that has that's why I throw history out because
I can't believe I just said that because there's
there's no there's never been a time like this
where buyers had and just general public had
so much knowledge at their fingertips of the
real estate market and with that I don't think
there's any going back Pandora is out and Ever
wonder what really happens behind the scenes
in construction, real estate and development?
We pull back the curtain on the new home construction
industry, the real estate market and the trends
shaping it all. Discover the stories, insights,
and expertise behind the process of building
a new home. Join us for Trust the Process podcast
and let's build something great together. Welcome
back to Trust the Process podcast where we talk
about the housing industry, new homes, and everything
that falls in between. Wanted to talk today about
some cycles and the history and trends and kind
of what we're seeing in the market. So some comebacks
over time and things that have historically proven
successful, not successful. Where are we at taking
the trends that we're seeing today and sort of
applying them to the historical value that we
know. And our resident expert happens to be a
history buff. So take us there. Tell us some
more about what we're seeing and historically
what we know about the cycles that are presenting
themselves now and where they've been presented
in the past. The urge to make a feudal England.
Go, go, go. Go ahead and do it. Land ownership
started. Okay. Well, okay. We are in such unprecedented.
The market's never going to be the same when
you look back more than 10 years. The rules and
the logic that you could apply to the real estate
market in 2025 versus like, let's say what I'm
getting at is pre -Zillow, pre -third party syndication
sites, pre the commoditization of housing where
everyone kind of is at least somewhat informed
on the market. I don't want to say everyone,
but a lot of people are at least somewhat informed.
Or they have a resource that's readily available.
At least they have, yeah, a way that kind of...
Yeah. So to say it more concise is that there's
so much transparency now in the real estate market,
it's... It's gonna be hard to apply the logic
and the thought processes of pre -2010, let's
call it, where there was a time when you had
to go on www .Zillow .com just to get to Zillow,
which didn't even have the kind of transparency
it has. Now it's an app, I'm thinking I think
it was 2008, 2009, and it didn't syndicate from
the MLS. We started syndicating to the MLS by
default, I wanna say in around 2014 or 15, and
we as brokers would have to opt in. Do you wanna
opt in? Now you have to opt. That syndicates
from other channels now too. You've got BDX platforms,
you've got Zom, you've got Livable, I mean all
of those others, it's all streamed out to the
masses. Basically Zillow which owns truly us
and then realtor .com and homes .com. I mean
there's really very few players in that space
and they get a lot of unique visitors, they get
a lot of eyeballs and that's a good way to gauge
the market nowadays to say, okay, we're in a
bit of a buyer's market in many cities, a high
growth market, cities, Phoenix, Las Vegas, most
of Texas, Florida. Atlanta is a struggling, I
shouldn't say struggling, but it's a pretty intense
buyer's market right now in many of the outer
ring suburbs, because Atlanta sprawls so much.
You have a lot of exurbs, a lot of places that
may be only boomed when the market was really
tight. And now that they're not booming, it's
kind of okay. What happens there? Places like
Vegas and Phoenix were closed market. We don't
have suburbs. We're kind of one giant suburb
So yeah, we might have a little bit of a softening
just because we're a high -growth market But
ultimately there's nowhere to go if you want
to live in Las Vegas you live in Las Vegas. I
mean, you can go to Kennesaw. I mean, you can
live in... Oh, sometimes probably two hours from
one city to the other. We don't really sprawl.
We look like we sprawl if you take a flight into
Las Vegas. But versus other East Coast metros,
how far is Philly? Philly sprawls all the way
into New Jersey. There's areas of New Jersey
that are Philadelphia suburbs, not New York City
suburbs. That's how sprawling it is on the East
Coast and maybe in some parts of California too.
