Embark on a journey through the tumultuous waves of the mortgage industry with Man Mortgage's finest from our Clearwater, Florida event. The dynamic duo of Caleb Wilson and our CFO Christian navigate us through the pre and post-COVID tide, with Christian offering his foresight on the potential shifts in interest rates. But the knowledge doesn't stop there; Chris Laughlin, the wizard behind the curtain in Capital Markets, demystifies rate sheets and loans like a seasoned maestro, while mortgage sage Corey Henderson imparts wisdom on thriving amidst market mayhem.
This episode isn't just about crunching numbers; it's about understanding the heartbeat of the industry. As we dissect the Mortgage Bankers Association's crystal ball predictions, we grapple with the quandary that has construction loan seekers and home builders pacing the floor—lock in those rates, or roll the dice for future falls? The chat takes a turn towards innovation as we spotlight the ingenious financial products that have blossomed in the low-interest landscape, and take a hard look at the raw reality that home builders face, an endeavor rife with surprises at every turn.
We wrap things up by peering into the crystal ball of real estate, taking note of the tectonic shifts in housing preferences and inventory. From the generational tide pushing towards cozy, quality spaces to the Instagram-ready vision of success reshaping our dreams, we explore what it all means for the future of homeownership. And as we cheer on the triumphs of our fellow industry pathfinders, we remind ourselves that it's the shared wisdom and education that lay the foundation for achieving not just success, but a legacy. Tune in for a session that's as enlightening as it is empowering.
Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.
Embark on a journey through the tumultuous waves of the mortgage industry with Man Mortgage's finest from our Clearwater, Florida event. The dynamic duo of Caleb Wilson and our CFO Christian navigate us through the pre and post-COVID tide, with Christian offering his foresight on the potential shifts in interest rates. But the knowledge doesn't stop there; Chris Laughlin, the wizard behind the curtain in Capital Markets, demystifies rate sheets and loans like a seasoned maestro, while mortgage sage Corey Henderson imparts wisdom on thriving amidst market mayhem.
This episode isn't just about crunching numbers; it's about understanding the heartbeat of the industry. As we dissect the Mortgage Bankers Association's crystal ball predictions, we grapple with the quandary that has construction loan seekers and home builders pacing the floor—lock in those rates, or roll the dice for future falls? The chat takes a turn towards innovation as we spotlight the ingenious financial products that have blossomed in the low-interest landscape, and take a hard look at the raw reality that home builders face, an endeavor rife with surprises at every turn.
We wrap things up by peering into the crystal ball of real estate, taking note of the tectonic shifts in housing preferences and inventory. From the generational tide pushing towards cozy, quality spaces to the Instagram-ready vision of success reshaping our dreams, we explore what it all means for the future of homeownership. And as we cheer on the triumphs of our fellow industry pathfinders, we remind ourselves that it's the shared wisdom and education that lay the foundation for achieving not just success, but a legacy. Tune in for a session that's as enlightening as it is empowering.
Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.
All right, everybody. It's Mark Jones, normally your host of Key Factors podcast, but today we're doing a quick rendition with a group of super intellectual individuals that run some of our higher divisions within man mortgage. You're joining us from Florida, clearwater. So our view to the right hand side beautiful waves that I don't really want to go out there simply because it's just too windy, but we've got some pretty cool topics that we want to discuss in a brief amount of time. But I want to real quick introduce the folks that are on this podcast with me. So first off, let's start on the right hand side. We've got Caleb Wilson. Caleb, how you doing.
Speaker 2:Good.
Speaker 1:Yeah, let's get close to that mic. Matter of fact, if y'all want, you can just hold the mic because they're so dark on big. All right, christian, briefly, can you give us maybe like a I don't know 60 second spiel on who you are?
Speaker 2:Not necessarily a spiel, but who are you CFO here at ManMargage for the last four years, a career in cap markets as well as audit and big accounting firms there in Denver for a while. So joined right before COVID hit, which for anyone in the mortgage industry would know. I came in with all my plans and everything obviously grew up enough in the mortgage arena, held on for what we saw as industry highs for a couple of years and now going through one of the largest drops at the moment.
