WEBVTT 00:00:00.000 --> 00:00:03.040 Ever wonder what really happens behind the scenes 00:00:03.040 --> 00:00:05.379 in construction, real estate, and development? 00:00:05.559 --> 00:00:08.240 We pull back the curtain on the new home construction 00:00:08.240 --> 00:00:11.060 industry, the real estate market, and the trends 00:00:11.060 --> 00:00:14.060 shaping it all. Discover the stories, insights, 00:00:14.240 --> 00:00:16.199 and expertise behind the process of building 00:00:16.199 --> 00:00:19.579 a new home. Join us for Trust the Process podcast 00:00:19.579 --> 00:00:22.420 and let's build something great together. Welcome 00:00:22.420 --> 00:00:25.199 back to Trust the Process podcast where we talk 00:00:25.199 --> 00:00:28.719 about new homes, the housing industry, and everything 00:00:28.719 --> 00:00:31.300 in between. We're hearing a lot of people in 00:00:31.300 --> 00:00:33.420 the market right now saying we're going to wait 00:00:33.420 --> 00:00:35.820 and see what happens. There is some trepidation 00:00:35.820 --> 00:00:37.640 in the market. We've talked about that before. 00:00:38.840 --> 00:00:41.740 And so one of the phrases, key phrases that we 00:00:41.740 --> 00:00:45.000 hear is we're gonna wait and see what happens 00:00:45.000 --> 00:00:47.420 with the market. And there are some pros and 00:00:47.420 --> 00:00:49.579 cons to that. Obviously, we don't know what the 00:00:49.579 --> 00:00:51.439 market will do moving forward, but what we do 00:00:51.439 --> 00:00:53.880 know is what's happening right now in terms of 00:00:53.880 --> 00:00:56.219 the cost. There is a cost associated with these 00:00:56.219 --> 00:00:59.240 people who are waiting. And so how are builders 00:00:59.240 --> 00:01:02.679 waiting that out? What cost is it having on the 00:01:02.679 --> 00:01:05.019 market and the industry as a whole? whole and 00:01:05.019 --> 00:01:08.439 what are buyers losing by by holding out for 00:01:08.439 --> 00:01:11.739 the who knows what is to come. Yeah. Kind of 00:01:11.739 --> 00:01:14.540 wanted to get your take on that and just have 00:01:14.540 --> 00:01:16.459 a conversation about what we think is there a 00:01:16.459 --> 00:01:19.400 cost associated with the wait and see method. 00:01:19.799 --> 00:01:22.540 I think it's very situation dependent. So if 00:01:22.540 --> 00:01:26.879 you are in a renting situation or you know you 00:01:26.879 --> 00:01:30.620 should own or you need to buy or you're making 00:01:30.620 --> 00:01:32.599 a major life move you're moving out of state 00:01:32.599 --> 00:01:37.450 or you're retiring. downsizing. There is a cost 00:01:37.450 --> 00:01:41.450 to waiting. I think of it the squirrel that runs 00:01:41.450 --> 00:01:43.810 in the road and is terrified of which direction 00:01:43.810 --> 00:01:46.769 and then gets run over. Because it's just analysis 00:01:46.769 --> 00:01:49.230 paralysis and there is a cost to sitting in the 00:01:49.230 --> 00:01:51.609 road deciding on which side of the road you're 00:01:51.609 --> 00:01:55.129 gonna go run to. Get out of the road. So but 00:01:55.129 --> 00:01:57.750 there are situations especially people that have 00:01:57.750 --> 00:01:59.650 golden handcuffs on low interest rates and things 00:01:59.650 --> 00:02:02.549 in their home. We're going to wait to upsize. 00:02:02.730 --> 00:02:04.150 We're going to wait to downsize. We're going 00:02:04.150 --> 00:02:06.769 to wait to make that move, whatever it is. We're 00:02:06.769 --> 00:02:08.930 going to wait for our dream home. In that regard, 00:02:09.090 --> 00:02:10.569 as much as I hate to admit it, I don't think 00:02:10.569 --> 00:02:12.810 that there is a cost to waiting on that. I feel 00:02:12.810 --> 00:02:16.810 that the market is uncertain. If the market did 00:02:16.810 --> 00:02:20.000 get soft, 5 % or 10%. You feel that on the home 00:02:20.000 --> 00:02:21.580 you're in right now, but you're going to feel 00:02:21.580 --> 00:02:24.039 it on the buy side Assuming that you're kind 00:02:24.039 --> 00:02:26.680 of trading in the same market and the cost might 00:02:26.680 --> 00:02:28.819 be the inconvenience of living there Maybe now 00:02:28.819 --> 00:02:30.860 you've had another baby and now kids are sharing 00:02:30.860 --> 00:02:33.659 a room more or you know somebody's moved back 00:02:33.659 --> 00:02:38.139 home when you yeah Yeah, so there's a lifestyle 00:02:38.729 --> 00:02:41.270 that they're sacrificing on some level. Right. 