The WORST Report Yet | This will Drag us into Depression.

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Pulte Homes 등 주택건설사 실적 발표를 분석. 주문 취소율이 전년 대비 2.4배(10→24건)로 급증, 금리 상승과 연준 긴축으로 수요 위축. 가격 인하·인센티브 확대로 마진 훼손, 800억원 규모 토지 매입 포기(계약금 2,400만달러 손실). 자사주 매입(약 9%)이 토지 투자보다 나은 수익으로 판단됨. 주택경기 바닥은 2023년 Q3~Q4 이후, 혹은 2024년 Q1일 수 있으며 경기침체 우려 강조. 실제 주택시장 저점은 예상보다 훨씬 늦게 올 것으로 봄.

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01. is by far the worst report yet now many of you might not necessarily care about this particular company but what they say is such a red flag for not only the economy but also hopefully deflationary pressures to come in the future as consumer spending Falls due to the weight of what's being seen I think it's a report that we ought to look at together and so I've got the earnings called transcript and let's get right into it so this is the nation's third largest homebuilder and just take a look at some of the things they say the very first sentence from the CEO just yesterday is we find ourselves delineating between the favorable demand environment that existed earlier this year which drove the current earnings versus the more challenging current conditions as we move through the quarter you can almost see the ebb and flow of Demand with interest rates I mean that's not a surprise and they're finding that people are canceling transactions at a rate that's an increase of 240 percent of last year last year we were at 10 cancellations during this time now we're at 24 that's an increase of 2.4 x right and they're finding that people are canceling home purchases for two reasons one the a can no longer afford a home because of high interest rates or B they're unsure if now is the time to buy a home so that psychology of pain or fear or making a bad decision and they believe here that because of the fed's latest commentary about aggressively raising rates to control inflation for at least the remainder of 2022 and then likely holding rates higher for longer we could see the most significant impact on today's consumers currently showing up as influencing housing demand but as soon as housing wealth goes down we tend to see the entire economy slow down as well and it's gotten so bad that this particular company is now aggressively discounting their outstanding inventory aggressively discounting and they talk about protecting their share within markets that is how many homes they sell compared to the other home builders and the way they're going to do that is by not being margin proud in other words they're going to dump Properties by cutting prices to make sure they could still sell homes and maintain that share of homes uh for sale and they're basically dumping out of properties not only are they dumping out of properties but if you look down here you can see that they canceled 24 million dollars of deposits you can see that actually at the last slide here that's not highlighted where they say nobody wants to write off these 24 million dollars in deposits so basically they had deposits on land that they were going to develop and they said hey look this is about 800 million dollars of land we don't want to buy it anymore because it's just a bad deal so we're gonna walk away on our approximately three percent deposit and we're not going to buy that land to develop to build homes on that's about 800 million dollars that's not going into the real estate market that 800 million dollars guess where it goes instead and this is where you always see with real estate companies a Divergence between how the stock performs and how the actual underlying company performs Pulte Homes and a lot of the home builders are finding that their stocks are so undervalued right now that rather than go buy more land or actually go develop more real estate what they're doing is they're buying back their own stock Pulte bought back almost nine percent of their own stock over well since the beginning uh since January of 2022 which is absolutely a huge amount nine percent of their outstanding stock bought back it's crazy uh how much they've bought back and they're doing that because they see a better return on buying their own stock than they do on actually buying land right now in fact I frequently talk about the three wedge deals that house hack is going to be able to get house hack is my real estate startup number one wedge deal is where you buy real estate below market value because you're buying fixer-uppers and you're fixing them up at a lower price than what anybody else can that's kind of like flipping homes but we're not home flippers we're doing long-term rentals at short-term rentals and so that's wedge number one is buying a good deal that's how you make money by let's say buying a five hundred thousand dollar home in say a seven hundred thousand dollar neighborhood putting in 50k of uh repairs you're up 150 000 right that's wedge number one wedge number two is selling parts of the portfolio while retaining management and some of the upside to Pension funds who are looking for cash flow that's the second way that a house act can get a wedge deal and the third way you can get a wedge deal is by buying your stock back at a discount when the market is panicking and that's what the home builders are doing it's actually smart and it's a tax efficient way of of increasing shareholder value anyway so uh with the current dramatic and ongoing interest rates likely being the biggest concern for most consumers and other factors in play at play including inflation fear of recession or increasing concerns about job loss like this is just an all-around on one hand bad report but on the other hand I hope the FED reads this report and they're like yes spend less money consumers spend less money be worried be fearful about inflation be fearful about recession be fearful about job loss please now they talk about having a more defensive posture for the near term they talk about having 28 fewer orders and what I found interesting was that first time home buyers actually represented three percent more of their home buyers in other words people who put generally put very little money down like three or five percent down so they're borrowing most of it which means sure they apparently have the salary to qualify but they don't they don't need a lot of a down payment and the older move up buyers are buying at a 45 reduced rate probably because they're like yeah no been through a housing crash before ain't doing it again the first time home buyers have it oops anyway uh let's see here homes under construction okay let's see higher financing incentives this is just a way that they're hitting their margins trying to dump these properties oh this was fascinating look at this given the change in buyer demand and the resulting impact on the Turning of our own land we currently expect that our land spend will drop materially next year now that I thought was really interesting because what they're actually and here's that nine percent buyback at the top what they're saying here is hey look we we haven't like actually fully hit the brakes yet and this is kind of something that you saw at Google as well where Google's like yeah look you know we we're getting reamed you know we're down like eight percent today and uh we hired way too many people we're trying to refine our Focus uh we kind of lost our focus and hired too many people but a hiring will slow materially in Q4 and next year and I'm like damn folks we've known about this disaster coming since January and you're just now refining uh and and so I think it's interesting how how long everything takes honestly that's probably been one of my biggest lessons of this cycle is it doesn't have to go fast you know just because I I expect the FED uh to rug pull us and go dirty doesn't mean the bot at the bottom of the market comes soon it could come years later uh and and we expect that for for Real Estate as well the bottom of the market you know at first I thought it was going to be Q2 of 2023 now I think it'll be more like q3q4 and and maybe when we get to Q2 2023 I'll be like damn the bottom of real estate market might not be until q1 of 2024.

