Transcript
Dean Wehrli:
Welcome to the New Home Insights Podcast with John Burns Real Estate Consulting. I’m your host Dean Wehrli. Today, we are going to be giving you kind of an update on the market, a pulse of the market. And for that, we are joined by Jody Kahn, our Senior Vice President here, who along with Devyn Bachman and their team, they handle the builder survey and the land survey. Some amazingly informative research products here that are waited with bated breath by clients around the country. Jody, how are you doing?
Jody Kahn:
I’m doing great. Thanks Dean.
Dean Wehrli:
Tell us… In fact, before we get started, why don’t you just give us a little brief intro for you? You were on last year here, but just a little brief tease for the folks.
Jody Kahn:
All right. I really think of my role as keeping my finger on the pulse of the housing market. Certainly, we use surveys to help us with that, big surveys and informal surveys, but also conversations with clients and our team members, like you, Dean, who are out in the field and bringing back insights on what is happening right now in housing.
Dean Wehrli:
And that’s actually what we’re going to be talking about, really, literally right now. Literally, we’re going to kind of recap the craziness and the tremendous activity and appreciation of the market over the last year plus, but then we’re also going to talk about maybe some signs, some anecdotal, some, I don’t know, quasi-quantitative, that things are maybe calming down a little bit. And then we’re going to end up by talking about the land market and then a little bit about what we see going forward, but just a little hint about what we see going forward.
Dean Wehrli:
Hi, this is Dean. Hey, just breaking in here a little bit. Jody and I had started off our discussion by talking about how the market had been performing, kind of taking a little backward glance and highlighting some of the hot market conditions. In hindsight, you know, you guys know about that, it’s familiar, you all know the market’s been hot, hot, hot. So we’re just going to skip ahead to where Jody and I start talking first about some of the consequences of these hot market conditions, and then onto more of current market conditions. Also, as just an aside, this market is moving really, really fast, so Jody and I recorded this on August 6th, 2021. Enjoy the rest of the show.
Dean Wehrli:
So for a while there, it was for a while now, I should say, it’s been kind of hard to miss in the housing market. It’s been that strong. It’s almost like falling off a boat and hitting water. It’s that easy. Well, you’re in Florida, right?
Jody Kahn:
Right. Right.
Dean Wehrli:
So if you fell off a boat and hit the water there, you might get eaten by an alligator and that’s not good for anyone. So what that brought though is actually a little bit of, hasn’t it that created some challenges for both builders and home buyers with this hot, hot market environment? Let’s talk about that for a minute, if you will.
Jody Kahn:
Right. At the same time that we started moving our ratings for the metros, which is based on sales and pricing strength, we ended up with almost all of the markets, top 50 markets, for sure, as strong to very strong markets, which signals a really good housing environment. But all these challenges were popping up and creating a lot of hassles for consumers, but also a lot of fires to put out for the builders. So a lot of the builders’ communities sold out well ahead of schedule, and there was really kind of a flood of demand, if you will, for lots and land, to try to replace those sold out communities. There were also longer and longer waits for delivery of the homes, because we started seeing all of these gaps with labor and building material shortages, and massive [cost] escalation of whatever building products you could get your hands on.
Jody Kahn:
So those were really challenging, both in estimating what kind of delivery the builders could promise, but also created some challenges on the pricing of the homes. The lack of visibility of what it was really going to cost to build that home versus what the builders had promised. We started seeing interest lists grow as well. And even now, there’s a lot of prospects waiting on these interests lists to see if they can purchase a home. Some builders did turn to bidding type processes like highest and best offer, some used lotteries, just trying to make it more fair than first come first serve. But in general, we’ve had way more demand for homes than the builders could possibly supply. It’s a good problem and a bad problem.
Dean Wehrli:
It is. And you had some folks, a lot of folks, actually, in a lot of markets, putting their name on every list, anywhere, no matter the exact location of the neighborhood or the types of homes they had. Whatever came up and they got to the front of that list, they’d buy. I mean, it was that almost panic kind of buying.