So I feel pretty optimistic. But anyway, moral
of the story is a lot of the growth markets are
in Kind of touching and flirting with buyer market
tear buyers market territory But what you should
be looking at is what is the overall interest
and appetite in real estate? For the general
consumer and still really high Zillow has great
traffic share prices doing pretty well once I
got out of flipping homes They you know, they've
had a bit of a rebound that did not bode well
for them, but you look at there's a lot of interest
in real estate and resources and ways for people
to channel that interest and look at third party
sites like Zillow and Julia and get an idea of
the market and sales history and property taxes
and HOA and think about how would you have known
what an HOA price was before Zillow? There was
no central repository that gave you that type
of data that you could get on your phone. And
that's just one touch point how many of those
are there. Right I can look at Properties in
Texas because it's fun to because it looks so
different than Las Vegas. Oh, that's a beautiful
house for 900 ,000. I'd be 1 .5 million here
Oh, wait a minute. The taxes are $27 ,000 a year.
They're 12 ,000 here the little things like that
Yeah, kind of all that's available now. Yes,
exactly And I think that that because of all
that empowerment sales history neighbors sales
history Well, we like this home Last time I sold
was in a sold from the builder ten years ago.
Oh, wait a minute four homes have sold in the
last few months on this very street, and this
one had this pool, and this one didn't have a
pool, and this one had this finishes, and this
one has this pool. And you could even scroll
through the house and see this looks like that,
that looks like this, ours has this, that just
didn't have, and yeah. So I think in many ways
that has, that's why I throw history out, because,
I can't believe I just said that, because there's
no, there's never been a time like this. where
buyers and just general public had so much knowledge
at their fingertips of the real estate market.
And with that, I don't think there's any going
back. Pandora is out. And in some ways, it's
good. I feel that it adds a lot of liquidity
to the market. It keeps people interested and
engaged in the market. Real estate is fun for
a lot of people. Looking at homes is fun online.
It stokes an interest in people. It kind of keeps
the flames of homeownership desire. going and
maybe is responsible for the growth markets and
what we've done in the last 10 years because
if you're sitting in traffic and you were on
the northeastern seaboard and it's rained for
five days in a row and your house looks dingy
and your boss is pissing you out and you go,
let me look at real estate in Florida. Let me
look at real estate in Las Vegas. Let me look
at real estate. Maybe make some major move and
you kind of get your foot over there and get
your feet wet before you even go. And maybe that
online platform engages you enough to say, you
know what, maybe we should consider that move
or we're going to retire. Where do we want to
look? Well, let's compare all the cities. You
can do a lot of that work from the comfort of
your own sofa. How did people do that before?
I guess you had to call an agent. I remember
moving in her interstate with my parents probably
20 years ago and my mom looked up real estate
agents and called a real estate agent and he
at that time there was email so that she he would
email her listings and then it was like okay
we want to be where in the city would be a good
place so they're usually three to seven photos
of a listing Any given listing in the MLS, the
MLS was limited at one point to 10 photos, but
agents didn't even, there was no industry of
professional real estate photography back then.
I mean, just think about how much the industry
has changed so that I feel that we have higher
peaks and higher goalies. So I feel that our
market is... more liquid so they have more volatility
because there's just more liquidity and buyers
are also more informed to say wow this feels
like there's a lot of homes for selling the zip
code whereas before an agent could kind of spin
the market however suited them and suited the
narrative that they wanted to create and the
reality around it so now buyers agents have been
completely disarmed with that and now buyers
know many times more than the agent. And they're
more resourceful and they've done more research.
They're more interested in it. How interested
are you when you're one of 15 clients that wants
to spend $700 ,000 to $900 ,000? Just kidding,
she's very interested in everything. So you get
a more informed buyer. So really the agents have
had to up their game in order to keep up with
the information buyers are available. Think about
it, this is all that buyer is thinking about.
Generally if a buyer is in the mood to buy, this
is all they think about. They're probably spending
three to four hours a day on Zillow. hour in
the, you know, hour at night before bed, 15 minutes
here, 15 minutes there. I mean, you can add up
very quickly. And I know that because when I
was looking to buy a second home in another state
a couple years ago. It's all I did, just trolling
it all the time. Just, okay, oh, I already know
this neighborhood. I know I don't like that neighborhood.