02. I don't know but I will say everything's taking way longer than expected it's lasting longer and it's been a lot harder than expected uh and you're seeing that in these earnings calls as well or companies are actually just now really starting to cut back it's crazy uh so let's see what else we have here well we expect the coming quarters will be difficult they're still positive and bullish in the long term that is people buying homes in the long term of course and remember generally home ownership rates decline during these housing crashes so it's a great opportunity for investors to increase their market share which is unfortunate for for individuals trying to get in but that's just the way it is uh talk a little bit about market share here with incentives uh interest rates okay here we go uh 35 of spec Ah that's not so interesting about the market average selling prices are coming down with margin consequences trying to give you the juiciest here yeah so they talk a little bit about their 24 million dollar write down how that would have represented 800 million dollars worth of properties uh that is Lots land that they would have bought uh what else is interesting is they talk about here how you saw a little bit of a dip in rates in August and this is true we did see a dip in rates in August and we saw some activity around then where people came off the fences but then rates went higher again in fact if you jump over to this PDF I have which actually has the 10-year treasury listed right here you can see that this green section right here is approximately where August is on the 10-year Treasury and uh you know August ended at 3.26 well we're at like four percent now so we're way higher I mean mortgage rates are now at an over average of seven percent it's quite quite remarkable uh so then look at this one here in many cases their buyers are walking away from sizable deposits which they say doesn't even make a lot of sense because they're potentially walking away from these deposits that are so large that's like Dude like even if prices went down 10 you just lock that in by walking away from your deposit and this is where uh I mean that's just an example generally people put three percent down as a deposit but just as an example uh because that's that's the argument they're trying to make here but then they say but that's where you really get into the psychology yeah I mean just like the courses I have on building your wealth they're designed for the psychology of money both real estate negotiations Property Management uh stocks investing for the long term right that's what they're all about you'd use that Halloween coupon code down below we going live in a course member live stream after this going through some more uh important earnings calls but boy oh boy uh when you start talking about companies going man the psychology of our customers is really changing that's when you know we have more pain coming uh and and it's just beginning and they do mention that some of the areas that are doing the best and this is very important for house hack go there to househack.com and that uh they're really focusing on areas with attractive job growth and warmer weather attractive climates which they suggest are the Sun Belt region so like the southeast and Florida uh Texas very interesting and uh so you are actually seeing those areas right now at least get hit less than you are West Coast areas even though West Coast areas have better uh job or a better climate uh it does seem like job growth is going towards the southeast and the South anyway uh they also notice look at this folks trades trades right plumbers electricians those are the trades that are feeling the slowdown in the industry right now the front end trades like underground plumbing blah blah blah in other words when trades people start feeling the Slowdown what does that mean recession folks one person spending is five dollars of somebody else's spending and it's just now slowing this is like this is crazy that 10 months after I made my January videos about the FED forcing a recession we're just now seeing companies like yeah now we're slowing down now we're canceling purchases now we're slowing hiring and they're not even at that max level of slowing down yet they're so slow and not Nimble it's scary anyway you're scared kevin.com life check out the programs and building your wealth and folks see in the next one good luck