Speaker 1:Yeah, it's interesting. And as we talk about while rides, I have Chris Laughlin to my immediate right who is in charge of our secondary and capital markets and kind of the you talk about the Wizard of Oz. He's the man behind the curtain pulling the strings and all that jazz. Chris, how are you?
Speaker 3:I'm doing well. Thanks for having me, Mark.
Speaker 1:Absolutely. Can you tell us maybe 60 second run through of where you've been, how you got to man and what you're doing for us now?
Speaker 3:Sure, I've been with man Mortgage just over a year now. I'm the head of the capital markets group here. I've spent most of my career in mortgage finance and capital markets about 10 years with Freddie Mac and about another eight years running capital markets for another independent mortgage company, as well as working for some hedge advisory firms as well.
Speaker 1:Very good, and most of you may be watching this or thinking that he's got an alcoholic beverage already because he's running the secondary markets. But it's not. It's just a little Celsius thing.
Speaker 3:Very tasty.
Speaker 1:And then to my left, corey Henderson, how you doing, brother, absolutely so. Can you tell us who you are, why, how long you've been at man and what you do?
Speaker 4:30-year veteran of the mortgage business, 25 of them here with man Mortgage. My latest stop is I've been the branch manager in Reno since 2005. And just happy to be here watching these hurricane-like waves crest on our shoreline here in water for us what was it?
Speaker 1:it was a blustery, it was a blustery Sathely within the confines of the resort. Okay, Well, today what took place is we had a meeting and I will tell you guys great job on getting top producers together, like-minded individuals in a place that it's overly comfortable to share ideas, to share thoughts without any kind of repercussions and actually get solid feedback. There were some curveball questions that were thrown up there on stage when you guys were on the panel and I want to talk about some of those things, One being the first with you. I mean, everybody wants to know what a rate's going to do.
Speaker 3:Yeah, absolutely. We've had some really high rates and I guess there's a lot of pent-up demand out there for something a little bit better than an 8% mortgage. So we have good news that rates are coming down. I think we can expect rates in the low to mid-sixes in the near term and then, if the economy softens, probably in the high fives. But I don't want to get too ahead of ourselves.
Speaker 1:Sure, and as a mortgage originator, I'm asked that question probably 15 times a day.
Speaker 1:What a rate's going to do, what a rate's going to do, and I think I should probably wear a shirt that says if I knew I wouldn't be doing this. Yeah, that's advice. So, as we head into, well, we've been in uncharted waters, kind of like what we're looking at outside. How tough is it to manage expectations, how tough is it to manage the capital markets and I had a follow-up question, maybe you can start with this one just a basic understanding of the capital markets for those, maybe laymen, that are watching and want to know more. Interested in this.
Speaker 3:Absolutely, I guess. Capital markets entails everything from rate sheet creation the rates that you see as you're locking a borrower in all the way to selling the funded and closed loan and making sure the investor doesn't have any issues in purchasing it. So capital markets really touches the whole life cycle of the loan and we get into some of the more technical side of the business I would say.
Speaker 2:I'd go even pre-life cycle the loan, selecting the products that we actually offer as well. There's a lot that goes into that trying to make sure we have the cutting edge of product suite, to make sure we can offer to loan officers. Which I wanted to back up a minute because we did introductions and I know everyone who watches your podcast knows who you are, but why are you here? I think we should make sure we point that out.
Speaker 1:Good fellows. I'm here because I'm now a part of the Champions Club within ManMortgage, love to be a part of it, happy to contribute any which way I can, and also happy to soak in as much as I can, which is why it's an honor to be able to have these kinds of discussions with. They always say stay in your lane, right. My lane doesn't consist of CFO duties. To a certain extent within my own branch. It doesn't consist of predicting the market, hedging properly and all of those things that we go through and are out of sight, out of mind, until something comes up and shit hits the fan, so to speak. Right Now we wanna know.
Speaker 3:Yeah, you nailed it, I think, if you wanna as little talk about capital markets because, honestly, if people are talking about it, there might be something wrong right?
Speaker 1:Right right.
Speaker 3:So we wanna run things smoothly, we wanna have good rates, we want investors to purchase our loans quickly, we want all those things, and so we're always monitoring our data, we're always trying to improve our process and actually the net result is to get you a better potentially rate or product out there so that we can possibly sell.
