저자: Kevin · 외국인
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8월 신규주택판매가 연율 80만호로 예상(65만)을 크게 상회하고 가격도 전년 대비 상승. 재고 감소와 주택 공급 흡수로 주택시장 바닥 신호라 주장. 연준 금리인하 기대, 주택건설주(빌더)와 HELOC 대출 기업(Figure) 긍정적 언급. 하우스해크 투자 홍보 포함.
다듬은 글
David, a max speed on new home sales, 800,000 seasonally adjusted annualized rate in August. The street was looking for 650. This is up 20.5% from July and up 15.4% from August of 2024. Now, we've been talking about mortgage rates, of course, uh, forever, and they didn't come down in August. These numbers are based on signed contracts.
So, people out shopping in August when the 30-year fix had not started its steep drop that we saw in September. Yeah, I mean that's fair. These are August numbers. Uh and I think what we're seeing in the market is we're starting to see this absorption of excess supply. This is a very normal part of the real estate cycle.
And so what happens when you get an absorption of excess supply is the next thing that happens is you start getting uh you know prices going up. And the reason for that uh is people are realizing that Warren Buffett is throwing money at real estate right now. He's throwing money at uh building stocks.
He's throwing money at home builders. This is an early tell that people realize rates are either going up uh or rates are either coming down because of recession or they're coming down uh coming down because of a normalization of inflation. Either way, you've got Powell who sees inflation as point transitory.
overtime transitory here, not point transitory that is. Uh so we expect in to see the return of disinflation once we get through tariffs or if we get a new president and a new regime that ends up replacing tariffs, we'll have deflation from that. Or we have a recessionary environment, we get deflation from that.
All of that ends up leading to this expectation that rates are going to come down. And if you look at the real estate cycle, I I really need to find a higher quality version of this, but this is actually the real estate cycle that I made about 16 years ago. So this is a graphic I slapped together on Photoshop about 16 years ago.
And you'll find that the absorption of excess supply portion or arrow is the bottom of the cycle, which is really exciting. This is what's leading to so much enthusiasm around real estate plays right now. It's leading to enthusiasm at lenders. It's leading to enthusiasm at Open Door. It's leading to enthusiasm at house hack.
People are throwing money at house hack right now. I think I mean we're raising over seven figures on on a on a monthly basis. And I think one of the reason is because people see the real estate market is sort of like okay wow yeah we're at an inflection point. This is big. Uh now I mean maybe it's because of the AI that we keep talking about which frankly like in the even the last 48 hours the AI training that we're doing I'm looking I'm going wow we are we are getting really close to this being a product that uh that we can sell.
So it's really exciting and our beta is launching in Q4 and and uh if we can uh if we can sell this product in Q1 it's a it's a game changer for for what houseack is we we we could explode the valuation of the company which we're really excited about. No guarantees obviously. I'm just saying the I I'm not sure when I say when I use Houseack, my point is when I use Houseack as a reference.
I'm not sure if people are plowing money into it right now because they want to diversify or because they want to bet on real estate or because they want to bet on artificial intelligence in real estate or they want some kind of combination of all of that. I don't know. Uh but it's what we're seeing.
So, it's interesting with these numbers that Diana here is talking about. She's talking about new home sales from August. The expectation was we were going to get 650. The prior release was 652. The prior release got revised up to 664 and this one beat month overmonth by 20.5. Now, I generally don't like looking at this data because it tends to be lagging data.
Uh in the, you know, it's it's not really impactful to traders either. You know, if you're trading stocks or whatever, nobody really cares about these. But what it does is it sort of reaffirms that what Buffett was seeing back, for example, in August is actually showing up in the data. you know, maybe he was getting phone calls, hey, we're clearing out the shelves over here.
Wouldn't be surprised if there's some insider info going on. Uh, that said, we also had building permits that beat. Building permits were expected at 1312 and they came in at 1330. So, it was well over 6.5% in the high 6% range. Now, we're down at the 6.3% range. So, this is a surprise, but again, we've been talking about the builders, their incentives.
Lenar's earnings last week, they said they're doing price cuts. They're doing uh all kinds of mortgage rate buys and other incentives. Let's look at the price today. Uh the price uh of a new home sold was uh $413,500. This is 4.7% above July. And it is uh wow 4.7% above July. That's huge for the price of new homes.