Dean Wehrli:
So appreciation, of course, was maybe the biggest story of this tremendous housing market. Just kind of provide the outlines about that, and then we’ll start talking about, how we may be seeing some signs of normalization.
Jody Kahn:
We track price appreciation through our builder survey, and at the moment, we’re seeing 19% year over year price appreciation nationally, and as high as 22% for the Northwest, Florida, and Southwest regions. These are records in our survey history, and we’ve been surveying for about 14 years. In fact, we had to change our builder survey this month to accommodate builders that wanted to signal 65% or more year over year appreciation.
Dean Wehrli:
Good Lord. Can we ask where that was? Or was that top secret?
Jody Kahn:
Top secret.
Dean Wehrli:
Top secret, darn it. That’s pretty impressive though.
Jody Kahn:
Of course, part of the appreciation story is the imbalance of supply and demand, but also in the material and the labor costs, which we’re measuring as up 22% year over year through our builder survey. And that, of course, was led by lumber with a 100% year over year increase, by second quarter. Now I know that the lumber is starting to ease a bit, but still these are hefty numbers and put a lot of pressure on the builders to continue raising prices. And honestly, that 22%, it doesn’t even cover the costly delays that the builders experience when the materials don’t show up, or the labor doesn’t show up, and it also doesn’t cover product substitutions the builders make to try to just keep building and getting those homes delivered.
Dean Wehrli:
Yeah, we hear that a lot, that build schedule has been padded just by the inability to get even just the little features. The little upgrades, and things like that, that you just don’t think about, they’re not arriving on time, so everything gets slowed down.
Jody Kahn:
Mm-hmm (affirmative). And some of the more vital components are part of the problem. Builders, for example, saying that they’re waiting on starts, because they didn’t get their lumber drop. Or maybe they needed a larger lumber drop and the only got enough for so many homes, and they have to budget those materials and figure out which homes are going to advance.
Dean Wehrli:
So let’s transition over Jody. So, again, we wanted to set the background. The market has been tremendous. The market is still extraordinarily, historically strong, but we are starting to see, maybe, the beginning of some calming in the housing market, some normalization in the housing market. So let’s talk about that a little bit. First, I think we probably should tackle the obvious, which is seasonality. How do you see that playing out right now Jody?
Jody Kahn:
Historically, we can see through our survey that summer is a slower season. It usually falls off or starts to slow down somewhere in May, sometimes June, each year, with January through May or June being the peak of the builder’s selling season. Then typically a slow summer, and then a small lift in September and October, after the kids go to school. And then slow for the end of the year on the sales side, because the builders are really focused at that point, on production, and what can they close by the end of year.
Dean Wehrli:
And how about attitudes though? Let me let’s switch to that. Have you seen a change in buyer sentiment? Through the builders we’re talking to, have you seen a sense that buyers are changing a bit lately?
Jody Kahn:
Definitely. The sales, as you said, Dean, they remain good, really good, but the frenzy seems less than it was. And here’s some examples of things I’m tracking. One is that, yes, there are interest lists, but now the builders are going deeper in those lists to be able to sell all the homes they decide to release. And previously, those homes would sell in hours, maybe a day, now it’s taking a couple of days or even a week or two to sell whatever they release. So the sales are made, but not the same frenzy.
Dean Wehrli:
Anecdotally, again, one of those I mentioned that at the top of the show is that we had… there’s word that a sales agent used recent, I was talking to them for a feasibility study we were doing. And this agent that “things are great, we’re still selling homes. We’re still selling out that phase release pretty rapidly, not as quickly, not in hours, maybe few days.” But he said that “buyers are no longer panicking to get that home.” And I mean, is it a good thing long term for market of buyers are “panicking”?
Jody Kahn:
I think it is a good thing. For sure, the builders will welcome some easing in the market and an opportunity to catch up on their production side. But I think the craziness of lotteries and bidding, et cetera, is really challenging for the consumer, and especially for the first timers. Imagine trying to buy your first home and the whole stress of that situation on some kind of highest and best offer basis. I don’t know if I could have done it.
