00:00Meredith, the home builders have just been performing so poorly.
00:03They've really been beaten down.
00:04There's a lot of stuck assets in this sector.
00:07What do you make of this idea of buying maybe what are value assets,
00:11trying to do a roll-up, combining them?
00:13Like, is there some value to be had in this sector?
00:17Sentiment is so bad that you could think that it was, like, deep value.
00:21But I don't know what improves in the, you know, of course, at the nadir,
00:25you can't see any light in the other tunnel.
00:27But at least the existing housing market is on track to be worse than last year,
00:32which was the worst year on record in terms of sales.
00:36So people are sitting on their hands.
00:37And it's, you know, in real estate, they always talk about the five Ds.
00:42Diamonds, diapers, divorce, downsizing, and death.
00:47And you don't have those things.
00:49That is amazing.
00:50I've never heard those five Ds.
00:52That's the real estate jargon.
00:54So people aren't getting married, so they're not getting divorced.
00:58And their diapers, you know, the fertility rate is, you know, at an all-time low.
01:03Diamonds are growing in labs now and look cheaper.
01:05And I'm not, you know, the concept of the American dream of owning a home,
01:10I don't know if that's fading a little bit.
01:13And I say this because you see a record number of men between 24 and 64
01:19living at home with their parents.
01:22And 64?
01:2264?
01:23Yes.
01:26And between...
01:27Well, you have to at that point, right?
01:29I mean, you've got to take care of your parents if you're in your 60s.
01:31Yeah, but these are men.
01:33That's not women.
01:34And it's usually the women who are...
01:35So I don't know whether that's chicken and egg in terms of that's because of an affordability
01:39issue or it's because men's labor participation is so low and they're on disability.
01:46And I don't know what all the different things are that lead into that.
01:50But I just don't see the demand for housing, other than population growth is expected to
01:57remain relatively...
01:58It's not going to be that strong.
01:59Now, that said, we need to build a lot of affordable housing.
02:02And I don't know how they're going to address that market.
02:06But there's repurposing that can be done.
02:08But in terms of just actual new buyers to the market, you don't see it.
02:13And 60% of homes are owned by households over 60.
02:18Well, that makes sense.
02:20You know, when you say that these guys are living in their parents' homes, I just think
02:24maybe their parents have sweet houses because the baby boomers have so much wealth, right?
02:30We talk about this silver tsunami all the time.
02:32And I don't know what the latest estimate is, but it's upwards of $75 trillion for that
02:39generation alone that's going to be passing on to...
02:41I guess first they pass it on to their wives, because usually the wives outlive the men,
02:46and then to the children, right?
02:49That's got to do something for the U.S. housing market.
02:52But I think at the very high end, I don't know that the men are living with their parents
02:56necessarily.
02:57So the concentration of wealth at...
02:59Well, I was being a little tongue-in-cheek there.
03:01My point is that the money is going to be passed on eventually, right?
03:04One of the big problems is that people just can't afford houses right now.
03:07Right.
03:07What I'm saying is that people may not...
03:09Like, the idea of renting may be more attractive to some people than it had been historically.
03:15So do you see the long-term home ownership rate of 65% coming down to lower 60s?
03:22And I don't know, but it should be on the table for thought.
03:27How much of it is also just opportunity costs that the housing market looks expensive?
03:31If you buy it, this idea of it being an investment doesn't seem as likely.
03:34And at the same time, why not just put all that in an S&P 500 fund and get something
03:38like 20%?
03:40So thank you.
03:41That's the other part of the equation.
03:43So you see more people investing in the gamification of the market than saving for a house.
03:51Because it's hard to imagine that home prices have the same trajectory from 2026 to 2030 as they did from
04:012020 to 2024.
04:03It's interesting because we subsidize the housing market to such a huge extent in this country.
04:11And it's an important industry.
04:13So I wonder if you see that being increased, those subsidies.
04:18This administration seems to want to subsidize growth.
04:20They've done it pretty well with the big, beautiful bill.
04:22And will they go further with the housing industry?
04:24They floated an idea about having seniors not have to pay property taxes.
04:28Well, they wanted to buy so much mortgage debt, right?
04:29Which they did, but...
04:30Right, no.
04:31Sorry, not having to pay capital gains when they sell their homes.
04:33Right.
04:34That would be an incentive.
04:35But what AARP says, the golden book for seniors, is that they want to age in place.
04:42And they don't want to relocate.
04:44They don't want to downsize.
04:45Right.
04:45And maybe that's just inertia and they don't, you know, they like their, they don't have
04:49to because so much of their, they don't, you know, 74% of seniors don't have a mortgage.
04:57So they don't want to.
04:59But if Florida really boosts the homestead allowance and lets you have no property tax
05:07on, you know, your primary home up to like $500,000, that could force a lot of people to
05:12become, what do you call it?
05:14Oh, snowbirds, snowbirds, there you go.
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