00:02:41.389 --> 00:02:43.610 Yeah, there's a sacrifice there that has a cost 00:02:43.610 --> 00:02:46.990 associated with it. But in terms of the suffering 00:02:46.990 --> 00:02:50.069 monetarily, I think that if you don't already 00:02:50.069 --> 00:02:52.650 own something and you're in the same city, you 00:02:52.650 --> 00:02:54.930 have gainful employment and you know you need 00:02:54.930 --> 00:02:56.969 to buy something and you're spending an exorbitant 00:02:56.969 --> 00:02:59.590 amount of money on rent, but you're just stuck 00:02:59.590 --> 00:03:01.490 on these rates or you're stuck on home prices 00:03:01.490 --> 00:03:03.150 or you're thinking there's something cataclysmic 00:03:03.150 --> 00:03:06.560 around the corner. I've heard people a broken 00:03:06.560 --> 00:03:08.780 clock is right twice a day right so eventually 00:03:08.780 --> 00:03:11.340 a bear the bears are going to be right eventually 00:03:11.340 --> 00:03:14.580 but how right are they so right now they're bears 00:03:14.580 --> 00:03:18.840 basking in the glory of saying well buyers outweigh 00:03:18.840 --> 00:03:21.840 sellers right now outnumber sellers so it is 00:03:21.840 --> 00:03:24.699 a more favorable time to purchase a home yes 00:03:24.699 --> 00:03:26.800 but you could have been three years down the 00:03:26.800 --> 00:03:28.580 road of a mortgage you could probably would have 00:03:28.580 --> 00:03:31.419 paid a five percent correction right now it takes 00:03:31.419 --> 00:03:36.110 us back to the end of 2023 It's that you're only 00:03:36.110 --> 00:03:38.770 you're you're if you were waiting from 21 you 00:03:38.770 --> 00:03:41.530 still are paying more Yeah, and you're but you're 00:03:41.530 --> 00:03:43.289 psychologically and some of those people are 00:03:43.289 --> 00:03:46.590 waiting for prices to drop, right? That's one 00:03:46.590 --> 00:03:48.810 of the weights that they are they waiting and 00:03:48.810 --> 00:03:52.090 it's only going the opposite in general because 00:03:52.090 --> 00:03:54.669 things are just more expensive labor costs generally 00:03:54.669 --> 00:03:58.569 go in one direction and labor is tied to materials 00:03:58.569 --> 00:04:01.740 because two -by -fours don't grow out of the 00:04:01.740 --> 00:04:06.199 ground. They have to be harvested, milled and 00:04:06.199 --> 00:04:08.800 sold and transported. I mean, all labor trickles 00:04:08.800 --> 00:04:11.759 into all of those things and in general, wages 00:04:11.759 --> 00:04:15.699 have one line. I mean, it's kind of like gas 00:04:15.699 --> 00:04:18.300 prices, right? I mean, it's a fixed commodity 00:04:18.300 --> 00:04:20.860 and they might have little tiny dips here and 00:04:20.860 --> 00:04:22.639 there, but for the most part, it moves in one 00:04:22.639 --> 00:04:26.740 line. So I think that in my experience on the 00:04:26.740 --> 00:04:29.959 brokerage side, When someone says they're waiting 00:04:29.959 --> 00:04:32.779 and they're blaming the market, they're really 00:04:32.779 --> 00:04:35.339 they're not ready They don't have the money. 00:04:35.379 --> 00:04:36.660 They don't have the credit whatever whatever 00:04:36.660 --> 00:04:39.839 it is. They're blaming the market For the reason 00:04:39.839 --> 00:04:41.560 why they're waiting, but that's not generally 00:04:41.560 --> 00:04:44.379 in this case for the fear that they can't overcome 00:04:44.379 --> 00:04:46.939 about right forward Which tells you that they 00:04:46.939 --> 00:04:51.860 can't afford so they're not ready to have a $2 00:04:51.860 --> 00:04:54.379 ,800 house payment versus $2 ,200 in rent, which 00:04:54.379 --> 00:04:57.209 is okay But to blame it on the market is not 00:04:57.209 --> 00:04:59.290 correct because you would never, first of all 00:04:59.290 --> 00:05:00.949 the tax savings right there is going to eat up 00:05:00.949 --> 00:05:03.029 the extra $600 just to what you're going to save 00:05:03.029 --> 00:05:06.399 in income tax and property tax deductions. the 00:05:06.399 --> 00:05:08.240 pride of ownership. So if you're not ready for 00:05:08.240 --> 00:05:10.740 the 20, that's fine, but don't blame it on the 00:05:10.740 --> 00:05:12.740 market. You're not suddenly going to wake up 00:05:12.740 --> 00:05:14.620 one day and go, oh my gosh, the exact same house 00:05:14.620 --> 00:05:19.579 to buy again, $2 ,200. So the rates dropped from 00:05:19.579 --> 00:05:22.800 seven to four and home values didn't change at 00:05:22.800 --> 00:05:25.920 all. They didn't jump proportionately. They didn't 00:05:25.920 --> 00:05:27.959 get into a seller's market where you're paying 00:05:27.959 --> 00:05:30.180 over appraisal and you're fighting for a limited 00:05:30.180 --> 00:05:34.759 stock of homes. So I think that to me, that's... 00:05:34.889 --> 00:05:37.769 That frustrating part that you just you can't 00:05:37.769 --> 00:05:39.370 tell somebody that they're ready to do something 00:05:39.370 --> 00:05:41.670 that right you can't tell you hear me Tell the 00:05:41.670 --> 00:05:43.389 agents that work for the brokerage all the time 00:05:43.389 --> 00:05:46.089 don't want to more than they do Yeah, they have 00:05:46.089 --> 00:05:47.310 to want it. They don't want it. Then what are 00:05:47.310 --> 00:05:50.009 you wasting great breath for? You're just losing 00:05:50.009 --> 00:05:53.290 credibility by Trying to cajole somebody that's 00:05:53.290 --> 00:05:55.870 not ready. So and what about from a builder's 00:05:55.870 --> 00:05:58.370 perspective? When somebody's when when the market 00:05:58.370 --> 00:06:00.050 does have a weight, right? There has been a moment 00:06:00.050 --> 00:06:01.850 of pause and there's where I know the market 00:06:01.850 --> 00:06:04.449 sure Yeah, there's a little weight in in the 00:06:05.120 --> 00:06:08.360 Sales world. So what how do you how do you pivot 00:06:08.360 --> 00:06:12.620 for that? So this is a great I'm gonna spin the 00:06:12.620 --> 00:06:17.120 word wait to me Yeah, I can wait for this home 00:06:17.120 --> 00:06:19.300 to sell for this dollar amount that I picked 00:06:19.300 --> 00:06:23.740 arbitrarily Or I can move the inventory because 00:06:23.740 --> 00:06:25.680 I'm in the business of building and selling homes 00:06:25.680 --> 00:06:30.120 So I can wait all I want. I'm gonna wait for 00:06:30.120 --> 00:06:32.620 the market to turn I'm gonna hold on this house 00:06:32.620 --> 00:06:35.000 cost me 11 ,000 a month But I'm going to hold 00:06:35.000 --> 00:06:37.980 on. I'm going to hold on and wait. Or making 00:06:37.980 --> 00:06:40.639 pricing decisions. We launched one two days ago. 00:06:41.180 --> 00:06:44.360 And I wanted to go $100 ,000 higher. And I didn't. 00:06:44.420 --> 00:06:46.720 I stuck where it was. I wanted to be into that 00:06:46.720 --> 00:06:49.060 next pricing threshold. And I just thought, you 00:06:49.060 --> 00:06:52.759 know what? I have more coming. And this is still 00:06:52.759 --> 00:06:54.699 a good project. If it sells for this or even 00:06:54.699 --> 00:06:56.779 10 % below what this is, it's still a successful 00:06:56.779 --> 00:07:01.420 project. So I can wait all I want. Or I can be 00:07:01.420 --> 00:07:02.920 in the business of buying building and selling 00:07:02.920 --> 00:07:05.139 and selling and the transaction hasn't finished 00:07:05.139 --> 00:07:06.860 You could build and build and build. Yeah, but 00:07:06.860 --> 00:07:08.879 until it sells. That's that key point on your 00:07:08.879 --> 00:07:13.379 plate Yeah, so I like to look at it that way 00:07:13.379 --> 00:07:15.660 so I practice what I preach say I'm not gonna 00:07:15.660 --> 00:07:18.100 wait because I could just say oh I'm gonna wait 00:07:18.100 --> 00:07:19.779 rates have kind of you know been a little bit 00:07:19.779 --> 00:07:22.160 elevated right now more than I thought You know 00:07:22.160 --> 00:07:24.879 higher for longer and I could just say I'm gonna 00:07:24.879 --> 00:07:26.480 wait I'm gonna wait until the rates come down 00:07:26.480 --> 00:07:29.810 into the end of the high fives and then then 00:07:29.810 --> 00:07:32.089 this house will sell for this. But you've also 00:07:32.089 --> 00:07:34.129 paid a lot of money in carrying costs and tied 00:07:34.129 --> 00:07:37.310 up a lot of cash in that deal that could be deployed 00:07:37.310 --> 00:07:39.790 in other avenues. So I'm not a fan of waiting. 00:07:40.970 --> 00:07:43.550 On the buy side, I don't wait to buy land. I 00:07:43.550 --> 00:07:48.269 don't wait to sell homes. I find my own kind 00:07:48.269 --> 00:07:50.829 of comfortable spot and go, I'm not going to 00:07:50.829 --> 00:07:53.129 push the market. It's all contingent on how the 00:07:53.129 --> 00:07:54.850 market's doing at that time. But in softer markets 00:07:54.850 --> 00:07:57.389 like we're in now, They're gonna sit around and 00:07:57.389 --> 00:07:59.509 wait and it's an interesting thought because 00:07:59.509 --> 00:08:04.050 you're I'm not gonna sit around and wait is Is 00:08:04.050 --> 00:08:08.050 hinged on the buyers? I mean buyers are waiting 00:08:08.050 --> 00:08:09.709 for you to drop your price and you're saying 00:08:09.709 --> 00:08:13.860 I'm not gonna drive not right, right So who's 00:08:13.860 --> 00:08:15.199 going to bloom first? It's cyclical somehow that 00:08:15.199 --> 00:08:17.459 they really rely on one another. So who's going 00:08:17.459 --> 00:08:19.920 to break? Who's going to look for that? And I 00:08:19.920 --> 00:08:22.319 like to be ahead of the market. So I like to 00:08:22.319 --> 00:08:24.699 not even have to come to that point because I 00:08:24.699 --> 00:08:26.319 want to price it right the first time. But I 00:08:26.319 --> 00:08:29.180 also don't have any opposition to finding the 00:08:29.180 --> 00:08:31.560 market if that means price reduction. And it 00:08:31.560 --> 00:08:34.720 changes. The market we know is ever moving. So 00:08:34.720 --> 00:08:36.879 you have to make price changes and fluctuate 00:08:36.879 --> 00:08:40.080 a little bit with that. And hopefully catch the 00:08:40.080 --> 00:08:43.690 attention of that. Yeah, sometimes you just have 00:08:43.690 --> 00:08:47.110 to be a smoking, screaming good deal when homes 00:08:47.110 --> 00:08:49.509 are costing you money to sit on your inventory. 