Now be careful. There can be some distortion with distortions with new homes because they throw so much money into incentives. So it does sort of sometimes distort that actual price level above 1.9% above August 2024. So prices going up on this. It's really interesting that this is happening. I guess people getting back into that market before the fall season, which is usually kind of the second most busy as opposed to the spring season, but it is
that is the before fall season, like the right before back to school. Uh and that's true. August could have been like people getting in, you know, right before back to school. Another real surprise to see prices go up as well as sales go up. Inventories though, we're looking at a 7.4 month supply. We had been at a 9mon supply.
Uh inventory is falling in a lot of different portions of the country. And it's not it's like more than seasonal, right? Because it's typical for inventory to fall during this time of year, but we're seeing a more than seasonal decline in inventory. So, there's just less available uh to be picked up.
uh fewer homes available uh and as a result uh you could end up seeing a squeeze in prices. I mean we saw this in 202 to 23. Between the fall of 22 and the spring of 23 we ended up seeing prices jump something like 15%. Because there was this sudden absorption of inventory and then we had this lack of inventory and just prices exploded which is great for people who already own real estate.
It's not so great for people who want to get into real estate, but that's the age-old problem. Keep in mind, it's mostly seniors that own their homes and have the vast majority of equity in their homes. And so, younger people are getting screwed. I hate to say that, but 54% of homes are owned by seniors.
40 uh that that ratio is 44% in 2008. So, seniors have really like gained the lead here. Uh 76% of those seniors have no mortgages with uh 78% of seniors not wanting to move or downsize which means less supply uh a lower available supply which isn't great. Uh instead seniors focusing on home equity lines with a loan to value average of just 24%.
This is how lenders like Figure, which is a 99% HELOC lender, mostly online, AI, blockchain, uh, is is killing it. And then you've also, especially post their IPO, they're nicely up. But, u, you're finding that people are tapping into their equity to do whatever, spend, you know, some more consumer spending or invest in the stock market because home equity loans are still cheaper than credit cards or personal loans.
So, it makes sense. in July. So, inventories coming down. Builders obviously making the push to get in people in the door, but builder sentiment again wasn't so great in September. So, these numbers are really quite something again. 800,000 up 20% monthtomonth. Back to you. Yeah, Diana. Yeah, that it's it's great.
So, I and I get it. Like I understand why you have these these HELOC lenders uh doing really well right now. But I think it's also worth mentioning that Maria Baroma, she just had this Bessen interview and there was a portion where she showed Figures CEO an interview with Figure CEO. I'm going to pull it up here.
And it's interesting because the Figure CEO, he's talking about competing with Fanny and Freddy. I know like I know they already know this but he doesn't have to compete with Fanny and Freddy. He could compete with Fanny and Freddy and they know this but the figure well I'll show you the clip here. The figure CEO he talks about competing with Fanny Freddy getting into mortgages know this figure it's in their financial statements 99% helocks.
So anything Figure does to expand their reach into regular mortgages, you know, whether they sell the mortgages to Fanny Freddy or they sell them to the private marketplace gives Figure even more of an addressable market substantially larger uh and any sales that they do in regular mortgages from HELOCs basically increases their revenue base assuming I mean there could be some cannibalization once rates really fall But it's okay because I think as an online lender, you know, their goal is to make the process as simple as possible, much like a rocket mortgage now by Mr.
Cooper. And these online lenders are just going to boom through this next refinance cycle. But listen to the competition talk here with Fanny. Oops. Another company. For example, I spoke with the CEO of Figure, who's also a mortgage originator. Here's what he said. Watch this. It took forever for them to hit play.
In terms of the the market that is available to you right now, the potential market, what would that look like? One of the big ones that we're going after is First Lean Mortgage. So, we're now competing directly with Fanny May and Freddy M. Yes. We're going after mortgage. Now, understand for for a lot of people who hear this.
You don't have to compete to f with Fanny and Freddy. Remember, you can sell to them, right? You can originate Fanny Freddy loans and just sell the loans to them. But yes, you can also compete with different products against Fanny Freddy. That is what happened in 200, you know, three and four when we were starting to kind of like build up the bubble.
