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00:00I want to talk about the partnership, though, and how it gets to the affordability issue.
00:04Let's go right there. Robert, or whoever wants to kick it off, please.
00:07Go ahead.
00:09That's a good partnership. You go, you go.
00:12Well, look, what this represents is the number one largest brokerage in the world, Compass.
00:18340,000 agents, nine brands, Compass, Corcoran, Sotheby's, Caldwell Banker,
00:24Better Homes and Garden, ERA, Central 21, Christie's, and Ad Properties,
00:27partnering with the largest mortgage company in the world to help sellers
00:31by giving them something they've never had before,
00:34which is the ability to market their homes to 60 million buyers
00:38without days on market and price drop history.
00:40Ultimately, there's a risk to listing, negative insights that are on listings
00:45that we are taking off the listing for the first time
00:48so that they can market without risk.
00:50There should not be these artificial barriers.
00:52Yeah, Bruin, come on in here because if we think about affordability,
00:55you know, what we hear over and over again from economists is,
00:58yeah, mortgage rates matter, you know,
01:03it matters how much people are thinking about buying and their salaries
01:08and how they think about affordability, but it really has to do with supply.
01:12And if we're not building more homes in places where people want to live,
01:16we're just not going to make a dent.
01:17How do you do it if you're not a builder?
01:19I think it's a very complicated problem,
01:21and I think it's really important that industry participates and does its part.
01:26And the purpose of this partnership is really to attack affordability in two ways.
01:30The first one is inventory.
01:32As Robert shared, we plan to bring, as a result of this partnership,
01:36500,000 to a million listings to the market that are not accessible.
01:40And so...
01:41Why aren't they accessible?
01:42Because part of the issue is that certain sites provide access
01:45to these private exclusives and coming soon listings.
01:48And these are inventory that really comes down to a more flexible way
01:52for sellers to be able to advertise their home.
01:54And what we think is that everyone is really focused on the buyer.
01:58That's obviously a very important side of the equation.
02:00But in some ways, the entire world has forgotten about the other side of the equation,
02:04and that's the seller.
02:04And so this partnership first is focused on the seller.
02:07It's about lowering the barrier to entry
02:09so that more listings can be advertised online on Redfin and on Compass.
02:14That's one side of the equation.
02:16The second side of this is a mortgage partnership.
02:18And that's where we are building a more integrated platform for buyers
02:23so that buyers that use Rocket Mortgage, that use Compass, can actually save money.
02:27They can get up to $6,000 in closing cost coverage.
02:31They can save up to 1% on payments for the first year.
02:35And so it's a very multifaceted challenge to fix affordability.
02:39But what's great about this partnership is it fixes things for both buyers
02:42and sellers on both sides of the ecosystem.
02:45But I've got to ask, you know, one of the things that Tim and I,
02:47we've covered this a lot in terms of affordability.
02:49And yes, some of it is buying homes, affordable homes where they are needed.
02:54It's not just buying homes.
02:55But the other thing is a lot of folks have said,
02:57we need to pay people more, that it's an income thing.
02:59So like, are you guys going to give mortgages?
03:01Are you changing your metrics in terms of income and so on and so forth?
03:06Like who qualifies?
03:06Yeah, because that gets to the affordability issue too.
03:10Yeah, I mean, I think, look, the reality is affordability, as you said,
03:13is much more than just supply and demand.
03:15Although supply and demand are probably the major ways to attack the problem.
03:19But a part of this is you have to have more ways to qualify people.
03:22You have alternative ways to look at things like credit.
03:25You have to think about reform.
03:26You have to think about wage.
03:27Are you doing that?
03:28You have to think about self-employed.
03:29We have diversified the way that we look at our population.
03:33I mean, you look at things like the creator economy.
03:35You look at the self-employed economy.
03:37So you have different ways that people make income, have credit.
03:40And it's really important, I think, to acknowledge that
03:43and to diversify the way you qualify folks.
03:45So the idea, the big picture, is you increase supply.
03:47You get more homes listed out there.
03:49It frees up inventory for people to buy that first home, Robert.
03:53But yeah, go ahead.
03:54So you mentioned developers and builders.
03:57Look, unfortunately, that will just take too long.
03:59If we attack the builder side, that will take two years to have it,
04:02even the most modest impact.
04:04And that's not really where you play.
04:06The bigger impact, exactly.
04:07Well, we play on both.
04:09But the bigger impact is on existing home sales.
04:12And that's where there's been less inventory
04:14because so many homeowners are locked into low mortgage rates
04:18and they don't want to lose that low mortgage rate
04:20to transfer to a 6% mortgage rate.
04:22So the way to expand the existing home sale market
04:25is to reduce the barriers to entry.
04:27And so let me give you some examples.
04:28Why do sellers say, hmm, when's the right time to list?
04:32There shouldn't be a right time to list,
04:34but they're worried about days on market.
04:36Why is there a fear of what price should we go at?
