Video Closed Captioning:
good morning good afternoon good evening
folks michael zuber one rental at a time
we are doing the three amigos a couple
of days early early because somebody is
retired and they’re enjoying life and
he’s just screwing with our thursdays so
now we’re getting it on tuesday and it’s
all kinds of craziness because the guy
got retired i’m telling you this is fun
how you doing dion
howdy i’m doing great thanks for doing
this early i appreciate it because uh
you’ve said it a few times when you
retire you you start to wonder how you
had time to work exactly
exactly hey man how are you i’m having a
lot of trouble keeping
i’m having a lot of trouble keeping up
with dion’s retirees schedule i just saw
your title still not retired
you guys these little subtle things you
work in that just
you guys are so crafty i love it well
hey i i know you guys didn’t have time
to watch it but i did a uh live stream
this morning at 7 00 am kind of off the
cuff and i’m going to highlight it here
because um
i think july 20th that national
association of realtors day is coming up
i think we’re getting little tidbits of
information both about existing homes
and new homes and i want to show you a
a user
with his list of builder feedback about
different cities because i think there’s
a lot in there
and it really points to housing
potentially causing the next recession
or the recession that starts here soon
so you guys ready ready
awesome
so again as i said this morning full
credit to the author rick policios it’s
actually one of the reasons i wanted to
do this this way so we could give him
credit uh this is a thread i’ll go
through the top one and then we’ll go
city by city again he was he works for
john burns real estate consulting
john burns is the place to go it’s
either them or black knight if you want
real estate information they have been
doing a home builder survey
for years
yeah and you could actually go back in
rick’s feed and look at last month and
the month before this is for june so
again
lots of contracts being cancelled talked
about that price is being cut greg
dickerson told us that was coming uh
demand uh is finally cooling
construction costs that’s an aha moment
we haven’t talked about that matt you’ve
actually said you’ve got a bunch of
projects you’re waiting to keep people
busy
and and then uh built look at this
builder layoffs i did not think we would
see this so fast
they’re laying off people that’s that’s
pretty eye-opening what do we think of
that headline we’ll go to you first dion
and then we’ll get to the cities next
i would want to know
the percentage
of
real estate transactions that were
happening that were builds
versus new builds because there’s people
like you you know a two-year adu which
sounds like a lot of fun oh
where
when bills stop happening because buyers
disappear buyers cancel deals
i’m curious to see how many get laid off
and how many transition into projects
like matt has projects like i have
waiting yeah no exactly and matt
anything in this kind of surprise you
so i think i heard a number it was 60
000 cancellations
yeah so that’s on existing home sales
you’re absolutely right 50 14.9
of uh june contracts
uh were cancelled roughly 60 000 just
before anybody blows up and you know
goes all nick on me
yeah well it’s it’s a it’s it’s
interesting 14.95
yeah but let’s not get it twisted um we
had a year ago we we had 11 of units be
cancelled so
um it’s it’s up three percent so it’s
not like it went from zero to 14.9 so
again let’s not forget that uh but let’s
go to the cities because i think it is
very interesting because we got cities
from across the country yeah
atlanta someone turned out the lights in
our s on our sales in
june um
this is this is what i this actually is
what i think they’re going to say about
existing home sales
in june um
[Music]
that’s this this is exactly the kind of
headline i think is coming
right then we got austin how many people
keep telling you austin’s on fire
sales have fallen off a cliff we’re
selling one-third of what we sold in
march and april trades are willing to
negotiate prices since markets have
adjusted significantly in the past 60
days
birmingham i mean that’s that’s the
south talk about hot of hot
sales have fallen 75 percent the last
two months
and further out communities again we’re
like if you’re close
it’s okay but um yeah farther out you
are they’re going out we’ll do boise and
then i’ll get some feedback boise right
the market that i’ve highlighted for
months is kind of the bubble of all
bubbles uh sales have slowed
tremendously builders are dropping
prices and halting new starts
seeing price drops on labor due to
slowing of starts expecting 15
to 20 reduction in most costs
talk about that that’s this this is this
is d this is kathy wood deflation right
here
yeah so what do you guys think of what’s
what’s happened thus far in this list i
love it yeah a little bit i love every
it i was right and i love it and i was
right and i love it i have a half
million bucks worth of projects that
it’s going to cost me the same dollars
it’s going to cost me 350 to do them
yeah like so now i’ll just do more i’ll
still do a half million bucks worth of
projects and it’ll be 700 000 worth of
value that i’ll get that’s the first
thing second thing is in the interview
that i did with the um uh uneducated