Uh what happened was private lenders were starting to say, you don't need the government sponsored entities, which you know were more more public then. Uh you don't need them. You don't need the Fanny Freddy's. We'll give you a better deal. What I'm actually finding right now, uh, and we're going to be talking about this with, uh, not only our course members, but our mastermind folks, is I'm finding lenders that are literally doing 40-year loans, 30 years, uh, 20 years interest only, I'm pretty sure it's 20 years interest only, and then it goes to a 20-year amortized period for a combined 40-year period.
I I have to fact check the numbers. I wrote them down, but I'm starting to see these products come through now. and uh they're they're full dock loans, you know, fixed rate mortgages and it's incredible, but they're private mortgages. They're not Fanny Freddy's. It's really interesting on rental properties as well.
So, there are some really interesting, you know, new private products coming out and this is a space that figure can I think very well compete in um using blockchain technology as an advantage and and for certainly loans under $500,000, we're winning in that competition right now. A and and Fanny and Freddy are likely going to see their own IPOs once again, right?
President Trump expected to take 5% of those companies public. Does that sort of even even pony up the the competition that much further? Well, we we like competing against them as private enterprises. Uh they got a little bit of an unfair advantage as a governmentbacked entity, but uh so it levels the playing field a little bit, but but right now we're winning irrespective.
So broadly speaking, is it an unfair advantage when government has a stake in public? Keep in mind this this like blockchain argument that he has. It's really hard to verify this right now. Uh this is, you know, this promotion that Figure uses. Uh and and like I want Figure to do well. I think I I've I've seen people use their lending products and people really enjoy it, but I think that this blockchain pitch is kind of mostly fugazy.
uh you know they say they use it regularly and that they're able to streamline the mortgage process through blockchain. I remain unconvinced with that uh and and I don't know that we really have independent data confirming that at this point but it is something that they do pitch and you could look at Fanny May you could look at Intel.
Well Maria there are decisions that the US government makes that we believe is good for society. We believe home ownership is good. So there therefore uh the government wants to be involved and I can I can tell you like having come into that's another tailwind for the housing market as well by the way is this idea of hey the government like best and wants lower rates to help mortgage markets right and help the housing market
from for the private sector that what we have seen here is that there was a breakdown in our supply chains and whether during co whether it was semiconductors whether we're seeing it with the Chinese putting export controls on rare earths. So there are some things for national security or that we have made the decision as a society we want to do.
But you know I I can tell you like that the Intel stake you know is now been validated that in Nvidia's come in and taken a stake. you know, the the big the biggest uh anyway, that that just starts going into a little bit more of sort of the level of government intervention that they're okay with. But, uh this is good news for the housing market broadly.
Uh now, if we can also go to the uh Red Fin, uh housing blog and get a little bit of an update from them. So, take a look at this. Let's see here. Uh, we've got uh we want high housing costs are pushing some Americans to make major family sacrifices like delaying having kids. Uh, wow. Which is kind of sad, but it's getting worse by the fact that home prices are now ticking up.
Uh, and you know, you're you're seeing, look at this, housing supply drops the most in 2 years. Now, the argument here is that sluggish demand spooks sellers. But what happens when this is this is the leadin part is what happens when inventory falls, you tend to ramp up for the boom. And I think that's why you're seeing the new construction level really move.
Look at this. Active listings of homes for sale fell 1.4%. Look at this over time here. We're down to the lows of inventory that we saw in March, February, March of 2023. Uh and and we're sitting actually to similar point here to this 2020 or 2012 level that I was talking about where we saw this rocket in inventory or sorry this rocket in prices at the beginning of 2020 uh or 2013.
Really interesting home prices ticked up 2 in August. That's despite this idea of hey like you know how many buyers are there? It's okay. We've got fewer sellers. That's kind of the weird irony right now is like you could have fewer buyers. Yes. But because there are fewer sellers, they're having to pay more because you have it's almost like if you've lost five buyers, you've lost eight sellers.
And so the net impact that we're seeing to reconcile this data is prices up, new home construction sales up, uh, and inventory that continues to climb, which is typically an early sign of a turning point, uh, in the housing market. uh doesn't mean that there aren't real problems. I mean, look at this.
Just over one in 20 of the people who struggle to afford housing said they moved in with parents and 6% moved in with other family members. Five moved in 5% moved in with roommates and 2.8% moved in with grown children. So, people consolidating. You're actually seeing lower household formation because of the challenges of unaffordability.