And then you go out there and put all the pieces
together. And you go, oh, wow, okay, this, okay,
definitely don't want this anymore. I'm not going
to look there. I'm not going to look there. And
then he's really holding it. You know, where
I have a client who I know I'm taking really
good care of. I'm hand -holding them, making
sure that their, you know, needs are met. But
I have... Other applications and I have other
clients and they're like, Hey, did you see this
one? And I'm like, Oh my gosh, no, I didn't,
but you know, good on you. Yeah. Good on you.
Right. But they're, they, yeah, they're, they're
doing that work for themselves, which is good.
And it keeps them engaged. And then I feel that
I noticed it when I was working my brokerage
business over 12 years and I don't do too much
of it anymore, but I noticed that buyers, I had,
I felt a title shift around 2017, 2018 where
Buyers were routinely going out with me for one
day. And they're making a move in one day. In
a day. Making a decision in a day. Because they
already knew. Yep. Like when I bought, I went
out there one weekend. And I actually only spent
one half of that weekend even house hunting.
The rest I just spent in town. Yeah. You know,
so I, because I knew. Learning about the town.
Yeah. Yeah. Feeling it. Okay, this is really
cool. But you knew what side of town you wanted
to be on. You knew what size was available. I
knew all the inventory. Nothing was a surprise.
So all I had to do was put it all together and
say, wow, this is really great. That's what I
want. And I jumped. I think we saw four houses,
if that. So I mean, it was, but I, I was. I've
been on that other side. I was in my agent's
shoes many, many, many times, especially like
post -2018, post -2017 when the syndication feeds
all lined up and all the data was pretty much
uniform across all the trust in Zillow and third
-party sites went way up because it used to be,
well, and who knows what Zillow says, because
their info was many times outdated. Homes would
be on there that had long since sold or homes
would be on there that... had been pulled or
weren't on there but were on the market. They
weren't showing themselves so they just never
could trust the information and now they can.
And buyers are very, very informed. So I feel
that that's overall a net positive for the real
estate market that keeps buyers engaged. On the
flip side, buyers get more and more spooked.
With more information and real estate consistently
making headlines, you can't watch it without
housing coming up. You can't. At least every
other day. More turmoil in the housing market.
It just creates this narrative of what they think
was the last thing that Becky and Squawkbox said.
And social media even. There are things in the
feed and I can't tell you how many clients, friends,
neighbors, colleagues will send me things and
you open up the social media inbox and you've
got all these things. Did you see this article?
What about this? And it's all interesting information.
It's almost like everyone has a real estate podcast.
I know, right? Microphones are too cheap. But
there's just a lot of info out there. There is.
And that's why we try to have a little bit of
a unique niche here. We talk a lot about new
home construction and building. We pepper in
a lot of real estate, but we try to... It's hard
not to, because we sell the homes at the end.
I think that those two go hand in hand really
well together. Right? We're not building them
to keep. Right, exactly. We've got to sell them.
So we have to keep ourselves well informed and
make sure that we have our thumb on that mark
and know exactly what the housing industry as
a whole needs and requires. Right. And to touch
on some history, because I... I had to get it
in there. But if you think about the inventory
we have right now, not us as trust home builders,
but the inventory any given city has is a representation
of what the market was doing at that time. Homes
built in the 80s look and feel different, generally
smaller. We actually talked about this earlier
today on a separate call that for the first time
in many markets, new homes are actually smaller
than many resale homes. And prices are lower.
There's that idea that a resale home might be
less than a new build. But that's not necessarily
the case. And when you look at it on it, you
know, marginally, you can see a new home is often
going to be less than a resale home. You look
at our microcosm of where we're building currently
in South Shore. Yes, a small microcosm. I get
that. But when I list one of our homes, or when
we list it, when the sales team runs with it,
we are often the cheapest home in that country
club. And that's part strategy, am I? I like
to underdevelop more than overdevelop. I don't
want to move the market. I don't want to break
any records. You don't want to be out there in
the front trying to set the front. Yeah, I want
to be the first one to get $5 .5 million out
of that or whatever. So I like to be more cautious.