Dean Wehrli:
Just to be clear. So you think less panic in the buyer is actually a good thing for the market.
Jody Kahn:
I do.
Dean Wehrli:
Okay.
Jody Kahn:
I do.
Dean Wehrli:
But one of the other results of this rapid appreciation has been affordability. I mean, ultimately, you think about a buyer pool out there that can buy your home, and a very key critical definition of that is just the ability to afford that home. What has happened to affordability with this? And how has that impacted the market now and going forward?
Jody Kahn:
Initially, as prices were rising, the low rates were really helping keep that monthly payment, still, relatively affordable for the buyer. But now, even with the low rates, there’s no way to hide 19% or 60%, whatever it is, price appreciation. So affordability is definitely weaker and we are hearing builders, particularly, those who service the entry buyer, saying some of their folks are priced out. They can’t qualify. And others that maybe can technically qualify are feeling hesitant, worried that they’re stretching a little too much on that monthly payment, or maybe just hesitant because they sense that it’s the top of the market, and is it a smart time perhaps to make a purchase. Hearing buyer resistance and hesitancy also in the move-up segment where affording it is maybe a little less critical than deciding how important it is to make a decision right now to purchase a home.
Dean Wehrli:
Yeah, I mean, again, anecdotally, we’ve seen here in Northern California, some of that, the remote buyer who, they’re relatively affluent, their job is based on an urban location, they have good incomes, and they’ve filled the gap for those local buyers who are priced out, to a certain extent. But even those relatively affluent, remote worker type buyers are being shifted into lower price markets, recently, because even they have been priced out for some of the higher price submarkets. Have you seen that nationally, that kind of trend?
Jody Kahn:
Yes. In a lot of markets that have been receiving these big migrations, I’m thinking like Boise, for example, which had already been, for a couple of years, receiving a lot of people from California and also from, say, Seattle and Portland. But there’s a real dichotomy there of the locals not being able to afford to buy really anything, and the out-of-towners were buying. But, yes, how can you go further and further afield into locations that really have not been part of the local landscape of where people live and where services are available.
Dean Wehrli:
Yeah. Winnemucca, Nevada, buy land there now. We’ll get there one day, you never know. What has changed in terms of just how builders are handling and managing their communities? Do you see signs there as well that things are starting to shift a little bit?
Jody Kahn:
I do. And I really like this, actually, because I see the builders returning to managing on a by community basis versus broad brush. So for a while it was, oh, we’re raising home prices, every third sale at every community by some percentage or dollar amount. Now there’s more an acknowledgement of some differences by community, which again is part of this normalization. So some of the builders are retaining sales caps where the demand is still really strong, but they’re releasing restrictions in some of the more moderately paced communities, and that’s great.
Jody Kahn:
Places that were not welcoming walk-in traffic, if the community is not so frenzy, the builders have opened to walk-in traffic, so that’s a nicer experience for the consumer trying to buy. We’ve also heard of builders dropping the bidding process. I don’t think they were ever big fans of it, but it seemed like the best way to try to manage the excess demand. But they’re acknowledging that it was not a good consumer experience and without the frenzy, they don’t have to go that route.
Dean Wehrli:
I totally agree with you. I actually had a couple of clients who they were very reluctant to do it, but that was the best way to manage and to be responsive to the market. Another way, tell me if you saw this nationally, but another method was to have sort of, I don’t know, for lack of a better term, sort of fake premiums. That is to say, you had standard lots that were every lot was a premium, even if it wasn’t a true conditional premium, like oversize or end of cul-de-sac or something like that. And are we starting to see that maybe dissipate a little bit as well or no?
Jody Kahn:
Yeah, we are actually. We just released our builder survey last night to clients, and some of the builders are commenting on rolling back lot premiums. And even some examples where they’re offering like a bonus to a selling agent, whereas they may have been resistant to working with the third-party realtors. We’re even starting to see a few examples of incentives in the market, not everywhere, but it’s out there.
Dean Wehrli:
Yeah. That’s a shock to the system, since we haven’t had anything more than the kind of pro forma $5K with lender kind of thing for quite a while now, at most places.
