00:00I do want to ask you about that divide. I mean, he's talking, of course, about buying, you know,
00:04suits and dresses and handbags. But is that kind of the real estate market, too, where you just
00:08kind of have this cash heavy luxury market that can kind of ignore everything going on with Kevin
00:13Walsh and the Fed and then everybody else who is dependent on getting a mortgage that has to look
00:17at a 7 percent average mortgage right now? Yeah, I think there's definitely two worlds.
00:23There's a discretionary real estate market where, you know, people are using cash. The mortgage
00:29rates are not so important. It's a little bit different. And then affordability is the major
00:34talking point of politicians today because the average first time home buyer is now nearly 40
00:40years old when they used to be a little more than 10 years ago, 28 or 29 years old. So
00:47there is sort
00:48of these two worlds, Romaine, and we need to be able to figure out ways to get more supply in
00:52the
00:53marketplace. And look, 7 percent is not so high. If you look at history, we used to be in the
00:58double
00:59digits with mortgage rates. So the challenge is not just rates. It's inventory and higher prices.
01:05So there's no sort of place for buyers to get some reprieve. And sellers who locked in a two or
01:123 percent rate are not going to sell right now because they see a 7 percent. So if they sell
01:17and
01:17they have to buy something else, they're going to have to lock in a higher rate. So it's a really
01:22tougher time in the housing market overall. Well, I mean, what sort of breaks that, though? I mean,
01:26if we're not going to get lower rates and I mean, I know that home builders are trying to build
01:31basically as much as they can, but obviously there are a lot of limits to that. And even at
01:34the pace they're building, no one thinks it'll actually catch up to that sort of potential demand
01:39out there. So is it just are we just waiting for somebody to give in finally and maybe finally the
01:45sellers just decide, OK, whatever, you know, I'll put my house on the market and I'll take whatever
01:49price I get? You know, look, there's a mixture of things. We need to have more supply incentives
01:56versus demand incentives like up zoning, you know, the city of yes, which Mayor Adams got passed,
02:03things like that to get more supply in the marketplace. And and we need to be able to get
02:09wages up. I mean, now people can't afford to buy their first time home because they can't pay
02:13the monthly mortgage that it would cost. So it's supply as we get prices down so that you could
02:20get more of a sort of intersection between supply and demand. We need to get more supply in the
02:26marketplace. I do want to ask you just a little bit, though, about, you know, how people are sort
02:32of maybe adjusting. Are we seeing like more use with adjusting to these higher rates, like more use
02:38of adjustable rate mortgage, seller financing, temporary sort of borrowing rates, things like
02:43that? I mean, if we believe this is where we're going to stay in terms of interest rate levels,
02:48I would think the people who are trying to sell, whether it's the builders or the homeowners
02:52themselves, that there would be maybe a little bit more interplay, a little bit more negotiation.
02:57Yeah, there is more negotiation. When rates are higher, sellers understand that and they know that
03:03buyers have less ability to spend money because money's more expensive. So everybody negotiates a
03:10little bit more. And so and people can get adjustables and do things like that. And people
03:16still have to buy, you know, because they've moved, they got a new job, they're starting a family,
03:20their circumstances demand that they buy a new home or rent a new place. So people are still doing
03:25that. It's just the speed of that has slowed down because rates have gone up, prices have gone up,
03:32and there's not enough inventory because part of that is the lock in effect of sellers who've decided
03:37not to sell because they don't want to have to pay a higher rate when they buy a new home.
03:41So we have a lot of I call it the big bowl of bad right now, you know, that it's
03:46sort of a weird
03:46time in the housing market, but it's not horrible. We had a very good summer. So we're going to have
03:52to see how it plays. And discretionary is very different. You know, like a place like New York City
03:56is a little bit different. It's insulated a bit from the rest of the country.
04:01They are. I mean, when do you see and I'm curious also, I mean, when do you see that
04:05if at all changing or is that just sort of a permanent structural feature given, you know,
04:10the strength of the local economy here? Well, you know, change is the one constant. So it's always
04:15changing all the time. We saw that the Fed chairman, you know, raised the Fed fund rate by,
04:22you know, a quarter of a percent. And I think that was a good thing because he's thinking of
04:27the long term and he'll probably raise it again in December. And so we need to get economic
04:32stability. I know people are finding it very hard to pay bills today in this country. So I think it's
04:37going to change. You know, we get we have ebbs and flows. We do have a lot of, you know,
04:41global
04:41issues going on right now, wars that are being fought. People are struggling. Everyday Americans
04:46are not having an easy time right now.
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