Uh and that's sad. And then I think that's why Besson is pushing so hard for rate cuts. All of the changes and sacrifices Americans make to make housing more affordable. They ate out at restaurants less often. 41% 34% took no or fewer vacations. 19% more hours. Uh 19% borrowed money. Jeez. And it kind of goes on here.
Yikes. Okay. All right. Well, it's a it's sort of a two-tiered system, right? You get the rich getting richer, uh the asset owners getting wealthier, and uh everybody else kind of getting left behind. I'm just looking at some of your comments here. One of you says, uh so this is good for REITs. Yes, real estate investment trust.
Somebody says, uh the if the housing market were allowed to operate within a free market, the median price would be around 250 and inventory wouldn't be a problem. I think what you're referencing is the uh lack of a free market that you have in the way of building, right? You have so much government oversight in building.
The problem with that is if you have too little government oversight in building, you potentially end up having properties that are built too cheaply and then you end up having, you know, disasters uh in in earthquakes or, you know, condos in Miami or whatever, right? So, so there is there is a balance there.
Uh, let's see here. You've got you got to be a millionaire to buy a house in the ghetto. It's tough. Yeah. What do you think about home builders? Well, like I said, Buffett is buying them. And I get it. I get why he's doing it because as resale inventory falls, you basically have like it's kind of like, think about it this way.
Let's say you want to go to prom. You really want a prom date and like all the tens are taken. you know, there's just no supply left of tens. And so then you're like, "All right." Like, you look around and there's just this army of fives and they're like, "We'll go." Those are kind of like the new construction homes where they're not the triedand-true neighborhoods that are the 10 out of 10, you know, best school districts, uh, most established neighborhoods and reputation for for quality and, you know, whatever people want in a in a neighborhood.
Instead, you have this sort of new untested, you know, hey, like makes up really nicely, but is it good? You know, that's that's my analogy for for the new construction because new construction, you always have a risk when you buy new construction. You're often buying new neighborhoods and you don't know like who are the neighbors going to be like what's going to happen?
What's how's like is is is this going to end up being a good neighborhood or not? Kind of interesting. So, um, somebody here says, uh, from Canada says, I had a question. Why are home prices in Texas so cheap while being so good? Well, I don't know that there's a comparison of so good. I think the question is, why are prices so cheap in Texas is exactly the reference to what we talked about with home building regulation.
In Texas, you you can build like crazy. I mean you have very uh lzair conservative policies uh which basically say hey let business decide and so your government regulation is very limited like you could really get away with whatever you want in terms of building in Texas and so you get massive supply as a result of that you do also have uh high property taxes so you have to be careful that you're not you know missing the boat on all the components that go into housing costs housing costs like anything else or a monthly payment factor.
So, when property taxes are double in Texas than they are in California or or other parts of the country, you know, that's something you have to factor in. You have to factor in uh serious uh you know, weatherproofing issues in Texas. You have to factor in the fact that, you know, once a home is like a 1970s home in Texas, you're almost better off rebuilding the damn home than you are renovating it, which is crazy.
It's it's almost like a mobile home, right? So, when you factor in property taxes, insurance, uh water, uh uh issues, you know, moisture issues from the humidity, uh and uh and the fact that people tend to rebuild even homes built in the '7s, you know, yeah, you're going to have a different price characteristic than, for example, a you know, maybe in your case, a Canadian home, depends on where it is, or a uh a California home.
You know, in California, you you wouldn't catch somebody dead rebuilding a 1970s home unless it burned down. you're going to end up finding, you know, people are are uh remodeling because there's a lot of residual value in the properties. You also have property taxes that are well half that of Texas, right?
Uh still have insurance issues, but you know, so there are a lot of differences. California is a very hard market to build in as well. Permitting is very very challenging. So, okay, good good qu good question there. What SAS do you think is needed in the building material construction industry? says, "Max, donating$5 Canadian dollars." A uh I have a lot of material procurement software.
You know, I I it software as a service in material building construction. The biggest thing for people is uh I mean, in my opinion, this is just sort of like on the spot when it comes to uh doing renovations or whatever. Typically, people get frustrated with business's capability of actually running inventory management appropriately.