Speaker 2:Or the best available. I think really and you said something that I think is really important and it's a misnomer a little bit in the industries we really try very hard. Chris's job and the way we do capital markets is not to predict rates. We do not wanna predict rates. A successful capital markets group is largely rate agnostic. I mean, there's obviously some gray area in the sense of we all feel rates are gonna go a certain way, but, like anyone would say, you can't predict the markets. I mean that is a dangerous game to play and any substantial company who's been around for a long time has not made a common practice out of predicting rates.
Speaker 2:Certainly, some people do really good and come in really aggressively and they win. It's like a roulette table. I mean, to be honest with you. I mean that's really what it comes down to. Our job is to, if you wanna bet a whole bunch on black is to put a whole bunch of red chips out there at the same time, right. So we are our hedge and what capital markets is doing is protecting the best rates. That's the job, and it's super important to understand the difference there.
Speaker 3:Yeah, we're not taking a position when we hedge. We are truly neutral in terms of if rates go up, we're covering our day one margin. If rates go down, we're covering our day one margin.
Speaker 1:Okay. So let me ask you this is the practice that you guys engage in. Would it be more reactive or proactive, or both?
Speaker 3:It's a little bit of both, I think. As a hedger, you're always selling into a market that could be selling off potentially, as you need to protect your rates, that's probably at the time you need to protect it most. It's probably the time where you don't wanna be selling because, honestly, prices are going down and I'm trying to protect against losing our day one margin. So there are times where I'm thinking ahead and trying to put on some hedge coverage, maybe ahead of time, to get ready for locks that are coming in. But you can't get ahead of yourself, so it's largely reactive.
Speaker 1:Yeah, that makes sense. That makes sense. That does make sense. Now, corey, you've been in the business for many years, more so than myself, so plenty of wealth to get from you, and I will continue to. You got a question for you. Yes, sir, you've been through refinance booms. You've been through the ups and downs. Now we're in uncharted, so to speak, territory and I feel like we're getting back to a I don't wanna say norm, but more so something that we've seen before. Yes, that we can react to, I should say, since rates are dropping so quickly. Do you? How do you feel about the influx of refinances that are potentially going to be coming?
Speaker 4:Well, we need the volume. Thank God for that, and I know that I'm not alone. I know there's other LOs at other companies that are saying holy moly, this is a blessing. We need this volume in order to get to the next chapter of this cycle. But Does everyone need a re-fi right now? Not everyone, I would say. It is very important that us, as originators and the trusted advisors of our clients, that we understand really what's going on with them. Is the kid going to college or just graduated? I closed a re-fi just about 60 days ago that they had maxed out their HELOC putting their daughter through college. Okay, it is actually 60 days ago, the optimal time in terms of where rates are or they're going in this next cycle. No, but when you have your, heloc is ballooned and you did that doing the right thing putting your kid through secondary education.
Speaker 4:now is as good as time as any. If you've had somebody that you closed and they've got a very elevated DTI in that $150, $175, $200 of payment that they're going to pick up, that's important to them. Now might be the time, and so it really there's no right answer. The answer is we've got to do our job and figure out what the needs really are of our clients, yes, yes, and so that's what our dad puts it we've got to have meaningful conversations.
Speaker 1:Absolutely.
Speaker 4:And now is more important than ever before that we have meaningful conversations.
Speaker 1:Yeah, and you know what? I think that was the theme towards the end of last year for myself is reminding all of my loan officers that they need to be having high level trust conversations, high level interviews with their borrowers.
Speaker 4:Yes, more important.
Speaker 1:It's not an application and stick them in a loan. It's ask the right questions, listen, ask more questions and then advise.
Speaker 4:Yeah, that's exactly correct, Caleb. You said something that made me think of a question and you said that capital markets really starts before the life cycle of the loan. And we've got a couple of products that I really like Number one I really like our construction program Absolutely, and then I'm getting into the Manny 100 a little bit. But will you take us through the thought process and the dialogue that you guys had in your meetings of what was the decision process to get these products to us?
Speaker 1:Now, before you do that, I do want to let the folks know what Manny Mac is, or the Manny 100 in this case, manmortgage has the unique ability to create their own type programs that will help folks that can't normally be helped with the products that are out there at the moment. So that's kind of some of the stuff that Corey's talking about. Go ahead, take it away.