economist we talked about this
he talked about the fact that even right
now you know plywood was going for 84
bucks a sheet
literally just a few months ago and they
just marked their stuff down to like 46
bucks a sheet
so it’s you know that’s plywood’s off
about 50 2×4 studs they’re still coming
off the only downside to what he’s
seeing in the in the you know in that
market the only downside that uneducated
economist is seeing is that they’re
going to start
making loads smaller
which is very frightening because then
that allows you’re not going to buy a
train uh car load of lumber to speculate
you will buy a truckload worth of lumber
to speculate
and so they’re actually taking what used
to be a car a car on a train and they’re
basically breaking it into fours and now
they’re selling off those quote unquote
futures
which when you make it smaller like it’s
what every stock company does right you
don’t want a two thousand dollar stock
you don’t want a two dollar stock you
want a 200 stock so it fits a bunch of
investment portfolios so i think that i
think we’re seeing exactly what we all
kind of expected we were going to see
and yeah there’s going to be pain and i
think it’s good is it a little faster
than you thought
no this is why no i i i mean i really
truly expected when rates got into the
sixes which they did i fully expected
that to cause the massive slowdown not
the fives but the sixes right when they
got into the sixes and that’s what
that’s where they were that’s what
caused all this pukey yeah you know like
we’re gonna see things pick up in q3
because we’re back down in the fives
where you know five and a quarter five
and a half you can find those rates now
yeah
yeah do you on any thoughts on what
we’ve gone through through boys yeah i
have two things the first one is
it didn’t happen as fast as i was
thinking it would
okay
because what i predicted last year and
we have this bet going
is that they would raise rates
it would cost things like this
especially in new builds because
especially and so the second thing i
want to cover is the people watching our
content who are doing one rental at a
time who are
investing to make work optional yep
are they buying new builds no no right
so
this isn’t impacting the people who are
watching this video who are thinking oh
this is doom and gloom there’s a
recession coming because this the new
home buyers are falling off a cliff
unless you’re a builder watching this
who also buys one rental at a time
you’re really not impacted right but
i thought we would increase rates faster
transactions would
fall off a cliff
inflation will continue yeah that’s the
problem is it wasn’t free it wasn’t low
interest rates causing inflation it was
helicopter money st what do you call
them stimulus ballers yeah
people with money to spend that they
didn’t really have to work for
um
and so maybe i got the timing wrong but
i think then we’ll see rates drop and
and now matt just said rates went back
down to the fives that’s because
lenders
lend on margin correct the fed said
we’re going to raise rates so banks
jacked rates up then the fed raised
rates a little and they jack rates up
again
but then lenders are competing with each
other
so they have that margin that they can
squeeze and compress
and as the fed was still holding assets
in their balance sheet there wasn’t as
much risk for lenders that’s what’s
going to shift going forward now that
we’re into uh quantitative tightening
the fed is going to be offloading assets
from their balance sheet which is going
to put more risk on the lenders i think
we’ll see rates go up again even
even if the fed doesn’t do
a 0.75
in this next meeting i think we’re going
to see rates go back up so if somebody’s
looking to lock one in now i would think
this is the week to do it yeah if you
like it lock it for sure something matt
the mortgage guy brings us every
wednesday a couple of things i want
because we got more to go through that
really start painting an interesting
picture that we’ve all been talking
about
um
builders are going to be an interesting
stock or company to watch the public
ones because what have we seen so far
right we’ve seen potentially layoffs
which is a it’s cost reduction overhead
uh you’ve also heard now multiple times
that subs are cutting costs as in we
will hear about lumber a big input going
down so yes they may be lowering a price
five percent but if their costs are down
as boise said twenty percent
people are going to be really pissed off
when builders margins go up
right they’re gonna sell less and make
more money it’s going to drive people
crazy
so let’s keep going because there’s more
in here that just kind of shake me this
is one that hurts charlotte
this recession is looking like and
feeling like a big
long five-year depression that’s a new
builder
yeah they didn’t it’s a guy that’s a guy
who started his company in 2012 or 2014
yeah after the last one yeah no nothing
like that it’s
uh i don’t see f i don’t see a five year
depression no what
come on
no it might be five quarters i don’t
know if it would be yeah i think yeah
five quarters is reasonable i think so
yeah i was actually looking for a stat
that i saw yesterday i can’t find it but
it was a great chart
and the chart showed that basically
with in the last decade that we’ve built
5.8 million new homes
from from 20 from 2010 to 20 into 2019.