But I'm also doing many homes out there. So at
the end of the day, I have to ride that middle
ground. But the fact remains is that currently,
with our spec that we just finished and relisted
as a brand new, currently ready to go quick move
-in, We are the cheapest custom in that community.
And our square footage isn't, I mean, it's a
really manageable square footage. It's not substantially
less than the competition, but we are smaller.
We're building smaller. And so builders making
those strategic decisions to build a little smaller
and price a little less, and all of those things
are actually... giving, you know, the next house
who's already overbuilt that was built 10 years
ago and they have this massive monstrous home
that's twice the square footage of what you just
built and it has, I can't imagine they'd have
better options and upgrades because we really
did this home. But in any event, I mean, apples
to apples, those two things, it's less to go
do. And now you've got the energy efficiency
and the rate -by -downs and other incentives
that builders will usually throw. Yeah, it's
and a smart home features and the energy efficiencies
that are gonna be less over time to own the home
as well And that's why builders set the market
and builders what we're in the business of built
we have to sell them So we're not holding on
to this asset that was part of our retirement
It's can we have to sell as we have on in the
next ones or we know we got to get this batch
of homes kind of move through the ecosystem so
we can Move on to other projects. I'm already
committed to and money's already on the line
and we're thinking about selling that Before
it hits the ground right that our whole idea.
Yeah, right So I think that's you know, it's
interesting to look back on it to say oh look
at the 70s and homes were simpler and then they
started to swell as became asset classes and
you know, they kind of has been a representation
and When building costs were low and you became
a way to stand out in the 90s We had a home episode
on McMansion. We did figure better. Let's do
more Yeah, you know that whole trend. Yeah, so
I think it is It's different, and this generation
of home buyers is going to be completely different
on the topic of some of the data. They don't
have to go very far to find data on the housing
market. But what I found interesting when we
talk about cycles, the biggest cohort of buyers
moving through the system right now is 56 years
old. 17 years ago, the average buyer moving through
the system, the largest cohort, was 39 years
old. They're the same people. 17 years later
they're 17 years older. It is the most alarming
statistic I've ever seen. It's showing you that
there's almost like this property gilded landed
gentry class that's moving through the market
and the average first -time homebuyers 38 years
old right now. Which was a surprise to me because
I would tell you 10 years ago it was 10 years
younger. 24 to 28 is what we were at previously.
10 years later, these people are waiting to be
able to entry level buyer at almost 40 years
old. So what does that move up buyer look like
in 10 more years? And generally speaking, I do
think that people that generation, it was the
boomer and the most of Gen X moved around a lot,
they were mobile. And there's an indication that
other millennials and maybe I mean, millennials
all through elder Gen Z's are not going to be
moving around as much they're making one purchase
in that. will probably be their home for 20 years.
It's kind of like the silent generation did in
the 20s and 30s. And it makes you think about
that move up product line, right? If this is
entry level, there's a move up. Whereas typically,
by the time you're getting to 40, now your family's
a little bit more established and maybe you have
a better income and you have a different job
and you need the square footage. And so now the
move up, that whole move up. May or may not even
be a thing in the future. If you're entering,
when do you move up? At 50? Now the kids are
moving out. Yeah, well which is why I'm strategic
in South Shore to build kind of small for custom,
you know, 32 to 38 square foot homes because
I know that my target demographic is probably
an empty nester that just wants some guest rooms
for the kids, an office, a craft room. They want
the square footage from the multi -purpose aspect
of it. but they probably don't need a playroom.
They probably want to use that loft as a pool
table room or media room. Yep. At the end of
the day, they don't need these big behemoths
because those are the people that are moving
through. You've got to know your audience and
I know that that's what's filling those gaps.
And we talked about this before, your previous
employer built a lot of what we call entry level.
And I know you guys probably had a lot of first
time home buyers, but you also had a lot of people
who were downsizing. Sure. So it's almost like
the bottom of the market. the people are going
to whipsaw back through and end up, they're going
to be the ones buying the entry -level product.
