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back to Trust the Process podcast where we talk
about new homes, the housing industry, and everything
in between. We're hearing a lot of people in
the market right now saying we're going to wait
and see what happens. There is some trepidation
in the market. We've talked about that before.
And so one of the phrases, key phrases that we
hear is we're gonna wait and see what happens
with the market. And there are some pros and
cons to that. Obviously, we don't know what the
market will do moving forward, but what we do
know is what's happening right now in terms of
the cost. There is a cost associated with these
people who are waiting. And so how are builders
waiting that out? What cost is it having on the
market and the industry as a whole? whole and
what are buyers losing by by holding out for
the who knows what is to come. Yeah. Kind of
wanted to get your take on that and just have
a conversation about what we think is there a
cost associated with the wait and see method.
I think it's very situation dependent. So if
you are in a renting situation or you know you
should own or you need to buy or you're making
a major life move you're moving out of state
or you're retiring. downsizing. There is a cost
to waiting. I think of it the squirrel that runs
in the road and is terrified of which direction
and then gets run over. Because it's just analysis
paralysis and there is a cost to sitting in the
road deciding on which side of the road you're
gonna go run to. Get out of the road. So but
there are situations especially people that have
golden handcuffs on low interest rates and things
in their home. We're going to wait to upsize.
We're going to wait to downsize. We're going
to wait to make that move, whatever it is. We're
going to wait for our dream home. In that regard,
as much as I hate to admit it, I don't think
that there is a cost to waiting on that. I feel
that the market is uncertain. If the market did
get soft, 5 % or 10%. You feel that on the home
you're in right now, but you're going to feel
it on the buy side Assuming that you're kind
of trading in the same market and the cost might
be the inconvenience of living there Maybe now
you've had another baby and now kids are sharing
a room more or you know somebody's moved back
home when you yeah Yeah, so there's a lifestyle
that they're sacrificing on some level. Right.
Yeah, there's a sacrifice there that has a cost
associated with it. But in terms of the suffering
monetarily, I think that if you don't already
own something and you're in the same city, you
have gainful employment and you know you need
to buy something and you're spending an exorbitant
amount of money on rent, but you're just stuck
on these rates or you're stuck on home prices
or you're thinking there's something cataclysmic
around the corner. I've heard people a broken
clock is right twice a day right so eventually
a bear the bears are going to be right eventually
but how right are they so right now they're bears
basking in the glory of saying well buyers outweigh
sellers right now outnumber sellers so it is
a more favorable time to purchase a home yes
but you could have been three years down the
road of a mortgage you could probably would have
paid a five percent correction right now it takes
us back to the end of 2023 It's that you're only
you're you're if you were waiting from 21 you
still are paying more Yeah, and you're but you're
psychologically and some of those people are
waiting for prices to drop, right? That's one
of the weights that they are they waiting and
it's only going the opposite in general because
things are just more expensive labor costs generally
go in one direction and labor is tied to materials
because two -by -fours don't grow out of the
ground. They have to be harvested, milled and
sold and transported. I mean, all labor trickles
into all of those things and in general, wages
have one line. I mean, it's kind of like gas
prices, right? I mean, it's a fixed commodity
and they might have little tiny dips here and
there, but for the most part, it moves in one
line. So I think that in my experience on the
brokerage side, When someone says they're waiting
and they're blaming the market, they're really
they're not ready They don't have the money.
They don't have the credit whatever whatever
it is. They're blaming the market For the reason
why they're waiting, but that's not generally
in this case for the fear that they can't overcome
about right forward Which tells you that they
can't afford so they're not ready to have a $2
,800 house payment versus $2 ,200 in rent, which
is okay But to blame it on the market is not
correct because you would never, first of all
the tax savings right there is going to eat up
the extra $600 just to what you're going to save
in income tax and property tax deductions. the
pride of ownership. So if you're not ready for
the 20, that's fine, but don't blame it on the
market. You're not suddenly going to wake up
one day and go, oh my gosh, the exact same house
to buy again, $2 ,200. So the rates dropped from
seven to four and home values didn't change at
all. They didn't jump proportionately. They didn't
get into a seller's market where you're paying
over appraisal and you're fighting for a limited
stock of homes. So I think that to me, that's...