do you know the last time that we built
5.8 million homes no
1930-1939
oh wow wow
since then we have averaged
21 million homes a year
interesting
there you go you’re the man that’s it
right there
if you can send that to me i will uh put
that as the thumbnail yeah well yeah the
the red line is the last 10 years the
blue lines are each decade before that
oh wow so if everybody wants to
pontificate about how horrible the
market is
it’s supply and demand there you go
there you go i love this so let’s keep
going colorado springs amazing how fast
the market can change with such a rapid
increase in rates so many people were
taken out of the market most builders
will go to suppliers trades and ask for
rollbacks on cost again this is why july
20th july 20th is a big day new home
sales are roughly 10 of the market i
expect uh june home sales existing to be
problematic yeah
for sure
dallas everybody likes texas framing
later framing labor has become readily
available suggesting housing starts slow
down in the finally showing up in the
typical signs haven’t raised prices in
three months framing labor is readily
available what that tells me is they are
slowing down yeah sure managing cash
flow yep
yep
des moines starting to see construction
trades hold labor prices for us that are
fearful of a downturn
again input costs are going down
fort myers how about this one investor
sales have stalled apparently a lot of
investors my fear here these are airbnb
buyers let me go buy a florida home as
an airbnb you know i don’t know i don’t
know that for sure just crazy but even
investor sales have stalled
right does it make sense does it make
sense
uh grand rapids uh believe we’re on the
edge of cost reductions making every
effort to refuse further uh cost
increases and pushing and decrease all
areas have significant two-year run-up
again costs
traffic slowed from red hot feels
different for sure but is a normal
market this is an example of a market
that’s probably doing okay
uh here i want to get to one that i saw
before and we’ll wrap it up let’s see
let’s see again folks follow rick on
twitter he’s an awesome read
um
i want to find the one that if you’re if
you’re a framer in new hampshire
and you want to work for a reasonable
wage yeah
lumberjack landlord gmail.com yeah so
we’ll do two more nashville is the one i
was looking for because this is what i
this is what i pointed at months ago
scary times hoard cash and hang on for
the ride national builders are cutting
staff and offering buyer incentives
move up buyers are now
practically
non-existent yes
this is the fed breaking housing this is
two years of people with rates below
threes going i’m not selling i’m staying
put
right
what i think is funny is
they say
the fed has these tools to slow
inflation
so they use the tools
and then we stop transactions which
you would think in normal years would
slow inflation
yeah well it’s it’s it’s not only going
to slow inflation we a lot of these
builders are talking about lower cost
which is inflationary or deflationary
but really what what i see in all of
this is transactions crashing
huge
like
and it’s and still very few people are
talking about transaction crashing
transactions leading to probably four
percent loss of gdp
and housing being the blame for the
recession this is what i this is this is
all the stuff that i see coming in real
time
yeah i love it yeah so again that’s jets
new construction do me a favor follow
rick he’s put this comes out monthly
i’ve talked about him a couple of times
i’ve interviewed him a couple of times
luckily enough uh matt where can people
find you still not
retired lumberjack landlord
uh instagram youtube and my live stream
on sundays 11 30 a.m eastern time
currently awesome and dion how about you
actually i don’t know where people are
going to find me i’m going to be in a
different place for every video i think
ah that’s awesome you’re doing
retirement right
awesome thanks guys
ciao