04:39Well, there shouldn't be a price drop history.
04:41That shouldn't be a conversation.
04:43My wife would never want to sell her home.
04:45But if you ask her, is there a price you'd sell your home?
04:48Yes.
04:48There's a price.
04:49There's always a price.
04:51But don't those histories inform the potential seller?
04:54Doesn't that data show and help inform a buyer?
04:57Doesn't that provide more information to the market?
04:59So look, if I were buying your company,
05:02I would love if your investment banker told me
05:04how long you've been trying to sell your company,
05:05how many times you dropped the price.
05:07But that's not what I'm buying.
05:09That's a negotiating point for leverage.
05:10If buyers deserve to know price drop history
05:13in days of market,
05:13sellers deserve to know how long has that buyer been searching,
05:16how many times they put in offers that fell through
05:18and fell out of contract.
05:20And so we believe if you, the buyer,
05:23what you need is you need more inventory.
05:25So to help you, the buyer,
05:27the best thing that we can do
05:28is just let the seller sell however they want.
05:31And if we do that, there'll be more inventory.
05:32So then wait a minute.
05:33So then now does the seller have more information
05:35or you're just getting rid of it
05:37and it's just kind of a through?
05:39We're just getting rid of it for the first time.
05:42So you just list it and you go.
05:43If you go to Australia,
05:45the word days on market and price drop history
05:47are not on the sites.
05:48They don't exist.
05:49The reason why is that system was built for sellers.
05:53Here, it was built
05:54because everyone's forced to put in the MLS.
05:56It was built for buyers.
05:58And so we're just trying to bring the pendulum back
06:00and give individual homeowners
06:01the same advantages as the builders.
06:03Builders market without days
06:05on market and price drop history.
06:06So we should give homeowners the same opportunity.
06:08What makes you so sure this is gonna work
06:10in terms of the affordability issue?
06:11Because I also wonder
06:12if you remove some of that information to Tim's point,
06:14if there have been price drops,
06:16that ultimately brings down the cost of the price of housing.
06:19But if you don't have that
06:20and it just kind of stays
06:21and maybe doesn't really indicate
06:23what's happening at the broader market,
06:26doesn't that lead to price appreciation?
06:27And that doesn't get to the affordability issue.
06:29Well, I think there's two things to point out.
06:30I think the first thing is,
06:31I think no one can disagree that today
06:34there is no inventory, right?
06:35Like we have an issue
06:36with the way the system works today,
06:38which is that we looked at some Redfin data.
06:41And so half of the homes that are listed right now
06:43have been on the market for 60 days plus.
06:45So we have a lot of stale inventory.
06:46You don't have a lot of new inventory.
06:49So fundamentally-
06:49I even said in my neighborhood
06:50because I like to check and keep an eye
06:52in terms of valuation.
06:53There's not much inventory coming on market.
06:55And so to me, it's less about some of these metrics.
06:58It's more just like, how do you create more inventory?
07:00More inventory creates more competition.
07:02It reduces scarcity
07:03and that creates pricing advantage.
07:05And so the bigger picture for us
07:07is just how do you attack the supply problem?
07:10Because without sellers,
07:11you're not gonna have buyers.
07:13And every seller ends up being a buyer.
07:15And that's really what we're focused on here.
07:17Robert, you were a data-driven guy.
07:19How do you measure if this actually works?
07:21Like what's the metric?
07:22We will see more inventory come to the market.
07:25How much more inventory?
07:27Before restrictions came into the industry
07:29through something called clear cooperation,
07:31which forced every individual American homeowner
07:33to put their listing in the MLS after 24 hours,
07:3790% of our listings started off
07:39outside of the MLS system.
07:41And when that rule came into effect,
07:44we saw less inventory.
07:45And so I can't give you the exact number,
07:47but we will see how much more inventory
07:50we will bring to the market
07:51and we'll share that with the public.
07:52Will this work in any rate environment?
07:55Absolutely.
07:55Just there should be no fear to list.
07:58There should be no downside to list.
07:59There should be no barrier to list.
08:01You should be able to list however you want.
08:03Do you want to not disclose the price
08:05and say price upon request?
08:07Do you want to have how many photos you want?
08:09Do you want to have no photos?
08:10Do you want to have an address
08:11that just says Fifth Avenue Luxury Penthouse
08:13without saying the exact unit number?
08:16Whatever you want.
08:17If you take away all those barriers,
08:19you will have more inventory.
08:20Help me understand too,
08:21what does this do to the selling process?
08:24The real estate agents who are selling properties,
08:26who often sometimes I would say,
08:28covet certain properties.
08:30Does that change any of that?
08:31Well, obviously I believe deeply in real estate agents.
08:34My mom is a real estate agent.
08:35That's what I'm trying to understand.
08:36All my clients are agents.
08:37Is your mom calling you and saying,
08:38what the heck are you thinking about?
08:40My mom supports this idea.