It's going to be the people who are 60 now, and
when they're 65, maybe they're downsizing out
of those. I mean, it's going to depend on affluence
and depend on their means and stuff. Yeah, they
don't want the yard, they like the attached.
There are things about that smaller product type
that... appealing. It's more versatile to their
lifestyle. If you want to hop in an RV and go
for six weeks or whatever. Lock it up and there's
no yard. Lock and leave kind of concepts. It
would be interesting that right when you think
of the entry -level product as oh they're gonna
be young there might not be. Not necessarily.
They might not be the youngest buyers in the
cohort. Those buyers it's been proven for the
last 10 years that people are holding off on
homeownership. they're buying later, they're
buying when their needs more match what they
can afford at that time. So I think with that,
that there's, and this is one more aspect, real
estate is now so much more visual. So I wanted
to touch on this with the Zillow thing. Real
estate is so much more visual now. People aren't
willing to compromise. That when I had a lot
of brokerage clients, they were... willing to
wait and willing to make sacrifices to get exactly
what they wanted because they've seen it all.
It's very visual. Real estate is a hobby now.
It's like, they follow architectural influencers.
They follow interior design influencers. Television
shows. Television shows. Shaws of sunset. Yeah,
exactly. Yeah, exactly. So I think that that's
interesting to me is that that could maybe have
fueled it. They're looking at these sad little
two over ones. I don't want to buy that for $350
when I could just save two more years and buy
this home for $500. Or maybe I get that promotion
or maybe my significant other finishes graduate
school or whatever and then she'll be working
or he'll be working. You feel like there's selectivity
that buyers maybe in the 70s and 80s didn't have.
They'd say, show me a house for $70 ,000 and
then they would just buy what was $70 ,000 because
it wasn't as much of an aesthetic as it is now.
Homes are way more visual now. The interior aesthetic
matters more. The finishes that go into it are,
yeah, that's true. That's true. Even the exterior,
you know, we have really, the exterior of a home
has changed so much over time. It's photographed.
A home is a model now. Literally, like a fashion
model. I mean, it matters how it presents itself
online. It just didn't matter as much before.
All the details and the window trims and the
different colors that are used. Curb appeal has
come so far. Oh, for sure. We used to say it
mattered. Curb appeal was really all that mattered,
they would say. You drive past and you see for
sale sign. Now it's like, yeah, but what about
the drone imagery? Right? Oh, did you even do
Twilight Shot? Oh, okay. Interesting. See, we
put in money. It's just different now. Homes
are models, and they just have to stand out.
Buyers are different. It's just a different generation
of home buyers. That's funny when you say that
model. We all know the term models, but when
you think about it in terms of the fashion runway,
they are the one walking the runway. That's right.
And I think that even the older generation, when
I say this generation of home buyers, mean the
older boomers that are bought, they're part of
this generation of home buyers. So they didn't
have that mentality 20 years ago, but now they're
on Zillow just as much. It doesn't discriminate
by age, socioeconomic area. You look at their
data, look at Zillow and their unique eyeballs
and the amount of visitors and the amount of
app downloads. That is just a vibrant app and
I think it's changed a lot. Yeah, interesting.
Anything from the past that you think will circle
back? I mean, obviously, the industry cycles
of interest rates and some of that stuff. Historically,
we can watch the trends and how they have circled
back. But do you think they'll come the same
way, given that everything else has changed so
much? Will they be maneuvered differently somehow?
We don't have a huge generation moving through.
I know they say the millennials are a big generation.
