and lukewarm sentiments on buying a home, but
we also got the spring influx of inventory. And
it's an interesting, you know, you plan for that
spring. Everybody knows spring selling. So as
an agent, agents are advising their clients,
wait and put your house on the market come spring.
Builders are, you know, who'll be in, I don't
know, when you start your homes at the front
end. Do you then time it to be with that spring?
Well, the miracle of getting a building permit
in Clark County, I'm not going to wait. And we
build custom homes generally, or semi -custom
homes. So the timeline, we don't run production
the way that a production builder would, or a
ton -inch builder. We might take seven months,
nine, or 12, just depending. And there's certain
things that maybe I walk through home and change
it. and makes my business partner crazy, but
I do. Sometimes if I feel like it can be better,
we'll make those changes in the field. Because
at the end of the day, we're trying to tweak
and get as much out of that asset as possible.
So if it slows it down a month, but I can make
it more desirable, I'll do it. So short answer
on the terms of when we start. Yeah, no, I never.
hold back and say, well, this is going to finish
in December. I'll think about it and say, that's
a bummer. That's probably going to finish in
December. But by the way, it almost never does.
December becomes February. And I think most builders
do that. They accommodate that or they allow
for that. They could offer some incentives, keep
a promotion, push some of that inventory that
might. Right. They need to make up. And if nothing
else, you always want to be funded enough, if
you're a developer, to say, you know what, December's
completion might make for great spring inventory
next year. And if I'm still sitting on it, we'll
stage it, we'll relaunch it, and we'll make it
a great piece of spring inventory that hits late
January, right before the spring rush, before
everyone is coming around. We have that privilege
in Las Vegas where we have seasonality, but I
always say it's more tied to holidays. So we
will see slowdowns in and around those holidays.
But we are also a high relocation market. So
sometimes people will take those breaks from
school and those holiday breaks from work to
do their house hunting here in Las Vegas. So
sometimes Thanksgiving can surprise you and have
great amount of traffic. Typically, November
is good. You get kind of a slowdown in October
and then there's a bit of an uptick in November.
We may not close it by Christmas anyway, so let's
just get it under contract and we'll close it
and move in at the new year. It'll be fun to
get it started then. So we have a lot of Asian
culture here too, so we have another major holiday
in February for Chinese New Year, so we'll see
that rush Tuesday. Okay, we want to buy in December.
Close in January and be ready for... Yeah, but
I think it's different even than the national
market. You know, most people see spring selling
sort of starts in March, April. Here we really
start our spring selling in February. Our season
is... My canned response is Super Bowl Sunday.
It is. That's the daily marker. We all know Super
Bowl Sunday. Tomorrow's going to be... It's probably
going to be busy. Yeah. And that's not to say
when I was running the brokerage very hands -on,
I knew I was going to start getting calls probably
the first week of January. It never failed. I
would get... you know, previous clients and referrals
that came out of the woodwork and say, okay,
we would just, but then they start their hunt
and earnest around that time in early February.
And you're, those are March contracts and April
closings and. Yeah. So to get around that, to
go back to your other question, where, where
as a builder and a developer, when you're working
with kind of unpredictable timelines and where
do you land in the seasons? That's why we try
to do a bang up job with renderings and. you
know, we're converting one of our inventory homes
to a model home now. So we want to have the model
inventory and have that kind of infrastructure
in place, but then try to represent our other
inventory that might be completing in September,
October, November. So that's a strategy on why
we will list our spec homes early to try to say,
okay, well, yes, we're not there and ready. And
that's why I had a big push to list our three
new pieces of inventory in Lake Las Vegas. By
the end of March, remember, I wanted that kind
of ready to go and live and have that running
through April, May, June. Those are probably
September, October, finish, you know, completion.
So in closing, so I want to capture some of this
spring inventory. So people know you're not only
looking at what the other production builders
have in this price point or the resales, but
yeah, that's how I try to take advantage of the
seasonality. And seasonality kind of has two,
I mean, if you were looking at it on a graph,
there really are two lines to follow. There's
seasonality of sales and seasonality of closings
or seasonality of funding on those. So they typically
don't even trend to the same because you start
the home here and it sells here. So you're moving
in a different trajectory at each different point.
So two different lines to track. April contracts.
Bring me closings. Yes, trying to make the April
showers. Well, that in the resale world, because
you're typically on a 30 day window, but in the
builder world where you're a seven month. Oh,
yeah. You know, even on a production home where
you're three, four months, you're still your
your line doesn't, you know, your bell curve
doesn't. You're right. Right. Right. In terms
of contracts executed. Yeah. And any any HB makes
that distinction. Usually they'll call sales
when a contract was executed. I don't think of
it that way. So they'll track new home sales,
because how many homes go to contract in November,
December, and they don't close until May of next
year? Exactly. So it's contract execution versus
closing. So funded are two really different distinctions.
And while they both are affected by the seasonality,
they're affected at a different rate. They are,
right. And that doesn't factor in cancellations.
True. So you can sell the same home three times,
many times, right? And that number is going to
be artificially higher. Over... Millions of data,
you know 1 .1 million homes go to contract new
homes in a year And it's even 10 % or 5 % of
those go to contract twice. It's 50 ,000 artificially
higher numbers of new home sales So I like to
look at closings. Yeah Yeah, because that's where
the money goes. A big part of it. Yeah, exactly.