Speaker 2:Yeah, sure, so start with construction for a minute. So construction there's two big categories that we've segmented into and we have a lot of what we call manisms, but manmade is our construction division. But we have both one-time close as well as two-time close, and the difference really being that there's certain conventional products that you're allowed to effectively close once and then it modifies at the end of the construction cycle and then you have a two-time close that really is more of a bridge-type loan that's really focused around getting through the construction, and then we get work on your takeout loan. That's more of a 30-year, 15-year mortgage at the end of the cycle. The big difference there is it costs money, as we were just talking about the hedge. It costs money to protect a rate and both of those products don't have that feature. Only the one-time product has the feature in which we protect that rate because there's an initial close and it's just modification. So that has a higher cost to it as we have to put a hedge on it and largely as much as we don't predict interest rates.
Speaker 2:Like I just said a minute ago, there's sentiment and we all have sentiment and, to be honest with you, since 2013, the sentiment was rates were going to go up. And I'll tell you, the hedge fund or the PE firm that I was working with and some of the hedge funds we worked with were interest rate long for many years and struggled with the low interest rate cycle that we were seeing, as rates churned into the twos and then up to the fours and down to the twos and so much loan cycle through those few years and a lot of monies were lost gambling on interest rates effectively. So now we're into this cycle where rates did go up. The sentiment took place. How long did it take? Well, it took 10 years to really occur.
Speaker 2:So now you're at a point where the sentiment is rates are too high and they're probably coming down. So whether you look at the MBA, which is kind of the largest IMB or lobbyist group, I guess as a collective that we all lean and trust and advise they're projecting, I think, 6% by end of year. There's so much speculation that goes into that. That forecast is old and they would admit this. The forecast is old the moment they print it. But what happens is you have an election year, there's the quantitative easing we talk about in the industry, and so you take these sentiments and they become well, the sense is it's going to go down. I hope that to be true, I hope we see fives. But the sense of I'm trying to protect if I'm building a home, so go back to construction. If I'm building a home, do I want to protect what might be a bridge loan at 8% or 7.5%? Do I really want to protect that rate? And the general sentiment is probably not. I'm not wanting to pay extra at this point to protect that and so I'll kind of let it ride. Which means, if they're not protecting their rate, what I mean by that is they're going to pay whatever the market rate is at the end of the loan and that's because the sentiment is hopefully lower. Now some people come in and say I don't care, I just wanna protect the rate right now because I think, mice, maybe the consumer's personal sentiment is the world's gonna blow up and that's for them to take that risk. And as an LO and a trusted advisor, I think from my seat, the best advice you could ever give is we don't know what interests are going to do and the second you start gambling on that. It's spooky.
Speaker 2:Those construction products, super valuable. Why we created those I mean they were really the two time was really back when rates were 3%. Corey, they weren't. Everyone was. The sentiment was rates were gonna go up and so obviously the one time product was the one that sold and it was like, oh my God, I'm gonna be in this for 30 years. So I'd really liked that and it proved to be very valuable from in mortgage and we really stood up our entire platform where we do our own draws and we do everything else. That has been invaluable and I think there's almost probably five to one that from when I talked to you and you could probably speak to this, how many do you see, come in the door, say I wanna build a home and they end up probably doing a purchase transaction some way. I mean it's really hard to you know in data.
Speaker 1:We get the question quite often, but it's because the consumer is uneducated and not not. This isn't a negative thing against consumers, but they're uneducated on the full gamut of that process Building a home.
Speaker 1:Yes, it's a little bit more daunting than what they initially anticipated or were told More expensive. Sure, yeah, they may have had a friend that has done it before, but the friend is in a completely different scenario financially and everything else, so they believe that they can do it. Thus, I would say about 90% of everybody that comes to us initially to build a home, custom ends up buying a home. That's so you're nine to one, yeah, I mean is that similar to?
Speaker 4:yours. Yeah, it's very much so.
Speaker 1:Yeah, I mean convincing them or at least educating them on hey, why don't you buy a house and then renovate it? Same concept you get what you want, but you're not taking on that elongated responsibility of having to keep up with the raids, lock this and manage all these different facets to building a home when you're still hey, you're still doing your thing, you're still trying to make whoever it is that you're going to be, so to speak, in life.