Jody Kahn:
Yeah. I don’t want to suggest that these are scary incentives or that prices are suddenly falling, but more an acknowledgement that not every community has robust activity right now. And some of them are probably a little beyond where they probably needed to be price point wise, so a little bit of truing up. Actually, one of the interesting comments, Dean, is, with the lumber prices declining, consumers are very aware from the headlines that the lumber prices have receded, and seem to be showing up, in some cases, expecting a roll back on pricing, but the builders are not rolling back the pricing. And I didn’t think they would. They’ll probably want to protect their appraisal values, but they are, in some cases, using design bucks, dollars you can spend at their design center to get some nice things in your home, so that the consumer perceives they got a better value, but not a rollback on price.
Dean Wehrli:
It is amazing how savvy a lot of buyers are, and how much information they bring to the table. Although I’m sure, in many cases, their broker is probably saying, “Oh, lumber’s down, ask for a price cut.” Well, everything else is up. And guess what? The market is what the market is, regardless of the price of the lumber.
Jody Kahn:
Mm-hmm (affirmative). True.
Dean Wehrli:
How about specs and builds and build timing, are builders doing anything different very, very recently than they have been through most of this market cycle?
Jody Kahn:
The build times still feel like they’re kind of a disaster for the builders, because it’s so unpredictable and they don’t know from week to week, which building material item will suddenly not be available. I sense it’s not really getting worse, it just hasn’t gotten better yet, but I think it will. The big trend I’m watching is that the builders had shifted a few months ago to only starting and selling partially built homes, which makes sense in this environment. They needed better visibility on their costs, and if they can get through framing or dry wall, then they have a pretty good idea and they can accurately price the homes.
Jody Kahn:
But it meant that for a while, the builders had nothing to sell, in some locations, and that inventory is starting to come to market now. And we’re even seeing a little inventory per community in our survey, where there was none, just one to two months ago. So nationally, the inventory numbers are still really, really low, the lowest I’ve ever seen them. But some of these specs coming out are going to mean better availability for the consumer who is out shopping for a home.
Dean Wehrli:
And maybe more certainty for the builder’s build schedule, which is another positive sign of a slightly calming market.
Jody Kahn:
Yes, yes. And with the houses partway through the construction process, I think the builders also acknowledged that they have a better visibility overall on delivery time, so they can try to assign a closing date that’s realistic.
Dean Wehrli:
Not to beat this dead horse, but it’s critical, again, to say that a couple of specs are in some communities, out there in a given submarket, whereas two months ago, three months ago, six months ago, there was zero out there. So that’s going from an insanely tight supply to an incredibly tight supply, I’m saying that again because it’s so critical and we wanted to make sure that’s clear, that this is not, by any stretch, a market that’s on a slowing down turn. It’s just calming down a little bit and become a little more normal and realistic.
Jody Kahn:
Right. I agree. And because of this, the builders can also manage pricing, just as I said, they were doing other things at the community level. The pricing too is now more about, am I targeting entry or move up? I’m hearing some builders say, they’ll make smaller increases at these entry communities, because they are concerned about buyers getting priced out, and maybe a little more price appreciation in move up communities where they feel like they have a little more runway. In general, I like this return to a more thoughtful environment, where the builders can adjust in a sensible way.
Dean Wehrli:
Are you seeing any locational differences, geographic differences with say increased incentives or some of these other trends you’re talking about?
Jody Kahn:
We did notice in our latest survey, some incentives, which show up as weaker pricing as well as comments from the builders. And we saw this in Florida, the Midwest, the Northeast, Texas, and Southern Cal. And not broad based in terms of every market, in every community, but a scattering of some incentives. We mostly saw closing costs, which is not surprising. Nobody raises an eyebrow at John Burns, if builders are contributing to closing costs, but the design center options get our attention, or rolling back lot premiums and applying some broker bonuses. That’s the nature of it today. Nothing too scary, but it is something to watch.