The fact that inventory still seems to be such that websites could say something's in stock and then it's not and your deliveries get cancelled and your delivery time frames are screwed up, that pisses a lot of people off. So, you know, that's really where I feel like AI logistics can help. Uh, somebody says, "Hed funds should not be able to own homes as investment vehicles." You know, people say this all the time and it's like the most common thing that people say because it's just like it's it's like a popular thing to say, but it's just data wise wrong.
You know, companies that own more than a thousand homes make up less than 1% of the homes that are owned. Uh so, so the vast majority of homes that are rental properties are owned by people who are momand pop investors who've moved on from the first home they bought and kept the other one as a rental.
and they, you know, they're they're providing rental housing. You know, the vast majority are not hedge funds or Wall Street firms or whatever. And even if they were like, good companies providing more rental products for you is good. The problem isn't more people buying and providing rental supply.
The problem is a lack of built supply. That's the problem in housing. So usually when people make these these arguments about oh you know it it's hedge funds buying up all the homes factually a wrong institutional investors with over 100 or with over 1,000 homes own less than 1% of the single family homes in the United States.
Look it up urban institute. They talk about this all the time and and people don't don't consider that. They just they rehash that argument because it's not popular to say, "Hey, we need to build more homes and lower building standards or streamline building standards would be the better way to put it because it's too complicated.
It's much more easier to go, it's the shoots that you're taking and making all the homes unaffordable. It's the Chinese, you know, it's like come on, man. It's ridiculous." So, uh, you know, that's uh that's important uh to remember. So, uh, somebody here says, "Big institutions want rental income. Single family sucks for that." Uh, I disagree with that.
I highly disagree with that. I think actually single family homes are, uh, the the the best investments that you can make in America. Uh, I'm I'm the biggest fan of that. Great inflation hedge. And really, you're providing rental supply for people, right? So, uh, and and remember, it's almost all small mom and pop owners who own real estate.
and again seniors. So you would be making a much stronger argument to go the seniors are buying up all the homes making it hard for Gen Z and millennials to buy homes than uh than it would be to say the hedge funds are causing the problem. Blame the seniors. Now I don't blame the seniors because I recognize the market.
I recognize the way it works. I blame the lack of building. That's that's my take, you know, and I'm more than happy to point the finger at the government because I think the more the government gets involved, the more they screw things up. Uh so big big big big fan of that. Um yeah and and this idea that you know single families might not be a good you know returning vehicle.
Remember what Warren Buffett said? Warren Buffett in 2012 he's like hey if I if I had the ability to scale because it's hard to scale single family real estate. I would buy uh thousands of single family homes right now. Totally agree with that. So somebody here says Kevin get the ultra watch. I did.
It's actually right here. I got it. It's going to give me a step reminder here soon or stand reminder. So, I'm going to have to get uh I'm going to have to go get a cup of coffee. Somebody says Trump needs to pass an executive order on institutional ownership. You're wrong. And if they don't own that much, an executive order won't hurt them too bad.
So, you donated $5 to just reiterate that there's like some kind of like either mental retardation going on here. Sorry. Or I appreciate the $5, though. or you're just like really biased, right? Like that's the thing is usually when you get people who who are so like well well your facts you even if your facts are true I still maintain that it's a problem but the facts say it's not a problem and and so there's some kind of like mental bias that you have going on that is blocking you from realizing that how you're trying to solve the housing problem is not how you solve the housing problem.
You solve the housing problem by building more homes. It's very, very simple. Austin, Texas is the perfect example of that. When in 2022, we started House Act. We looked at Austin, uh, Colorado, Atlanta, Florida, Manhattan, Brooklyn, uh, uh, you know, Utah, St. George, Utah, Sacramento, uh, Reading, you name it.
We we flew like 400 trips to find the best markets to invest in for house hack. And we specifically chose not to invest in Texas because we're like they are tearing down 1970s homes and there's a building boom coming here. What happened in Texas? Prices plummeted about 25% from peak because of an excess of building.
What happened in Brooklyn where you have dumb building policies that make it really hard to build extra homes, right? We should we should not have ownorous regulations on building uh a anything over four building in Brooklyn, right? We should make it easy to build a 16-unit building. Instead, builders prefer to build duplexes because it's too hard to build a 16 unit in the same footprint because the regulations in Brooklyn are insane.