That frustrating part that you just you can't
tell somebody that they're ready to do something
that right you can't tell you hear me Tell the
agents that work for the brokerage all the time
don't want to more than they do Yeah, they have
to want it. They don't want it. Then what are
you wasting great breath for? You're just losing
credibility by Trying to cajole somebody that's
not ready. So and what about from a builder's
perspective? When somebody's when when the market
does have a weight, right? There has been a moment
of pause and there's where I know the market
sure Yeah, there's a little weight in in the
Sales world. So what how do you how do you pivot
for that? So this is a great I'm gonna spin the
word wait to me Yeah, I can wait for this home
to sell for this dollar amount that I picked
arbitrarily Or I can move the inventory because
I'm in the business of building and selling homes
So I can wait all I want. I'm gonna wait for
the market to turn I'm gonna hold on this house
cost me 11 ,000 a month But I'm going to hold
on. I'm going to hold on and wait. Or making
pricing decisions. We launched one two days ago.
And I wanted to go $100 ,000 higher. And I didn't.
I stuck where it was. I wanted to be into that
next pricing threshold. And I just thought, you
know what? I have more coming. And this is still
a good project. If it sells for this or even
10 % below what this is, it's still a successful
project. So I can wait all I want. Or I can be
in the business of buying building and selling
and selling and the transaction hasn't finished
You could build and build and build. Yeah, but
until it sells. That's that key point on your
plate Yeah, so I like to look at it that way
so I practice what I preach say I'm not gonna
wait because I could just say oh I'm gonna wait
rates have kind of you know been a little bit
elevated right now more than I thought You know
higher for longer and I could just say I'm gonna
wait I'm gonna wait until the rates come down
into the end of the high fives and then then
this house will sell for this. But you've also
paid a lot of money in carrying costs and tied
up a lot of cash in that deal that could be deployed
in other avenues. So I'm not a fan of waiting.
On the buy side, I don't wait to buy land. I
don't wait to sell homes. I find my own kind
of comfortable spot and go, I'm not going to
push the market. It's all contingent on how the
market's doing at that time. But in softer markets
like we're in now, They're gonna sit around and
wait and it's an interesting thought because
you're I'm not gonna sit around and wait is Is
hinged on the buyers? I mean buyers are waiting
for you to drop your price and you're saying
I'm not gonna drive not right, right So who's
going to bloom first? It's cyclical somehow that
they really rely on one another. So who's going
to break? Who's going to look for that? And I
like to be ahead of the market. So I like to
not even have to come to that point because I
want to price it right the first time. But I
also don't have any opposition to finding the
market if that means price reduction. And it
changes. The market we know is ever moving. So
you have to make price changes and fluctuate
a little bit with that. And hopefully catch the
attention of that. Yeah, sometimes you just have
to be a smoking, screaming good deal when homes
are costing you money to sit on your inventory.
It's different when we have stuff that's not
done and we have it listed through our builder,
director, and Zillow and things like other new
home sources. I'm not as motivated on those because
I can't sell it right now anyway. It's not done.
But when they're done, they go, okay, let's get
this thing going. Let's make sure that we're
the next one to sell on the zip code in this
price point. So that's kind of, I spin it on
myself. Yeah. And the one that we have right
now, coming up with some different ideas, different
incentives, different things that we can do to
try and move the needle, which has been fun and
exciting. I like having to be more competitive.
We have two actually that are completely done
and we're getting creative on one. The other
one's in a different price point where I think
we're going to be okay. It's a price point that
I could technically rent out if I had to. It's
in the $800 ,000 range, so it's okay. 1 .8, I
don't want to write that out. 1 .9, I don't want
to write that out. So I have to find price discovery.
So catching the attention, you know, dangling
a carrot in a way that catches the attention
of that potential, I'm going to wait it out,
right? Yeah, just to say, how much do you want
to wait? The relationships are entirely reliant.
Right. And thankfully with luxury builds, we
have a lot of uniqueness, whereas when we have
brokerage clients that are selling one of many
homes that all kind of fit that same box. Well,
the cost of a buyer waiting in a market that's
soft, they're probably not going to pay more
in six months. And if your home's not perfect,
then they're just not going to jump. We just
had this discussion today. If you're not compelling,
you're not pushing that buyer into the next zone
where they're ready to pull the trigger. So on
our luxury builds, first of all, we don't have
production builders competing with us in that
price point, the 1 .8 to 2 .5. And they're one
-offs. There's just one here and there. They're
one -off at the cost of the deal. You need lots,
so you get the feeling that... you might want
to jump on this. You might not want to wait.
If you are ready, go ahead and go for it. So
that's what I have to appeal to. And we have
to get more creative and throw in a $12 ,000
golf cart. Which we did. That was, yeah. Throw
it in. We'll throw it in. Yeah. A fun addition
in a golf course community. In a golf course
community, let's find a little niche that is
going to stand out. And there's not a ton of
inventory in there, but there's also not a ton
of turnover. There's not a ton of buyers that
circle through there. It's not like some other
zip codes that have People moving here locals
that are upsizing downsizing or moving around
or whatever and they don't have it doesn't have
that type of Critical mass yet in that in that
price point in that area. So you just got to
stand out. Yeah Yeah, all right, so there is
a cost associated for sure on both sides I mean,
I think that you know, they're missing those
buyers that aren't quite ready are missing great
homes There's the other side that says if everybody's
on the fence now's the time to jump in because
there's so much inventory There's so much available.