00:08:50.269 --> 00:08:52.070 It's different when we have stuff that's not 00:08:52.070 --> 00:08:54.610 done and we have it listed through our builder, 00:08:54.789 --> 00:08:57.470 director, and Zillow and things like other new 00:08:57.470 --> 00:08:59.789 home sources. I'm not as motivated on those because 00:08:59.789 --> 00:09:01.370 I can't sell it right now anyway. It's not done. 00:09:01.889 --> 00:09:03.889 But when they're done, they go, okay, let's get 00:09:03.889 --> 00:09:05.450 this thing going. Let's make sure that we're 00:09:05.450 --> 00:09:07.830 the next one to sell on the zip code in this 00:09:07.830 --> 00:09:10.980 price point. So that's kind of, I spin it on 00:09:10.980 --> 00:09:13.279 myself. Yeah. And the one that we have right 00:09:13.279 --> 00:09:16.639 now, coming up with some different ideas, different 00:09:16.639 --> 00:09:18.500 incentives, different things that we can do to 00:09:18.500 --> 00:09:21.519 try and move the needle, which has been fun and 00:09:21.519 --> 00:09:23.860 exciting. I like having to be more competitive. 00:09:24.500 --> 00:09:27.080 We have two actually that are completely done 00:09:27.080 --> 00:09:29.779 and we're getting creative on one. The other 00:09:29.779 --> 00:09:31.100 one's in a different price point where I think 00:09:31.100 --> 00:09:33.460 we're going to be okay. It's a price point that 00:09:33.460 --> 00:09:35.740 I could technically rent out if I had to. It's 00:09:35.740 --> 00:09:39.759 in the $800 ,000 range, so it's okay. 1 .8, I 00:09:39.759 --> 00:09:41.820 don't want to write that out. 1 .9, I don't want 00:09:41.820 --> 00:09:42.980 to write that out. So I have to find price discovery. 00:09:42.980 --> 00:09:44.759 So catching the attention, you know, dangling 00:09:44.759 --> 00:09:46.559 a carrot in a way that catches the attention 00:09:46.559 --> 00:09:49.139 of that potential, I'm going to wait it out, 00:09:49.299 --> 00:09:51.399 right? Yeah, just to say, how much do you want 00:09:51.399 --> 00:09:52.740 to wait? The relationships are entirely reliant. 00:09:53.000 --> 00:09:55.639 Right. And thankfully with luxury builds, we 00:09:55.639 --> 00:09:59.879 have a lot of uniqueness, whereas when we have 00:09:59.879 --> 00:10:01.580 brokerage clients that are selling one of many 00:10:01.580 --> 00:10:04.570 homes that all kind of fit that same box. Well, 00:10:04.929 --> 00:10:06.970 the cost of a buyer waiting in a market that's 00:10:06.970 --> 00:10:08.230 soft, they're probably not going to pay more 00:10:08.230 --> 00:10:10.850 in six months. And if your home's not perfect, 00:10:10.929 --> 00:10:12.629 then they're just not going to jump. We just 00:10:12.629 --> 00:10:15.049 had this discussion today. If you're not compelling, 00:10:15.289 --> 00:10:18.730 you're not pushing that buyer into the next zone 00:10:18.730 --> 00:10:20.769 where they're ready to pull the trigger. So on 00:10:20.769 --> 00:10:23.269 our luxury builds, first of all, we don't have 00:10:23.269 --> 00:10:24.889 production builders competing with us in that 00:10:24.889 --> 00:10:27.330 price point, the 1 .8 to 2 .5. And they're one 00:10:27.330 --> 00:10:29.690 -offs. There's just one here and there. They're 00:10:29.690 --> 00:10:30.429 one -off at the cost of the deal. You need lots, 00:10:30.470 --> 00:10:32.789 so you get the feeling that... you might want 00:10:32.789 --> 00:10:34.570 to jump on this. You might not want to wait. 00:10:34.789 --> 00:10:37.330 If you are ready, go ahead and go for it. So 00:10:37.330 --> 00:10:40.289 that's what I have to appeal to. And we have 00:10:40.289 --> 00:10:43.169 to get more creative and throw in a $12 ,000 00:10:43.169 --> 00:10:45.710 golf cart. Which we did. That was, yeah. Throw 00:10:45.710 --> 00:10:48.049 it in. We'll throw it in. Yeah. A fun addition 00:10:48.049 --> 00:10:50.110 in a golf course community. In a golf course 00:10:50.110 --> 00:10:53.029 community, let's find a little niche that is 00:10:53.029 --> 00:10:54.769 going to stand out. And there's not a ton of 