Speaker 4:It's funny you say that the average consumer thinks, oh, I'm going to build a house, sticks are going in the air, when in reality there's so much back work that goes into that. You've got to pick your general contractor. Where are the services and actuality to the lot? And when you pick your general contractor you're entering a short-term relationship with them. So if it gets choppy, rocky during the process, nobody has any fun with it. So I mean there's a lot of key and very vital decision that need to get made before sticks go in the air and people just think, oh, sticks magically start. There's a lot of legwork that goes into it.
Speaker 2:Yeah, which that ties back into the question. Really. I mean, you said how do we come up with products? We knew there would be value in that, but what you just took as a product financials value. We'd look back in time and we say, well, we made this much money off the product or we were able to help this many customers with that product is just a small piece of it Immediately. What I do is I take that product value and you put a multiplier on it. To you it's worth nine to one. I mean, as an example, it's 900% of what the product actually is brought in.
Speaker 4:Don't you call that a malt in the business?
Speaker 1:Yeah, yeah, right, I've got a nine malt, a malt for Caleb also, yes.
Speaker 2:So that's, if it's five to one or nine to one, it's certainly more than zero. I mean the idea that people come in, they trust you now because you've educated them on a unique, complex product, and so that was really a we knew there'd be value there. Jason Mann, our CEO, was really foundational in that. A couple of our branches needed it and we stood it up and it's just grown a lot through COVID and post COVID. So especially with the home inventory issues, Absolutely.
Speaker 1:Yeah, that's happening everywhere.
Speaker 4:Yeah, I think the inventory is very I'm glad we have it because with the inventory problem that we have not only in my market but in your market you know, basically coast to coast this is something that we can help alleviate those issues and problems in our own submarkets. So I'm very one, very thankful, absolutely. You guys put your heads together and designed a, in my opinion, a very excellent product and we're very blessed to have it.
Speaker 2:And it's nice to not be stuck as a consumer to DR Horton Right, and I'm not saying anything about DR Horton. I will, but I'm just kidding.
Speaker 4:I mean stay tuned for a second part of this podcast.
Speaker 2:The big builders, you know you're not stuck and laden to their particular programs. All of a sudden we opened up a market that's diverse, to all these builders and some small mom and pop builders to some mid-sized builders, and so we've seen that product help so many people.
Speaker 3:Absolutely Honestly, it sets man apart. I think having, I mean, I don't really know of any other independent mortgage companies that have construction products, much less have one time and a two-time offering Right.
Speaker 1:What it allows a loan officer, a producing originator, is the opportunity to compete with the builders, to compete with the credit unions, because credit unions, historically always transparent, have lower rates. Why? Because they service their own loans, they make their own rules, et cetera. But when you put us on the same playing field, there's no way that a bank or credit union loan officer is not going to get smoked by one of us, and what I mean by that is we'll run circles around the paper pusher because of our extensive experience and advocating for what we do as originator. Correct, you know. Yeah.
Speaker 2:You know, rate-wise I think we're still running competitive. So as an IMB, I think the thing I would say is are we always going to be the best price?
Speaker 3:I mean, someone's probably losing money on a loan that we'll do right now.
Speaker 2:But we're not necessarily willing to do that. I think our goal is we'll always be a fair price and it's maybe not the best price, but we will be consistent, we'll get the deals closed and we'll always be there with a fair price. But the other question you had on the Manny 100, right, I mean, that was really around a bond program concept and anymore, like you look at demographics, demographics are fascinating to watch and through this post-COVID era and long-distance moves, we're a big thing that everyone is watching versus short-distance moves, and so long-distance moves have become more prevalent. But then right now no one's moving, so we're kind of waiting to see what the next line of moves will be.
Speaker 2:We've got roughly 50% 56% of people who are what we'd call pent-up demand. Oh yeah, definitely. I think 20-some percent are likely to move shortly from the last survey and anotherindi– the 27% is wanting. Very interested, I think, is what the survey read Like an architectural survey magazine, so that that's an interesting, interesting metric to watch. If they move long distance, I think being the trust validator Can be trickier because you know first of all who's gonna get that consumer when they come into the new market.
Speaker 1:And you don't know which market they end up in with this new trending WFH thing. You don't know, and so home right.