08:41Okay.
08:42She supports the partnership.
08:43But no, agents are at the center of this.
08:46And we, both our companies with loan officers
08:48and real estate agents,
08:49we are powering the real estate professionals
08:52that are required to make the transaction happen.
08:54The other thing I would add
08:55around the rate environment to that question.
08:57Because you guys did kind of smile
08:59when I said what was going on with the 10-year
09:01and how we saw rates move down.
09:02So it does impact this market.
09:05It's great to see rates moving in a good direction.
09:07We think that gets more buyers off the sideline.
09:09But I think what's unique about-
09:10Unless the economy's slowing down
09:11and nobody's going to be working.
09:12That's right.
09:13What's unique about Rocket in particular
09:16is that Rocket has the home search experience.
09:18We have a servicing book.
09:20And because of that,
09:21we can acquire clients at a lower cost.
09:23And when you can acquire clients at a lower cost,
09:26you can help save them money on the overall transaction.
09:29And so you eliminate a lot of the friction.
09:31You become more efficient by using technology.
09:33And that turns into real savings
09:35in terms of lower rates and lower fees.
09:37And that happens in any rate environment.
09:39That's what's unique about our business model.
09:41So that means some of the mortgage origination costs,
09:43like some of these things will go away
09:44or be reduced or what?
09:45That's right.
09:46And that's because many of the clients
09:48are buying, they're already homeowners
09:51that we service,
09:52and then they're buying their next home.
09:54And so the cost to acquire that client
09:56becomes significantly lower.
09:58And because we do a good job servicing them,
10:00we can then provide them with their next purchase,
10:02a cash out refinance, a home equity loan.
10:05And we can do all of that more efficiently
10:07because that cost of acquisition
10:09has come down significantly.
10:10Well, we have a couple of minutes left,
10:12and we want to talk a little bit
10:13about the macro environment
10:14and the individual companies.
10:15As Carol mentioned,
10:16both of you guys reported earnings late yesterday.
10:19Compass shares down about 1.5%.
10:21The company forecasts first quarter revenue
10:23that topped analyst estimates.
10:24When you look out at the landscape right now,
10:26where are you seeing signals of strength
10:28and where are you seeing signals of weakness, Robert?
10:30So overall, we have more inventory,
10:32which has been the key bottleneck
10:33over the last five years,
10:35which has not been enough inventory.
10:37So we have 9% more inventory
10:38than we did this time last year,
10:40but still less than pre-pandemic levels.
10:42Prices are basically flat to up 1%.
10:44We have 4% more pending contracts
10:46than we did this time last year.
10:48So things are okay.
10:50We're not out of the woods yet.
10:51Mortgage rates being at three-year lows
10:54at just under 6%.
10:55I think the key is,
10:57can we see sub-6% mortgage rates,
10:59not for a day, not for three days,
11:00but for a season?
11:02If we do, then I think we will see strength in the market.
11:07Faroon, same question to you.
11:08What are you seeing when it comes to the macro?
11:09How does it compare from last year,
11:11a year ago, six months ago,
11:12and your visibility on the outlook?
11:14Yeah.
11:15I mean, generally,
11:15when you look at all the different industry forecasts,
11:18we expect the mortgage market
11:19to be bigger in 2026 than 2025.
11:21I mean, the question is just how much bigger
11:23and how far up and to the right.
11:25So more activity.
11:26More activity,
11:27more purchase behavior,
11:28more refinance behavior.
11:29Obviously, as Robert said,
11:31we see inventory starting to creep up a little bit,
11:33which is good.
11:33We're starting to see rates cooperate,
11:35which is good.
11:36And I think that for the first time,
11:38you're starting to see a five handle
11:39on the rate environment,
11:40and that's going to bring a lot of buyers
11:42off the sideline.
11:43And so we do expect 26 to be better than 25.
11:47But a big part of this is just some companies
11:49have built a business model
11:50to be able to thrive in any rate environment,
11:52and that's kind of what our focus is.
11:54We know the president is so focused on affordability.
11:57He's focused on making sure
11:59that people can get into homes.
12:01Have either of you guys had conversations
12:02with the administration?
12:03We have.
12:04I mean, we have great relationships
12:06with everyone at the administrative world,
12:09and we support reform.
12:12We support affordability.
12:13We support new programs, new initiatives.
12:16Anything we can do to create more buyers and sellers
12:18and improve the supply challenge
12:21that we have in this country, we support.
12:23Was there anything in terms of a specific program
12:26that you would like or policy
12:28that you'd like to see the administration support?
12:30Yeah, I would very much like to see them
12:35eliminate NAR,
12:36the National Association of Realtors,
12:37clear cooperation rule
12:38that forces homeowners to put their listings in MLS
12:41is not NAR's home.
12:43It's the homeowners home,
12:44and they should have the freedom
12:45to market their home when, where, and how they want.
12:47So, let's go over to the national expansion plan.
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