PLUS: Taylor Morrison and Banner MD Anderson Cancer Center are teaming up to build and donate 16 fully furnished homes to support cancer patients.
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00:00with median home prices climbing 4% from last year. Many potential home
00:04buyers are left wondering if they'll be stuck in a cycle of renting indefinitely.
00:09How can we break this cycle and provide meaningful support to those in need?
00:13Joining us with those answers is the CEO of Taylor Morrison, Cheryl Palmer.
00:17Welcome to cheddar.
00:19Well, thank you so much. It's just a pleasure to be here today. We're happy
00:22to have you. So we want to talk about rising home prices and high mortgage
00:26rates. How are they affecting buyer demand and market activity right now?
00:32You know, we have seen over the last, I would say four weeks, Asia, we've seen
00:37about 100 basis points of reduction in the interest rate. So that's helped
00:42quite a bit. I mean, if you go back a few months, rates were in, you know,
00:46the mid to high sevens last year, they had actually gotten over eight, maybe
00:50even early this year. So now we're looking at rates that are in the mid
00:54sixes, which I, um, is really helping the consumer. Um, you know, over the
01:01last couple of years, we've come from an environment where rates were, you
01:04know, 3% and less. And the customer has really begun to understand that we're
01:11not going back there. And so as we've seen rates come to the six back to the
01:166.5% range with the tools that we have to help our customers, we've really
01:22been able to get customers to their new front door. There's still, there's
01:27still, you know, some affordability challenges with that first time buyer.
01:31But more and more, we're actually able to help the consumer today. So can you
01:37talk about those tools that you're kind of helping a lot of new home buyers
01:40with when it comes to the point that we're not getting back to that 3%? Can
01:44you talk about some of the tools you're helping them with? Yes, absolutely. And
01:48the important thing here is that every customer has a different need. And so
01:53we have so many different tools in our toolbox. Some customers actually the
01:57monthly payments okay, and they need help with closing cash cash to the to
02:03the closing table. So we want to keep our incentives and allowing them some
02:08opportunity there. But then we have other customers that need just 100%
02:13certainty on what that monthly payment will be. So that interest rate is
02:17critical. So it's about buying down an interest rate to help them at a payment
02:23they can afford. Others may be in a situation where they know that after the
02:28first 12 or 24 months, they'll be in a much better place, they may have some
02:33changing changes going on in their job or promotion. And so we might pull on a
02:38two one or a three to one buy down, which would allow rates to start as low
02:43as maybe 4%, 5%, 6% would become the permanent rate. The important thing is
02:50that our customers will have to qualify at that final rate. So we don't get into
02:55the same challenges we did many, many years ago, where the consumer couldn't
02:59afford that ultimate payment. I'm sure a lot of people would love to hear that
03:024% if that's the case for them. And for sure, and we're talking about
03:07affordability, right? A lot of people, unfortunately, as we're discussing,
03:10cannot afford to buy a home right now. So how is the market looking for
03:14renters?
03:16Yeah, certainly we've seen prices move and the combination to your point about
03:21what's happened to prices, interest rates and just life, right? Some of the
03:25inflationary pressures have had an impact. Um, so we're seeing a strong
03:30rental market as well. You likely know we have our yardley brand, which is a
03:35wonderful single family, single story product. Um, two bedroom, generally
03:42two bedroom homes. We have someone in three bedroom homes, but they have a
03:45backyard. They're in a gated community, and so they get to enjoy the lifestyle
03:50of having their own home. We call them horizontal apartments because, like I
03:54said, they're all single story. Um, and it's gone really well. I mean, we are
04:00just short of housing in our country today. And so what we really need to
04:04provide is shelter, and it doesn't matter to your point if it's for rent
04:09or if it's for for purchase. We just need to make sure that we can
04:13accommodate the needs of all consumers today for sure. And let's talk earnings
04:17report now. Taylor Morrison's adjusted E. P. S. Of a dollar 97. It beat
04:21expectations. So how can the company sustain this performance despite a
04:25slight decline in home deliveries as we discussed?
04:29Yeah, actually, we saw our deliveries move up, you know, year over year and
04:34quarter over quarter. And as we've guided for the third quarter, we expect
04:37to see the same here. You know, I think one of the things that has been so so
04:43critical for us and our buyers is that we do serve all consumer groups. About
04:48a third of our buyers are first time buyers, and even those that group of
04:52first time buyers I would say have some subsets. I mean, there's kind of singles.