Speaker 2:Oh, and so to come, come full circle. It's like licensing as for you Needing to be licensed in a certain state or for man mortgage to be able to do cross-country business, she comes super important and so on these bond programs, when people need, need those products and and Need some assistance to get into the homes, which is huge right now, because home it's not just inventory, it's affordability, right, we really needed a product that kind of Came out of a single-state bond program, sure, and some options that that you guys could reach out with and was Competitive with some of the bond program, not to mention with home affordability options. The bond programs are completely gummed up, right.
Speaker 1:I mean, the delays on on some of these purchases and from a cap markets perspective are incredibly in addition to the rates that that are being offered out there by these type government bond backed Loans. You compare that to what we offer and it makes better sense in many cases, in many cases. So, now that we've talked over all the people's heads with all this, Mortgage jargon.
Speaker 1:I want to bring it to reality for just a moment. You've got consumers that consume, obviously, but what they are consuming is, I don't know, programmed intentional in one way or another. But in dealing with finances without getting too political, what are you seeing with how rates are being conveyed and are, I Guess, the real estate industry as a whole right now in the media and everything is scare, scare, scare and rates are too high and nobody can afford anything when, realistically, in my market, there is still affordability. Now it's not like it used to be when there was more inventory and homes coming on the home on the market regularly, but they're acting as if it's not. It's not possible. No one is going to be a get be able to get a home. If you're a first-time home buyer in a average bracket and I asked you, chris, because this is your no- I mean, I think you definitely get some of that, where people see a it's kind of like sticker shock.
Speaker 3:I would say they see a rate that's 8% and, having you know been through COVID where rates were three and they talked to their neighbor who has, he's just like oh so happy he has a three and a quarter rate. He loves his mortgage better than he loves his house.
Speaker 3:Yeah but in all, in all seriousness, he doesn't want to move because it, you know, it actually Wouldn't make sense for him financially when he really does want to move. So right now people are buying houses, even with the rates that that are sixes, sevens, even eights. But I think there's a little bit more hope now in the market in terms of like, yeah, I can get through this, I can, I can get through a couple years with it with a higher rate, I'll refinance. Right, you know it'll happen. So I think when people come to trust man mortgage, they really they could, they find that there's value in the relationship. Sure, sure.
Speaker 1:So, cory, are you seeing anything different, since we are in totally different markets?
Speaker 4:I mean, from what I'm seeing, which is literally just what I articulated there, the thing about Northern Nevada, the Trequimados area, is we don't have a lot of building space left. Ah, okay, when you look at where Reno sparks, carson City is situated, we're in a valley that runs north and south. There's not much east and west that we got going on anymore. If you're gonna move east, you're going to another town, you're going to Fernley or out the Fallon. So the north and south corridor is really what's happening and there's not a lot of infill. It's happened yet, but people don't want to make that drive sometimes.
Speaker 4:And so you've got kind of Reno is reshaping itself a little bit. I really think it's gonna grow towards Carson City and infill some of that area, but it just hasn't been done yet. They're planning, they're planning.
Speaker 2:How long do you think that average commute is right now? Like for the suburbia new move, someone buys the you know, Okay.
Speaker 4:So if you're out in Spanish Springs, let's say, and you want to drive to South Reno, your drive time during the days probably about a half hour, Half an hour, okay, when when there's no traffic it's 12 minutes. Oh wow, okay, and so we've got a traffic problem, and if you're coming from LA, it's not a traffic problem.
Speaker 1:I was gonna say the same. Well, that's what I mean, if you're coming from LA it's not a traffic problem.
Speaker 4:But if you're an original fifth generation Reno, this is a traffic problem. Okay, you're used to getting from point A to point B in three minutes and everybody's happy yeah.
Speaker 2:I think Denver's usual commute when I was living there, whether it's south or north or east west, was probably around 45 minutes to an hour. I was kind of in that hour and willing to do the audio book there, but I think that the average temperament changes to your point the bigger you get.
Speaker 1:So it's interesting Reno's getting to that 30 minute ranger and that brings up a good point is, I think, for example, back in the day, california went through what Texas is going through or what Florida is going through, and they run out of land, the values go up and then they come down, and then they go up, and then influxes, et cetera. But people tend to start migrating outwards towards the rural areas until they become city, and I think that's what's going on in a lot of places. Where we talk about there's no inventory. Well, no, it just hasn't been built yet or it hasn't adopted. The new concept of this is the way life is. You can't go there and reach out and touch your job from your house. Why? Because it's just evolution.