Dean Wehrli:
Okay. I’ll be honest with you. We have seen very little of the incentivizing above that pro forma amount, yet, in Northern/Central California, Northern Nevada, where we do our work here in this office. But, yeah, I mean, it makes sense that some of that’s going to come back, given the level of appreciation we’ve experienced.
Dean Wehrli:
Jody, let’s talk about, let’s switch over to the land, and we’ve had this incredible, insatiable appetite for land from builders for quite a while now. You guys do a land survey, tell us about that real briefly. And then let’s talk about some of what’s happening right now, in terms of what you’re seeing from a land demand and land pricing.
Jody Kahn:
We’ve been surveying for about 10 years now and this is a quarterly survey. At the end of each quarter, we reach out to the top residential land brokers around the country and get them to rate like the hotness of demand. They share information on price appreciation, types of buyers for different types of land, et cetera. It’s been a great opportunity for us to track the alignment of land with the home sales and look for any glitches that might signal trouble ahead. And sometimes really wowing us, particularly lately with some big numbers.
Dean Wehrli:
Such as?
Jody Kahn:
For example, 99% of the 78 top land brokers who just rated second quarter demand for us, say that that demand for lots and land is hot or on fire.
Dean Wehrli:
On fire-
Jody Kahn:
So that’s-
Dean Wehrli:
… I love that term.
Jody Kahn:
Yeah. On fire. So it’s true that the on fire portion slipped just slightly from first quarter, but still the overall combination of hot and on fire is the dominant rating. And then price appreciation for finished lots, the average nationally is 16% year over year in the good A to B locations, and the C to D locations, secondary locations, even tertiary are right behind at 15% now year over year. I noticed that the Southwest and the Northwest were at the top of every category of lot and land appreciation. And on the flip side, it looked like the Midwest and the Northeast are lagging in terms of appreciation rates, not necessarily demand, but that the appreciation is just not as strong. And then for you and our Californian listeners, the finished lot prices are up 16 to 18% year over year across different levels or qualities of location, according to the brokers, but actually trailing the national average on the undeveloped land. And I’m thinking, Dean, that this is just, it’s very difficult to get land entitled in California, and that might be part of the problem.
Dean Wehrli:
For sure. Yeah, no question, because it is extremely difficult to get entitlements in California, yes.
Jody Kahn:
One thing that was surprising and exciting in the latest survey is we were expecting to see, ultimately, the appreciation in C and D locations, which are the suburban locations where builders want to offer these new communities, 19% year over year for undeveloped land prices. And it’s actually exceeding the appreciation in the better A to B locations.
Dean Wehrli:
Yeah. Is part of that just a denominator effect. Those A and B locations were already high priced, but also that’s where the folks are migrating out of, maybe both those factors are contributing to that?
Jody Kahn:
I think so. I think so. It’s definitely, you can get a larger parcel, typically, and at a more affordable basis in a C to D location, and people seem happy to be moving to suburbs with their continued work from home or hybrid status. So it’s working for everyone.
Dean Wehrli:
Have you seen any markets start to shift a little bit softer demand in the land world?
Jody Kahn:
It’s more anecdote right now than hard data, but I did speak recently to a couple of the land brokers, and in Salt Lake City, which is still one of the hottest housing markets in the country, one of the top brokers was mentioning that some of the builders are not bidding on additional deals. And the gist of it is they say that they have what they need, at least for the moment, for a couple of years runway. So I thought that was a little surprising.
Dean Wehrli:
Yeah. I think generally, though, I mean, we saw a hiccup there in land acquisition there immediately post-COVID. A lot of builders reacted very strongly, maybe in hindsight overreacted, but at the time it felt right and stopped all land acquisition, even let go of a lot of land acquisition personnel, so that led to a little bit of a shortage in their pipeline. Generally speaking, though, I think, aren’t builders still very much in acquisition mode?
Jody Kahn:
Yes. Yes. I do think that there is still a lot of acquisition going on, particularly, with 99% of the brokers saying that demand is hot or on fire. It’s just beginning to show up that not everybody still needs immediate lots to help their division or their local operation. And so there’s a little bit more variation between builders.