00:10:54.769 --> 00:10:56.169 inventory in there, but there's also not a ton 00:10:56.169 --> 00:10:58.429 of turnover. There's not a ton of buyers that 00:10:58.429 --> 00:11:00.389 circle through there. It's not like some other 00:11:00.389 --> 00:11:03.600 zip codes that have People moving here locals 00:11:03.600 --> 00:11:05.700 that are upsizing downsizing or moving around 00:11:05.700 --> 00:11:07.200 or whatever and they don't have it doesn't have 00:11:07.200 --> 00:11:10.700 that type of Critical mass yet in that in that 00:11:10.700 --> 00:11:13.159 price point in that area. So you just got to 00:11:13.159 --> 00:11:16.950 stand out. Yeah Yeah, all right, so there is 00:11:16.950 --> 00:11:19.669 a cost associated for sure on both sides I mean, 00:11:19.669 --> 00:11:22.029 I think that you know, they're missing those 00:11:22.029 --> 00:11:24.389 buyers that aren't quite ready are missing great 00:11:24.389 --> 00:11:27.250 homes There's the other side that says if everybody's 00:11:27.250 --> 00:11:29.250 on the fence now's the time to jump in because 00:11:29.250 --> 00:11:31.549 there's so much inventory There's so much available. 00:11:31.549 --> 00:11:33.679 So it's it You know, there's a pro and a con 00:11:33.679 --> 00:11:35.539 to it. They may not be able to find the home 00:11:35.539 --> 00:11:37.679 they want by the time they're ready to make the 00:11:37.679 --> 00:11:38.919 decision. Easily, easily. Because all the best 00:11:38.919 --> 00:11:40.779 inventory will be gone. We've been in this business 00:11:40.779 --> 00:11:42.740 long enough to know that as fast as it changes, 00:11:42.820 --> 00:11:44.480 it changes. It changes. And it changes under 00:11:44.480 --> 00:11:46.600 your feet. Yep. And you don't really know until 00:11:46.600 --> 00:11:48.480 you look backwards on the market. Now we're looking 00:11:48.480 --> 00:11:52.019 back the last 30 to 45 days going, oh, it really 00:11:52.019 --> 00:11:54.240 has been a buyer's market. I mean, it feels like 00:11:54.240 --> 00:11:55.860 a buyer's market. Maybe the data would argue, 00:11:55.899 --> 00:11:57.679 and I know it's all... I don't know though, the 00:11:57.679 --> 00:11:59.659 data supports. I mean, when we're looking at 00:11:59.659 --> 00:12:02.279 the analytics and some of that data... out there. 00:12:03.419 --> 00:12:06.580 This last 60 days has been, there's a lot of 00:12:06.580 --> 00:12:09.500 shift that is happening. It's been a weird spring. 00:12:09.919 --> 00:12:11.740 This is not, this is normally, but I think we 00:12:11.740 --> 00:12:13.379 knew that was going to happen. We did. A lot 00:12:13.379 --> 00:12:15.320 of sellers are saying, well, let's just wait 00:12:15.320 --> 00:12:18.419 till spring and list it. Yep. No surprises. Cost 00:12:18.419 --> 00:12:20.960 of waiting. You're waiting for what? More of 00:12:20.960 --> 00:12:22.820 your neighbors to be selling as well. Right. 00:12:22.980 --> 00:12:25.220 So I think, but I've just, you've been in this 00:12:25.220 --> 00:12:27.740 business long enough to know that in three to 00:12:27.740 --> 00:12:29.700 four months, It could be a completely different 00:12:29.700 --> 00:12:31.399 story. And all those people are going to say, 00:12:31.620 --> 00:12:33.500 boom, we were looking a few months ago. I feel 00:12:33.500 --> 00:12:35.620 like there are so many more options. Yeah. And 00:12:35.620 --> 00:12:38.860 now what? Now, I guess this one will do. It's 00:12:38.860 --> 00:12:42.379 picked up. Yeah. So one thing that in Clark County, 00:12:42.440 --> 00:12:46.659 in our metro, 15 % of homes that transacted last 00:12:46.659 --> 00:12:48.980 month were new construction. Cross a lot of price 00:12:48.980 --> 00:12:52.639 points. So that is they are way over -representing 00:12:52.639 --> 00:12:54.500 the market. Because new construction is only 00:12:54.500 --> 00:12:58.610 about Maybe seven eight percent of the market 00:12:58.610 --> 00:13:03.710 that exacts every year So it's over represented 00:13:03.710 --> 00:13:07.570 so two to one almost Arguably if you looked at 00:13:07.570 --> 00:13:10.070 it proportionally sure so I mean there's an our 00:13:10.070 --> 00:13:12.529 market of that is luxury so you're so worried 00:13:12.529 --> 00:13:15.590 a smaller piece Yeah, because where we build 00:13:15.590 --> 00:13:18.309 in South Shore Country Club like Las Vegas a 00:13:18.309 --> 00:13:21.830 lot of that inventory are big Tired old homes, 00:13:21.929 --> 00:13:26.100 and we are not refresh modern current sized more 00:13:26.100 --> 00:13:28.519 appropriately for that buyer pool, 33 to 4 ,300 00:13:28.519 --> 00:13:31.419 square feet, not 7 ,800 square feet, 10 ,000 00:13:31.419 --> 00:13:33.299 square feet, eight car garages. I mean, those 00:13:33.299 --> 00:13:35.779 are amenities that are really small, tip top 00:13:35.779 --> 00:13:38.379 of that pyramid. And those buyers, those sellers 00:13:38.379 --> 00:13:42.059 are wanting four, 3 .5. 