04:58There's two incomes. So we serve about a third of our closings our first times,
05:02and we have our move up and second move up. And that part of the market
05:07continues to be very, very strong, along with what we call our resort
05:12lifestyle brand, which is Esplanade, which really serves the needs of 55 plus
05:17consumers. And that's just a tremendous. That's just a tremendous brand. It's
05:23like our customers are going to summer camp every single day, and those
05:28consumers are in a very different place. Many of them are paying cash, so it's
05:32really across all consumer cohorts. What I would tell you about that first
05:37time buyer Asia is there's a lot of them. It's a very deep hole. If you
05:42look at the millennials and how they've evolved, if you look at the generation
05:46behind them, but we just have to use all of the tools in our toolbox to
05:51really help them get qualified. And do you believe that is what's kind of
05:55fueling the strong performance and outlook? The strong number of first
05:59time buyers that you're supporting? I think across the board, I think the
06:03strong number of first timers that are really desiring their first home. But I
06:08think, you know, life continues to happen. Our move of buyers. It could be
06:12a change of jobs. It could be a change of family and new Children in the
06:16family. And then there's our move up in our what I call our resort lifestyle
06:21that are generally moving to make sure that this next chapter of their life is
06:25exactly what they want. They're generally moving to be near those
06:29Children. We call him grandparent chasers. I'm just one of those. So I
06:32appreciate how important that is. So different reasons. Um, you know, the
06:38bottom line is we are short, depending on what you want to read or what you
06:44want to believe. We're short somewhere between, you know, one in five million,
06:49um, households in our country today. So once again, there's such tremendous
06:55opportunity, I think, for times to come. In fact, I think there's never been a
07:00better time to buy than there is today because the builders are out there
07:04really assisting customers, given the impact in interest rates turning to
07:09community involvement. How does Taylor Morrison's partnership with Extreme
07:12Makeover Home Edition really showcase the company's commitment to community
07:16involvement, especially with 2000 volunteers working on each rapid build?
07:21Oh, thank you so much for asking the question. We're so excited. It's been
07:25really a special time for Taylor Morrison. As you know, we are the first
07:29ever exclusive home builder for Extreme Makeover Makeover Home Edition for A. B.
07:34C. And, you know, the heart of Taylor Morrison has always been around kind of
07:40our unwavering commitment to better our community. And what a more special way
07:46than to do it. Delivering these homes for such deserving families. You know,
07:50at this point, we've completed four builds. We've done two in Texas, one in
07:55Austin, Houston, and two in Florida, Orlando, Tampa. And they were amazing.
08:01Like you said, 2000 volunteers showing up for each build. This would not have
08:05been possible without our partners. And for us, it actually started when we
08:11delivered these first eight houses in June to some very special patients, a
08:20new community in Gilbert, Arizona, that was donated for Banner M. D. Anderson
08:24Hospital. It's actually on the campus of the hospital, and we've built houses for
08:31the patients and their loved ones while they're undergoing treatment. That's
08:35where it all kind of started, you know, and I want to get more into that home
08:38away from home program, which is really special and really important for people
08:42who, you know, are getting treatment and wanting to also lay their head where
08:45somewhere they feel safe. How are you alleviating the financial and emotional
08:49burdens on these cancer patients? And what impact do you anticipate we'll
08:53have on their overall treatment experience? Because it is a tough time
08:56for them for sure. Oh, it's a very difficult time. And as a home builder,
09:01you know, there's just no greater gift I think we could give them than to
09:05build a community of homes that eliminates those stressors you're
09:09talking about, like hotel costs, rent or mortgage payments and allow the
09:15patients to simply heal. These homes are right there on the campus, so
09:20they're within walking distance of Banner M. D. Anderson's Cancer Care
09:24Center, which eliminates all of those financial burdens. Many of them are
09:28coming within state, but too far to drive every day. But the hotel stays
09:33can be overwhelming. So having a house for you and your loved ones, these
09:39houses will help more than 80 patients and their families each year as they
09:45can focus on recovery in a very comfortable like home environment. The
09:50design of the homes are wonderful. They're just like our they come from
09:54our yardley brand where it's 1000 square feet, two bedroom, two bathrooms,
10:00kitchen, laundry, kind of a gathering room and even private backyards for
10:04them to enjoy the outdoors. That is very special for sure. And it seems like
10:08you have a lot on your plate at Taylor Morrison. Anything coming up on the
10:11horizon that you would like to share with us? Well, I am very excited about
10:16these final two episodes with extreme makeover home edition. One will be at a
10:23community of ours, La Mira and Mesa, and the second will be a little community
10:29center that we will be building right next to these eight houses. So the
10:33families of these patients and the patients can gather and, you know, have
10:38the support from one each other where they're all going through this very
10:41unique experience. Cheryl Palmer, CEO of Taylor Morrison. Thank you so much for
10:45joining us here on cheddar.
10:47Well, thank you. Have a great day.