So diving a little further into the elephant
in the room, spring selling season now, everybody
banks on it. In the industry, we know it is the
cash cow season. It's when things uptick after
the winter. A lot of builders bank their revenue
on that. And in the resale world, a lot of sellers
hope to move or buyers help to buy. It's projected
to be this ooh -ahh moment and this year has
not been. No, it's not materialized. Let's talk
a little bit about that or how... I think it's
confidence. It's micro or it's macroeconomics,
but every time you count out real estate, with
the exception of one event, 2008, every time
you count it out, you're usually wrong. It just
never... They're non -fungible assets. They have
utility. They have functionality. They have status.
There's a lot of reasons people buy. They represent
their retirement. They represent their new marriage.
They represent their new wealth. There's only
so much people will wait out the real estate
market. So I feel that it's been kind of lackluster.
It just doesn't feel like spring. Oddly enough
in Las Vegas at least and we're making some headlines
because we're a particularly slow metro area
But you look at the new resale contracts or anything
that's hit our MLS. So sometimes builders will
put new homes on MLS When you look at that data,
we're still going to contract in about 800 houses
a week, which is pretty good That's very good.
Yeah, our lowest of our lows and coven around
this time in 2020 It was around 500. Okay, and
then our highest of our highs and the crazy run
-up in 2021 was around 800. So we're actually
in that number right now at that point. That's
confidence builder. I like that. Yeah, I was
on a precipice this weekend, so I had to look
at these numbers because I was about to freak
the hell out. Talk yourself off the ledge. I
don't want to say it's as hot because in 2021
that number may have been 1300, but we didn't
have the inventory to sell. So our rate limiter
back then Was our inventory. Now it's buyer demand.
I mean, buyers, there's no two ways around it.
Buyers are way more cautious and they're way
more concerned. And home prices are higher than
ever and interest rates are not higher than ever,
but they're still very elevated. So there's,
it's not, if not for the things I mentioned previously
that they're a symbol of your marriage, symbol
of wealth, symbol of your retirement. If we didn't
have that carrying us, I do think that would
be even more dismal. but we've had high rates
for many years now about three years and We've
survived way worse and it's not even that bad.
It's just not It's just not as quickly as I would
like it to and we build in a Segment that is
even you know is smaller market segment and that's
a slow -moving market anyway And now I feel like
it's just taking a tick back. That's even some
of the other things that are happening There's
a there's just a climate you know people have
had impact from the tariffs and from the stock
market You know there's I think it's even if
it doesn't it didn't directly affect me Yeah,
but I held back on purchasing two lots in Las
Vegas because of this I mean I'm falling into
it too, and I'm I hate fear, and I hate making
decisions off of fear But you also don't want
to be overexposed and you want to make sure this
company is still here in 10 years. You don't
want to get greedy. Now there will be, again,
I won't wait it out forever. So someone right
now is going to get an offer from me on a piece
of dirt in Lake Las Vegas. It just will. They
will. And maybe not now. They would have gotten
it two weeks ago, but maybe they'll get it in
two weeks or three weeks or four weeks. I would
like to see some buy opportunities in terms of
the parcel in order to pull me off that ledge.
So maybe some of our homes. if they're still
sitting, maybe they have to be a buy opportunity
for somebody. The margins in new construction,
especially luxury new construction, are really,
really great. So you can support and sustain
market fluctuations and incentives and concessions
and things like that. It's interesting right
now because there was a time in the market, obviously,
interest rates spiked. And so there was this
tangible factor that that created a bit of a
slow down right now it's just purely confidence
yeah it's just there's a climate in the air that
has people a little trepidatious yeah there's
just we had almost a 20 % stock market correction
in the last three weeks yeah we've regained a
lot of that but that'll spook you it spooked
me you know you just spook that's what it is
everybody's a little spooked just kind of We
had a little conversation yesterday that I liked
that when we're recounting these stories a year
later, two years later, six months later, you
throw weeks away like they're nothing. Remember
those eight weeks where it was like, but when
you're living it - That's true. It's so true.
Gosh, we haven't sold those two. We've got to
get rid of those and we've got to do this. You
just feel like, okay, remember that in hindsight,
the weeks shrink. I have to think back to, I
have to channel who I was in 2020. Right? Yeah.
All of March was terrifying. All of April was
terrifying. I remember all of May was terrifying.
I was still buying land. I was still doing it.
So I wasn't, it wasn't scaring me, obviously.
But again, we've had liberation day for three
weeks now. I mean, you know, COVID three weeks
into the COVID lockdown was barely the first
week of April. So it just shows you that we don't
think about it, but there's really not been a
lot of time elapsed for these things to kind
of iron themselves out and for people to realize,
okay, you know what, we're fine, we're gonna
make our moves. And for that fear to kind of
get absorbed back into the market as we start
to realize it maybe isn't gonna be as fearful
as we have thought. It works in both ways. You
remember 2021. there was a fear they were running
out of houses. So the fear worked in the opposite.
And we saw it in multiple offers, $50 ,000 over
list price, and appraisal waivers, inspection
waivers. It was fear operating to the benefit
of the real estate market. I think that overall
generally has a negative effect on the housing
market. But the sellers like it. Builders like
it in the short term. It's candy. It feels good
going down, but it makes you feel like crap later.
A little sugar hangover. Yep. So that's seasonality.
So there's a psychology to it, for sure. And
we're all affected by the climate. All right.
So that is spring selling season. And thanks
for joining us on a quick recap of what we know
about the market for today and what we're seeing
here in spring selling season as seasonality
is concerned. So thanks for joining us. on Trust
the Process podcast and we will see you next
time. Thanks. Bye bye. Thanks for tuning into
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