2 .5, but the house needs 00:13:42.059 --> 00:13:44.399 everything. The pool's 20 years old, the pump 00:13:44.399 --> 00:13:46.840 is dead, the AC is ready to go. I mean, the home 00:13:46.840 --> 00:13:48.879 represents a $100 ,000 bill when you buy it. 00:13:49.179 --> 00:13:51.580 You're gonna be changing some major components 00:13:51.580 --> 00:13:53.480 in the house, and there's a hot oven. There's 00:13:53.480 --> 00:13:57.179 three water heaters instead of one or two. That's 00:13:57.179 --> 00:13:58.840 the niche that we're in, and that's what helps 00:13:58.840 --> 00:14:01.840 me sleep at night, but I'm ready to be more competitive. 00:14:01.980 --> 00:14:04.519 I'm gonna have to be more competitive. I think 00:14:04.519 --> 00:14:07.700 the biggest example of losing, you know, the 00:14:07.700 --> 00:14:09.700 cost of wait and see are people that didn't do 00:14:09.700 --> 00:14:12.580 it. You know, back when, let's say during the 00:14:12.580 --> 00:14:14.139 COVID times, or when those things were, you know, 00:14:14.320 --> 00:14:16.120 those people are like, gosh, we should have, 00:14:16.279 --> 00:14:18.460 we didn't do, you know, and now the prices were 00:14:18.460 --> 00:14:20.919 this then, and now they're this. You've priced 00:14:20.919 --> 00:14:22.779 yourself out of whatever new home you think you 00:14:22.779 --> 00:14:24.559 want, or if you're entry level, or if you're 00:14:24.559 --> 00:14:27.019 luxury, you know, that move up. Exactly, you 00:14:27.019 --> 00:14:29.799 might have now locked. been locked out of what 00:14:29.799 --> 00:14:32.080 was once an affordable price point. Oh, for sure. 00:14:32.200 --> 00:14:34.100 And when you're in a city that's growing, there's 00:14:34.100 --> 00:14:36.899 no guarantee what a $400 ,000 home should look 00:14:36.899 --> 00:14:39.340 like. Right. In a stable market, maybe East Coast 00:14:39.340 --> 00:14:40.940 market that doesn't have a lot of influx to it, 00:14:40.960 --> 00:14:43.580 it's kind of stable. Yeah, that home is going 00:14:43.580 --> 00:14:45.600 to go up along with inflation and other factors, 00:14:46.179 --> 00:14:48.960 maybe data center moved in or whatever. But in 00:14:48.960 --> 00:14:51.679 this booming Southwest, now we're growth markets, 00:14:51.720 --> 00:14:55.210 so we correct first. That doesn't change. Las 00:14:55.210 --> 00:14:57.090 Vegas didn't just suddenly become less desirable 00:14:57.090 --> 00:15:00.169 the last 60 days. So those are the things that 00:15:00.169 --> 00:15:01.870 why I don't wait on development projects. We 00:15:01.870 --> 00:15:04.330 have three subdivisions that are in various stages 00:15:04.330 --> 00:15:06.230 right now. I'm not pausing any of those. I'm 00:15:06.230 --> 00:15:08.250 not going to wait. I don't want to build those 00:15:08.250 --> 00:15:10.629 because yeah. So then what? You wait four more 00:15:10.629 --> 00:15:12.330 months and then by the time the market becomes 00:15:12.330 --> 00:15:13.850 a seller's market again, you say, oh, I wish 00:15:13.850 --> 00:15:15.090 I would have started that. I wish I had homes 00:15:15.090 --> 00:15:17.750 to sell right now. No, you just got to go and 00:15:17.750 --> 00:15:20.529 work in whatever market you're in. I think some 00:15:20.529 --> 00:15:23.830 of that weight is is the fear of a catastrophic 00:15:23.830 --> 00:15:25.769 moment. There's a boom, there's a bust, we're 00:15:25.769 --> 00:15:27.889 about to, bottom's gonna fall out. There's these, 00:15:28.110 --> 00:15:30.669 you know, the sky is falling kind of fears that 00:15:30.669 --> 00:15:33.070 some people are carrying around with them from 00:15:33.070 --> 00:15:37.990 who knows what. And I just, I don't think that's 00:15:37.990 --> 00:15:39.529 where we're headed. I've never, the squirrel 00:15:39.529 --> 00:15:40.669 in the middle of the road, I've never had that 00:15:40.669 --> 00:15:42.950 fear. You cannot fear dictate your decision making. 00:15:43.049 --> 00:15:45.950 I mean, you can let it inform certain decisions 00:15:45.950 --> 00:15:48.789 within that plan. Okay, if you're a little afraid 00:15:48.789 --> 00:15:50.629 of the market, then... maybe scale down your 00:15:50.629 --> 00:15:53.610 product offering or dial down the spec level 00:15:53.610 --> 00:15:57.110 or do four out of the six instead of six out 00:15:57.110 --> 00:15:59.570 of six if you're gonna do a six. That's a thought, 00:15:59.809 --> 00:16:02.429 yeah. You know, scale it down a little bit to 00:16:02.429 --> 00:16:04.590 let the market kind of absorb it a little bit 00:16:04.590 --> 00:16:08.690 more, but you can't... Just get out. I mean then 00:16:08.690 --> 00:16:10.750 just don't you can't be a fair mother builder. 