Dean Wehrli:
Now, let’s as always on this podcast, we like to look into our crystal ball. We’re going to do that in kind of a limited way here. Here at John Burns Real Estate Consulting, we’re kind of resetting our projections for the rest of the year and thereafter now, so we can’t really tease that. But let’s talk about what you’re seeing, Jody, in terms of maybe the land market, and that, in terms of what you expect to happen going forward.
Jody Kahn:
I think the biggest challenge for our forecasting and for our clients as well, is going back to that thought that many builders sold out their community is ahead of schedule, and a lot of them have planned replacements, but in my opinion, actually getting those open is going to take more time than they were probably anticipating.
Jody Kahn:
And anecdotally, one of the top Phoenix land brokers told me that the big master plans there are nine to 12 months behind on development. And then I heard the same thing from one of the master plan developers. We’ve also heard this in Houston, so it may not be every market, but nine to 12 months delay means you won’t have lots to build on. You can’t build the home without it, so that’s going to tend to slow volume, I think, this year as everybody just struggles to replace those communities all at the same time.
Dean Wehrli:
But that might also continue pressure on pricing though, shouldn’t it, with limited supply?
Jody Kahn:
Yeah, it probably will. We did just ask the land brokers about the overall supply of developed lots and land. And we specified B to C locations, again, suburban locations where people want to live. And 69% said the supply is much lower than normal today. So-
Dean Wehrli:
Wow.
Jody Kahn:
… that’s a good baseline against second quarter, 2018, we asked the same question, and only 33% of brokers were reporting much lower supplies. So you can see that the situation has degraded a bit. It’s really all, as you said, about the big appetite to replace those communities. And there was a lot of appetite by builders, both publics and privates. So 51% of the brokers are actually saying that the jurisdictions are going to be the biggest impediment to expanding supply. And as I think about this, we’re at that point in the cycle where often the jurisdictions, who are also kind of maxed out and not particularly well staffed to handle all this demand, they start asking for larger minimum lots and home sizes, which might be bigger than what the consumer even really is looking for.
Jody Kahn:
And you start seeing those demands for more expensive elevations, more onsite and offsite requirements. I’ve heard some recently about expanding sewer capacity, and as you know, Dean, that’s an expensive add-on to any community. And it takes time, because, again, all of the trades that have to do with laying pipe or leveling sites, all the dirt work, et cetera, they’re maxed out as well. So I think we are going to see some challenges in getting those new communities open. They’ll open, but it might not happen as quickly as builders thought. And it might flow into next year, early next year, instead of this year.
Dean Wehrli:
Yeah. There’s a lot of sort of these natural breaks on supply, which, again, is one of those fundamental factors that was much, much less true the last time, 2008. Supply is just so much more constrained and likely to be constrained going forward than it was.
Jody Kahn:
Yeah. Agreed. Agreed.
Dean Wehrli:
How about costs, aren’t cost a huge, huge issue right now? Not just lumber, but actual development costs of getting those lots of ready.
Jody Kahn:
Right. Yes. It’s not as significant as the pressure on building the homes, which I mentioned before was 22%. But our quick survey of the brokers is that the development costs on average are up 15%. And that would be the labor and the materials on site, that doesn’t include necessarily like engineering, planners, et cetera, so just literally getting the site work.
Dean Wehrli:
So in terms of looking forward, what can we say about what we’re kind of expecting here in the near term, at least with respect to supply?
Jody Kahn:
I’m expecting that new home supply is going to remain constrained for the second half of this year, for the things we just discussed, the development delays. I think some of those new communities will open in 2020, I’m sorry, 2022, which will be helpful. Because if we can see a matching of easing or normalizing demand with a little more supply coming into the market, this gives us a really good normalized, market environment that is good for consumers and is good for the builder.
Dean Wehrli:
Prices, I know we have to be a little careful here, but what can we say about pricing expectations?
Jody Kahn:
It seems that the prices will have to stay elevated in the near term, even though there are these affordability concerns. At least partly because the costs are still so high, and also given that there is still maybe more demand than supply, that will tend to give the builders a little latitude to stay ahead of those costs.