So, what happened in Brooklyn and California? prices skyrocketed. San Diego prices up. Brooklyn prices is up. At the same time, Austin, Texas fell 25%. So, thank you for your $5. But where's the data? You're not providing data. You're providing emotion and bias. When you provide and look at the data and you understand how capitalism works, you will finally recognize that what I ran for, I ran for this on for as governor.
I tried in 2021 and got almost a million votes doing this. I pitch that what we need in California is streamlined building regulation. Why do I have different codes between cities that are like 10 minutes apart? It's the stupidest thing ever. All it does is make things complicated for architects and engineers that like the weather doesn't change that much in 20 minutes.
Why don't we streamline building codes between different cities and even across the entire state so we could build more homes or expand where we can build homes and then interconnect cities with boring tunnels so we don't have more traffic, right? Those were some of the things that we ran on and and like when we look at the data, the data says this is exactly what we need.
But again, people aren't data dependent data dependent. Instead, people are emotional. like they will literally throw $5 to make themselves look like a fool uh at at like ignoring data. Like, yeah, we know your data says that, but my bias says this. Fine. Again, thanks for the $5. I appreciate you being here listening to the to the rant, but uh you know, it it's also important to kind of like wake up to the facts, man.
It's crazy. Somebody Ethan donated 10 bucks here to say thoughts on buying commercial real estate like office space in downtown areas such as Chicago and remodeling them into apartments. It's very expensive. You have to be careful with the type of property that you're buying. So, if you're buying a high-rise, for example, uh you know, an early 1920s high-rise is going to be more desirable to renovate into apartments, ironically, than a 1960s property because in the 1960s, a lot of the 1960s buildings, you you actually have to core them out in the middle to get enough window space for units because 1960s, you had so many of these flat offices, and they're just not really conducive to chopping up inexpensively into homes, uh, apartments basically.
1920 is a lot easier to do. Some of the more modern buildings a little easier to do. But yeah, I mean the office in my opinion is mostly dead. Like I would not make a bet on office. But I would also be very cautious on my ability to turn an office into uh you know a home, especially in a you know more blue city that's going to have those ownerous building regulations.
So you really better know what you're doing. So you know $10 there to to to say uh you know you better know what you're doing if you're going to get into that. So, uh, yeah. Anyway, uh, somebody says, "But Kevin, you failed to factor that these investors hold a substantial presence in specific markets." Uh, I mean, like I said, you know, institutional ownership, uh, of those who own more than a thousand is less than 1%.
And and if you actually look at where they've concentrated, they've concentrated in high build markets like sunb belt markets like Texas, like Dallas, uh, or Florida. And uh compare the price action of what's happened in Dallas uh uh and Austin and parts of Florida. Compare that price action where you're going to have more of that institutional concentration also having more building.
Compare that to what's happened in New York and and California. You'll actually find that where there's lower institutional investment of real estate, you have higher prices. So, ironically, more institutional investment is correlated with lower prices because they're investing in high build markets.
So, again, like the very argument you are making doesn't fact out with reality and the opposite is true. Look, this is what I do for a living, okay? I started House Act not just to buy uh and provide rental properties to people, you know, we buy fixtures that nobody's living in. We literally all the time we're buying properties that are vacant and they've been vacant for years and we're bringing them to the housing market.
We're doing a service. We're building on ADUs. We're building more apartments. We're building speck homes to provide more housing. Not only are we doing that, but we're developing real estate artificial intelligence to help people skyrocket their net worth with AI and real estate that actually matters.
Now, that's all huge in my opinion, but you have to remember that this is what I do. Like, I love real estate and it's in my opinion really hard to to to compete from the data point of view uh when when people leave comments because this is what I do on a daily basis and it's pretty easy for me to answer these questions.
Uh but anyway, that that's my take. Again, you know, maybe I'm biased. I got a real estate startup. It's called House Hack. You can invest in it. read the solicitation or the purchase uh the private placement memorandum if you're accredited or the offering circular if not accredited you get a 5% yield through conversion plus all of the upside in the stock actually think it's a pretty good deal uh but uh but yeah I mean institutional investors are regularly concentrated in sunb belt and high build markets uh which have seen much more moderate or or potentially even negative price growth compared to these these supply constrained markets that I've been talking about.
So I think it's uh it's it's very interesting. Uh so anyway, great great questions. .
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