We don't have that big generation that is going
to require the way that the baby boomers, or
I should say that was actually the silent generation
buying those first tract homes. The baby boomers
were the kids that were having, right? It was
that World War II generation, not the ones born,
but the born in the 20s, and they were a big
cohort of buyers. And I think that without some
sort of big shock to the system, we're gonna
languish in this overall housing shortage, overall
housing is a bigger share of your income. think
that word the era of seeing potato fields leveled
for Residential affordable housing is never going
to come back and we saw that all the way up to
into the 70s ago it wasn't really till the late
70s with a 30 -year mortgage kind of became prevalent
in the mid 70s and When homes became easier to
finance and longer terms Think they just became
bigger and bigger and bigger and now we're seeing
a little bit of shrink flation with houses So
sometimes yes homes new homes are smaller, but
you're actually paying more per square So you're
so you're yeah, they're cheaper. They're smaller,
but you're actually paying more for the same
thing, for apples to apples. And I think that
that might change. I think that that cycle of
the average new home in the 70s, I believe was
1 ,600 square feet, now it's 2 ,200, but it's
shrinking. And a lot of that is product and labor
costs. It has no choice but to cut down. And
insulation costs more. It's harder to manufacture.
Exactly. There's more insulation needed. The
windows are more expensive. You can't throw together
a house anymore. So I think it just made sense
that what's going to give? If wages aren't dramatically
increasing and rates aren't coming down, borrowing
costs aren't coming down, the home itself, who's
going to blink first? It's going to be the size,
right? You can get greater density with smaller
homes. True. Right. So. True. Interesting. There's
a lot of factors. I do think that zoning laws
aren't going anywhere. We've got a lot of episodes
on that. I feel like it's always going to be,
you know, we look at our one project we have
should have been 23 affordable town homes ends
up fashionably. We're going to do another episode
of that. Six luxury homes are going to be a million
and a half dollars. So there's six families on
that parcel instead of 23. I don't think that's
going to stop anytime soon. There's not enough
political will for that to stop, to reverse course.
And they still had a lot of resistance on that
project. Even doing six luxury homes, which would
be the nicest homes on that strip of land, you
know, that quarter mile will be the nicest product
and we still got resistance from all the neighbors.
So without that, with that NIMBY -ism, it's just,
yeah, so no, to answer your question historically,
we're not gonna circle back to an era of the
40s, 50s, 60s where farms are being plowed over
and you're seeing some affordable homes that
go in. I just don't think... Even with land at
a premium, the way that it is unavailable and...
Yeah, I just don't, I don't feel it. I think
we have these cyclical buyer's markets. It's
gonna keep coming around. We had it in 2020.
We had it in the decade, in the previous decade.
We had a lot of six -month periods that were
buyer's markets. In a market like ours, a relatively
closed market, builders just dial down their
spec homes, less inventory, corrects, moves around,
and then equalizes within three to six months.
It's just too small of a market, especially the
Western markets, because some of the Sun Belt
and the South sprawls like we talked about, but
the Southwest markets, they're just too closed.
They're just too easy to manipulate. Even just
12 ,000 homes a year, roughly complete, 10 to
12 ,000, even if the average builder pulls back
20%, you're losing, you know, you're only adding
8 ,500 homes to the inventory, you're losing
over 2 ,000 houses. It doesn't take long to shock
the system and prop it back up and say, oh, it's
fine, we just pulled back. We were gonna finish
out a 200 -home subdivision in 18 months where
you're gonna do it in 24. You have to throttle
it down a little bit. Interesting and I love
that. I just like the idea of right where we
are Looking at what has been what has brought
us here and kind of where we have seen, you know
Yes change and things move. Yeah looking at those
numbers statistically who's buying and where's
our greatest cohort and some of those things
I feel like Help to draw the picture of what?
Yeah, you know, you can't quite see it. Yeah,
but you know what's out there, right? Yeah, you
can feel and you can look at the day and think
okay in 12 months or 24 months. What do we think?
is going to be in demand and what's it going
to look like. Yep. I like it. Well, thank you.
Great insights. Always a great conversation.
Appreciate it. And we appreciate you guys being
here with us too. So I'm taking a moment to think
about the pause of where we're at and how we
got here and where we're going. Hopefully that's
an interesting conversation for you to consider
too in your own needs. And we will hope to see
you again next time on the next episode of Trust
the Process podcast. Bye -bye. Thanks for tuning
in to the Press the Process podcast. Make sure
to follow us on Spotify to stay in the loop with
the latest insights, project updates, and everything
in between. See you next time.