So it's it You know, there's a pro and a con
to it. They may not be able to find the home
they want by the time they're ready to make the
decision. Easily, easily. Because all the best
inventory will be gone. We've been in this business
long enough to know that as fast as it changes,
it changes. It changes. And it changes under
your feet. Yep. And you don't really know until
you look backwards on the market. Now we're looking
back the last 30 to 45 days going, oh, it really
has been a buyer's market. I mean, it feels like
a buyer's market. Maybe the data would argue,
and I know it's all... I don't know though, the
data supports. I mean, when we're looking at
the analytics and some of that data... out there.
This last 60 days has been, there's a lot of
shift that is happening. It's been a weird spring.
This is not, this is normally, but I think we
knew that was going to happen. We did. A lot
of sellers are saying, well, let's just wait
till spring and list it. Yep. No surprises. Cost
of waiting. You're waiting for what? More of
your neighbors to be selling as well. Right.
So I think, but I've just, you've been in this
business long enough to know that in three to
four months, It could be a completely different
story. And all those people are going to say,
boom, we were looking a few months ago. I feel
like there are so many more options. Yeah. And
now what? Now, I guess this one will do. It's
picked up. Yeah. So one thing that in Clark County,
in our metro, 15 % of homes that transacted last
month were new construction. Cross a lot of price
points. So that is they are way over -representing
the market. Because new construction is only
about Maybe seven eight percent of the market
that exacts every year So it's over represented
so two to one almost Arguably if you looked at
it proportionally sure so I mean there's an our
market of that is luxury so you're so worried
a smaller piece Yeah, because where we build
in South Shore Country Club like Las Vegas a
lot of that inventory are big Tired old homes,
and we are not refresh modern current sized more
appropriately for that buyer pool, 33 to 4 ,300
square feet, not 7 ,800 square feet, 10 ,000
square feet, eight car garages. I mean, those
are amenities that are really small, tip top
of that pyramid. And those buyers, those sellers
are wanting four, 3 .5. 2 .5, but the house needs
everything. The pool's 20 years old, the pump
is dead, the AC is ready to go. I mean, the home
represents a $100 ,000 bill when you buy it.
You're gonna be changing some major components
in the house, and there's a hot oven. There's
three water heaters instead of one or two. That's
the niche that we're in, and that's what helps
me sleep at night, but I'm ready to be more competitive.
I'm gonna have to be more competitive. I think
the biggest example of losing, you know, the
cost of wait and see are people that didn't do
it. You know, back when, let's say during the
COVID times, or when those things were, you know,
those people are like, gosh, we should have,
we didn't do, you know, and now the prices were
this then, and now they're this. You've priced
yourself out of whatever new home you think you
want, or if you're entry level, or if you're
luxury, you know, that move up. Exactly, you
might have now locked. been locked out of what
was once an affordable price point. Oh, for sure.
And when you're in a city that's growing, there's
no guarantee what a $400 ,000 home should look
like. Right. In a stable market, maybe East Coast
market that doesn't have a lot of influx to it,
it's kind of stable. Yeah, that home is going
to go up along with inflation and other factors,
maybe data center moved in or whatever. But in
this booming Southwest, now we're growth markets,
so we correct first. That doesn't change. Las
Vegas didn't just suddenly become less desirable
the last 60 days. So those are the things that
why I don't wait on development projects. We
have three subdivisions that are in various stages
right now. I'm not pausing any of those. I'm
not going to wait. I don't want to build those
because yeah. So then what? You wait four more
months and then by the time the market becomes
a seller's market again, you say, oh, I wish
I would have started that. I wish I had homes
to sell right now. No, you just got to go and
work in whatever market you're in. I think some
of that weight is is the fear of a catastrophic
moment. There's a boom, there's a bust, we're
about to, bottom's gonna fall out. There's these,
you know, the sky is falling kind of fears that
some people are carrying around with them from
who knows what. And I just, I don't think that's
where we're headed. I've never, the squirrel
in the middle of the road, I've never had that
fear. You cannot fear dictate your decision making.
I mean, you can let it inform certain decisions
within that plan. Okay, if you're a little afraid
of the market, then... maybe scale down your
product offering or dial down the spec level
or do four out of the six instead of six out
of six if you're gonna do a six. That's a thought,
yeah. You know, scale it down a little bit to
let the market kind of absorb it a little bit
more, but you can't... Just get out. I mean then
just don't you can't be a fair mother builder.