00:16:10.789 --> 00:16:12.629 You can't just say only build in Jewish markets. 00:16:12.649 --> 00:16:16.649 Oh, that'd be great That's actually great business 00:16:16.649 --> 00:16:21.049 An infinite money printing machine And if we 00:16:21.049 --> 00:16:22.769 could predict it right if our crystal balls all 00:16:22.769 --> 00:16:24.590 worked and we knew when that was gonna be yeah 00:16:24.590 --> 00:16:26.370 Sure, you're gonna time it that way But because 00:16:26.370 --> 00:16:28.470 we don't and there are like you said we're looking 00:16:28.470 --> 00:16:31.009 at it in the rear view mirror We know what has 00:16:31.009 --> 00:16:33.370 happened and so it's hardly we can see yeah, 00:16:33.370 --> 00:16:37.039 what trends have been but we are here and we, 00:16:37.159 --> 00:16:40.080 you know, that what's out there is an unknown. 00:16:40.179 --> 00:16:41.879 Look at the current market we're in right now, 00:16:42.019 --> 00:16:45.399 60 days, and we had a lot of kind of national 00:16:45.399 --> 00:16:48.620 turmoil, terrorists, and a lot of fear that maybe 00:16:48.620 --> 00:16:50.500 sparked the whole thing, but in general, we're 00:16:50.500 --> 00:16:52.799 not in much different of a spring than we were 00:16:52.799 --> 00:16:54.679 last year, year before, year before. Rates are 00:16:54.679 --> 00:16:58.559 nearly the same as they were in 2023, 2024, 2025. 00:16:58.720 --> 00:17:01.620 We've had three springs now. Unemployment's roughly 00:17:01.620 --> 00:17:04.700 the same. Actual personal income growth is up 00:17:04.700 --> 00:17:07.460 from last quarter, so people are making more 00:17:07.460 --> 00:17:10.140 money. The stock market is near all -time highs. 00:17:10.700 --> 00:17:12.859 We'll probably start breaking records within 00:17:12.859 --> 00:17:15.039 this month of June. If you look at all the analytics, 00:17:15.099 --> 00:17:16.579 when you have a strong May, you almost always 00:17:16.579 --> 00:17:19.460 finish the summer strong. So we're going to have 00:17:19.460 --> 00:17:22.220 a great stock market, great employment picture. 00:17:23.069 --> 00:17:25.630 were in a market that has always been desirable, 00:17:25.710 --> 00:17:27.529 even in the lowest of the lowest. It's just got 00:17:27.529 --> 00:17:29.390 a lot of sun. It's got a good tax comment. It's 00:17:29.390 --> 00:17:31.549 got a lot of good stuff to do. It's close proximity 00:17:31.549 --> 00:17:34.950 to millions and millions of people in other neighboring 00:17:34.950 --> 00:17:37.829 states. That didn't just go away. That didn't 00:17:37.829 --> 00:17:39.930 change. So I would have had, I would have really 00:17:39.930 --> 00:17:41.710 had no way of seeing this buyer's market coming. 00:17:42.529 --> 00:17:45.690 And I use that word loosely because it's so local. 00:17:46.589 --> 00:17:49.769 I think we're there at $400 ,000 to $700 ,000 00:17:49.769 --> 00:17:51.890 price point and certain gross imposes. Like you 00:17:51.890 --> 00:17:53.730 said, it's local. I think in the luxury price 00:17:53.730 --> 00:17:56.670 point, we just did the analytics this morning. 00:17:56.890 --> 00:17:58.950 So we ran all of those numbers and it really 00:17:58.950 --> 00:18:04.430 does look like or everything points to that section 00:18:04.430 --> 00:18:06.609 of the market being in a buyer's side. Also, 00:18:06.809 --> 00:18:08.289 that particular zip code we're looking at has 00:18:08.289 --> 00:18:10.259 a lot of luxury homes. Right. You're going to 00:18:10.259 --> 00:18:12.480 expect it to have more inventory. Sure. So you 00:18:12.480 --> 00:18:15.680 go one area over and maybe they, you know, have 00:18:15.680 --> 00:18:19.299 a much lower churn. So it's just so local price 00:18:19.299 --> 00:18:21.940 point specific, amenity specific. Cause if I 00:18:21.940 --> 00:18:24.039 said, look at what we build and say, Oh, I want 00:18:24.039 --> 00:18:26.660 it to be in guard gated country club, new construction 00:18:26.660 --> 00:18:30.079 under 2 .25 million. That's the sellers market. 