Dean Wehrli:
Back in 2008, I remember so many people talking about a soft landing, and how we’re looking for a soft landing. Let me digress for a second here, it seems like there were some fundamental factors at play then, that were true then, that are different now. As things like there was crazy rising prices back in say 2008, and before, of course, there was huge… there’s kind of supply overhang, there’s lots of supply. There was very, very easy lending standards. And there was a shrinking economy. This time around, those same four fundamental factors, only really one of those is in play and that’s very high appreciation. Otherwise, we have a strong economy, 930,000 jobs were generated last month. We have a much tighter lending standards and we have much, much, much tighter supply. I mean, so do you think this time there is a scenario for a “soft landing”?
Jody Kahn:
Yeah. I think there is a good scenario there. As I say, I’m kind of looking for that combination of normalizing demand and supply at the same time, which would be the soft landing, the actual soft landing. There are a couple of unknowns here. Certainly, there’s some question right now about the work from home, getting extended, as you know, COVID cases are rising. Some of us have to wear masks again, et cetera. So whether or not people get called back to work or can live in more far-flung suburbs or so-called sister cities, those smaller cities that they moved to, like in your area, that would be like Reno. The other, I think big unknown is how much demand was just pulled forward as buyers, no doubt, accelerated purchases due to their COVID worries, but also we’ve had great low rates. And nobody really has a quantified way of answering that question right now.
Dean Wehrli:
No, they don’t. And it maybe is one of those non-quantifiable ones, which I know analysts hate, even though get used to it, that’s the real world. But here’s my take, I think a lot of that demand… I don’t think there was a tremendous amount of demand pulled forward, because I think a lot of that demand was just unrealizable, as conditions were. And I’m speaking of course, to remote working. It tapped into, I think, a latent demand that was not going to be realizable without this remote working revolution, so I don’t think that’s a demand that was just sort of borrowed from the future. That’s I don’t know. I could be completely wrong.
Jody Kahn:
No, I get what you’re saying. That makes sense. I think another unknown that we’ve been just discussing, particularly, as you mentioned, I live here in Florida and we’ve been on the receiving end of just a huge wave of migration, which admittedly is an ongoing thing. We always get people coming in from the mid-Atlantic and the Northeast. But the question is, now that a lot came down and purchased homes, will they stay? Or will they go back? Will they list those homes for sale? An interesting anecdote from a car transport company is that they’re not seeing a lot of requests for people who want to go back up to, say, the mid-Atlantic, say, to New York to move their cars. So that suggests that they’re still here this summer and it’s hot and humid in Florida. They’re not going back so quickly. So maybe they’re going to stick.
Dean Wehrli:
Have they thought about the alligators? How they even… I don’t know. And the insects the size of shoes, that’s also a scary thing. Sorry, Florida, I’m just kidding. And you know what, it’s going to wind up being just the zeitgeists. It’s amazing how much of a housing market is based on what’s between the ears is the psychology of it. And will there come a time where buyers overact to, like we said, five times already, a slowing market, but far from a slow market? We’ll see. But, again, when the fundamentals are pretty strongly positive across the board, that’s going to win out over psychology, eventually, I think.
Jody Kahn:
Yeah, I know what you’re saying. Depending on how consumers react, if they see like limited incentives or on the flip side supply coming out from the builders now, that was under construction for a few months, will ease some of that feeling like the panic or the urgency.
Dean Wehrli:
And again, that’s a normalization, which, honestly, I think on the whole, it’s going to be a good thing.
Jody Kahn:
Me too.
Dean Wehrli:
Well, Jody, thank you for those insights. I really appreciate you coming on to the podcast.
Jody Kahn:
Thanks having me, Dean. Fun as always.
Dean Wehrli:
Oh, it was fun. We’ll do this again. This is Dean Wehrli for the New home Insights Podcast, and we’ll talk again in a couple of weeks. Unless you’re bingeing right now, in which case, thank you. See you then.