You can't just say only build in Jewish markets.
Oh, that'd be great That's actually great business
An infinite money printing machine And if we
could predict it right if our crystal balls all
worked and we knew when that was gonna be yeah
Sure, you're gonna time it that way But because
we don't and there are like you said we're looking
at it in the rear view mirror We know what has
happened and so it's hardly we can see yeah,
what trends have been but we are here and we,
you know, that what's out there is an unknown.
Look at the current market we're in right now,
60 days, and we had a lot of kind of national
turmoil, terrorists, and a lot of fear that maybe
sparked the whole thing, but in general, we're
not in much different of a spring than we were
last year, year before, year before. Rates are
nearly the same as they were in 2023, 2024, 2025.
We've had three springs now. Unemployment's roughly
the same. Actual personal income growth is up
from last quarter, so people are making more
money. The stock market is near all -time highs.
We'll probably start breaking records within
this month of June. If you look at all the analytics,
when you have a strong May, you almost always
finish the summer strong. So we're going to have
a great stock market, great employment picture.
were in a market that has always been desirable,
even in the lowest of the lowest. It's just got
a lot of sun. It's got a good tax comment. It's
got a lot of good stuff to do. It's close proximity
to millions and millions of people in other neighboring
states. That didn't just go away. That didn't
change. So I would have had, I would have really
had no way of seeing this buyer's market coming.
And I use that word loosely because it's so local.
I think we're there at $400 ,000 to $700 ,000
price point and certain gross imposes. Like you
said, it's local. I think in the luxury price
point, we just did the analytics this morning.
So we ran all of those numbers and it really
does look like or everything points to that section
of the market being in a buyer's side. Also,
that particular zip code we're looking at has
a lot of luxury homes. Right. You're going to
expect it to have more inventory. Sure. So you
go one area over and maybe they, you know, have
a much lower churn. So it's just so local price
point specific, amenity specific. Cause if I
said, look at what we build and say, Oh, I want
it to be in guard gated country club, new construction
under 2 .25 million. That's the sellers market.
And we're really the only seller. Right. So I
think that it's just so situation specific and
it's that's what real estate is so challenging
because. You can't, they're not really truly
commodities. They're not fungible. You can't
move them around. You can't generally change
them much, right? I mean, you can't change your
neighborhood. You can't change things without
major costs, you know, commitments. So you're
really kind of stuck with what it is. You can
do $100 ,000 renovation, but that's not, it's
still, the home is in its essence what it was.
And not still gonna serve exactly what you need
or what you might be looking for. So the moral
of the story, wait and see is not really serving.
No, it generally isn't. I mean, and we just had
this discussion today too, that inventory breeds
buyers generally. So as this inventory situation,
if it continues to go up, you'll see more buyers
come off the sideline because like I said, the
economic picture is not that much different.
There's some fear in the market because around
90 day pauses of tariffs and negotiations and
things like that. But ultimately, There's no
shyness in the stock market, right? There's very
little shyness on the builder side builders are
acquiring land and Going as if nothing's happening.
So I just feel like you know what? It's like
a big tablecloth. It'll find that the iron way
iron the kinks out of it. I feel that that's
just We're looking at a really small window of
time in the big scheme of things 60 days, 35
days, 40 days, really. Even if we had two quarters
that were kind of a housing recession, it's not
really the end of the world. As a builder, I
mean, I wouldn't necessarily want to own 15 rental
homes that I had to sell in the next three to
five months because those are... probably tired
used up homes. There's a reason you're selling
them and rents have kind of come down a little
bit. So from another investor standpoint, rentals
are not as appealing and the cost of money is
still really high. I don't know. The entry level
home is a little higher to get into. So rentals
aren't a bad gig either. They're not a bad gig.
The data is showing them softening, but we also
have a lot of inventory. Yeah. So rentals have
kind of lagged because it takes more time to
build a multi -family or condo. And investors
are feeling some of that. All right. So there
is a cost associated with waiting. So if you're
on the sidelines, if you think you want to get
into the market and you haven't yet, reconsider.
Look at it again. It could be the right time.
And if not, look historically at what you may
have missed in terms of pricing or rates over
time. Anyway, thanks for joining us on this episode
of Trust the Process. Hopefully you learned a
little something that gave you either a comfort
about decisions that you have made or the desire
to make decisions that you haven't yet. So we'll
hope to see you again next time. Thanks. Bye
-bye. Thanks for tuning into the Trust the Process
podcast. Make sure to follow us on Spotify to
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