00:18:30.079 --> 00:18:32.279 And we're really the only seller. Right. So I 00:18:32.279 --> 00:18:36.000 think that it's just so situation specific and 00:18:36.000 --> 00:18:38.039 it's that's what real estate is so challenging 00:18:38.039 --> 00:18:41.279 because. You can't, they're not really truly 00:18:41.279 --> 00:18:43.119 commodities. They're not fungible. You can't 00:18:43.119 --> 00:18:45.539 move them around. You can't generally change 00:18:45.539 --> 00:18:47.359 them much, right? I mean, you can't change your 00:18:47.359 --> 00:18:50.039 neighborhood. You can't change things without 00:18:50.039 --> 00:18:54.440 major costs, you know, commitments. So you're 00:18:54.440 --> 00:18:56.259 really kind of stuck with what it is. You can 00:18:56.259 --> 00:18:59.099 do $100 ,000 renovation, but that's not, it's 00:18:59.099 --> 00:19:01.920 still, the home is in its essence what it was. 00:19:02.059 --> 00:19:04.539 And not still gonna serve exactly what you need 00:19:04.539 --> 00:19:07.400 or what you might be looking for. So the moral 00:19:07.400 --> 00:19:10.980 of the story, wait and see is not really serving. 00:19:11.180 --> 00:19:13.920 No, it generally isn't. I mean, and we just had 00:19:13.920 --> 00:19:16.500 this discussion today too, that inventory breeds 00:19:16.500 --> 00:19:20.680 buyers generally. So as this inventory situation, 00:19:20.680 --> 00:19:23.859 if it continues to go up, you'll see more buyers 00:19:23.859 --> 00:19:25.359 come off the sideline because like I said, the 00:19:25.359 --> 00:19:27.059 economic picture is not that much different. 00:19:27.759 --> 00:19:29.599 There's some fear in the market because around 00:19:29.599 --> 00:19:32.180 90 day pauses of tariffs and negotiations and 00:19:32.180 --> 00:19:36.400 things like that. But ultimately, There's no 00:19:36.400 --> 00:19:39.599 shyness in the stock market, right? There's very 00:19:39.599 --> 00:19:42.160 little shyness on the builder side builders are 00:19:42.160 --> 00:19:45.640 acquiring land and Going as if nothing's happening. 00:19:45.700 --> 00:19:48.140 So I just feel like you know what? It's like 00:19:48.140 --> 00:19:50.660 a big tablecloth. It'll find that the iron way 00:19:50.660 --> 00:19:53.240 iron the kinks out of it. I feel that that's 00:19:53.240 --> 00:19:57.599 just We're looking at a really small window of 00:19:57.599 --> 00:20:01.210 time in the big scheme of things 60 days, 35 00:20:01.210 --> 00:20:05.150 days, 40 days, really. Even if we had two quarters 00:20:05.150 --> 00:20:08.670 that were kind of a housing recession, it's not 00:20:08.670 --> 00:20:12.049 really the end of the world. As a builder, I 00:20:12.049 --> 00:20:14.250 mean, I wouldn't necessarily want to own 15 rental 00:20:14.250 --> 00:20:16.509 homes that I had to sell in the next three to 00:20:16.509 --> 00:20:18.849 five months because those are... probably tired 00:20:18.849 --> 00:20:21.630 used up homes. There's a reason you're selling 00:20:21.630 --> 00:20:23.809 them and rents have kind of come down a little 00:20:23.809 --> 00:20:26.430 bit. So from another investor standpoint, rentals 00:20:26.430 --> 00:20:28.230 are not as appealing and the cost of money is 00:20:28.230 --> 00:20:30.170 still really high. I don't know. The entry level 00:20:30.170 --> 00:20:32.509 home is a little higher to get into. So rentals 00:20:32.509 --> 00:20:34.769 aren't a bad gig either. They're not a bad gig. 00:20:35.569 --> 00:20:37.750 The data is showing them softening, but we also 00:20:37.750 --> 00:20:40.150 have a lot of inventory. Yeah. So rentals have 00:20:40.150 --> 00:20:43.250 kind of lagged because it takes more time to 00:20:43.250 --> 00:20:45.450 build a multi -family or condo. And investors 00:20:45.450 --> 00:20:49.130 are feeling some of that. All right. So there 00:20:49.130 --> 00:20:51.829 is a cost associated with waiting. So if you're 00:20:51.829 --> 00:20:53.789 on the sidelines, if you think you want to get 00:20:53.789 --> 00:20:56.430 into the market and you haven't yet, reconsider. 00:20:56.529 --> 00:20:58.569 Look at it again. It could be the right time. 00:20:58.569 --> 00:21:01.450 And if not, look historically at what you may 00:21:01.450 --> 00:21:03.630 have missed in terms of pricing or rates over 00:21:03.630 --> 00:21:07.599 time. Anyway, thanks for joining us on this episode 00:21:07.599 --> 00:21:09.480 of Trust the Process. Hopefully you learned a 00:21:09.480 --> 00:21:12.140 little something that gave you either a comfort 00:21:12.140 --> 00:21:15.500 about decisions that you have made or the desire 00:21:15.500 --> 00:21:18.440 to make decisions that you haven't yet. So we'll 00:21:18.440 --> 00:21:20.960 hope to see you again next time. Thanks. Bye 00:21:20.960 --> 00:21:24.180 -bye. Thanks for tuning into the Trust the Process 00:21:24.180 --> 00:21:27.240 podcast. Make sure to follow us on Spotify to 00:21:27.240 --> 00:21:29.680 stay in the loop with the latest insights, project 00:21:29.680 --> 00:21:32.220 updates, and everything in between. See you next 00:21:32.220 --> 00:21:32.480 time.