Speaker 2:Have you noticed inventory changing too, though, cause, like as a man, we actually have some fun projects we're partnered on with real estate development. I find it interesting to hear how people are talking about inventory and you go back to our fathers or our father's fathers, and they grew up on bunk beds or maybe two sets of bunk beds in the same room, and it was fine. That was the American dream. They had a house, they had multiple kids. It feels like we've reached a point and maybe we're actually backing off this point, but that we had every kid had their own room, and it might have been several hundred square feet, and every room had their own bathroom or at least a Jack and Jill type thing, and that's that home they were treading up to.
Speaker 2:What I see a little bit is inventory shifting to a smaller home, but a nice, a nice, smaller home, and some people I've heard quotes to like I don't want to live in a monstrosity. I think people are getting to this point where they want those nice features or maybe a remodeled one, which is something else we should touch on is the baby boomers, cause we have an inventory price adjustment coming there, handing it to the next generation. But have you answered the first question, have you? As you talk to your realtor partners, are you hearing that similar shift in what people's appetite is?
Speaker 1:I think this is a tough question, but I'll tread lightly. I believe that the philosophy is everybody is trying to keep up with the Joneses. Hate to be cliche, but social media has caused our view and our perspective of the outside world to be limited to what we see on our screens and that feeds into this whole idea of a million dollar listing and selling, rodeo and all of these.
Speaker 1:And then you see your friend that posts, and they don't ever post pictures of bunk beds, they only show you the good rooms. So that continues to just stay embedded as we go through life. And I guess another point I'll try and make is we don't typically go backwards with anything technology related. We typically don't go backwards with much at all unless there's a destruction or disruption in what we're doing, and I'm talking catastrophic why, I don't know. When was the last time you went to get a new phone? Did you ask for the latest version or did you ask for the new version? Right, we don't ever. Hey, you know what? Give me that flip phone.
Speaker 2:Now there are a counterculture to that.
Speaker 1:Come back, yes, but they come back briefly and as a FAD versus, this is how we do life now. People work it from home. I don't think we're gonna go backwards on that concept.
Speaker 2:But there was a pretty heavy rebound on it where people coming back to the office to some degree Now has it stabilized. It's like a dead cap bounce a bit. Did it go all the way back up? No, certainly not. There was some normalization.
Speaker 3:I would think that in the suburban areas where there has been sprawl, that there should be potentially a softening of the market. Where there was an hour-long commute, now you have folks working from home, and they don't wanna live an hour away from the center of town.
Speaker 1:That's very true and I think that may unfold in years to come. I don't think it's gonna be a quick like.
Speaker 3:I'm thinking of Washington DC and actually some of the areas out in Loudoun County where it used to be like an hour commute to get into. You know, even to right into Tyson's Corner, virginia, or into DC itself it would take terrible traffic, take an hour. Now more job-creation outside and so they don't necessarily have to, you know, find that house in the brush where they can drive an hour to get to.
Speaker 1:I think that will actually help. Once people get that concept and over the fear of number one buying a home. It's already a big thing, big step. It's the biggest purchase that a consumer will make. Then the positive, negative chatter from friends, all these advisors, family, etc. Rates are too high. Some are saying no, they're not, by the damn house. There's just so much that these consumers go through these days with all of the outlets that it will take time for us as originators to educate them and then show proof in the pudding, if that makes sense, because their friend is going to listen to us. Three years later they're going to go shoot. I should have bought now. I'll buy. It'll be a little delayed, but I don't know If I knew I wouldn't be doing this.
Speaker 2:I do think it'll be interesting to see if the house, is the new inventory, ends up just being. I think you'll see upgrades. I don't think you'll have as much for micro countertops, things like that. I think you'll end up with stone and those sort of things as this new inventory pops up and they'll be it's hard to say affordable, because what $500,000 used to buy versus? But I think as you build in that ballpark you can build smaller homes that have some of those sort of features. I'm seeing a little more appetite in that than historically. It's just not big. Maybe all they're aiming for is how much of their house is going to be on camera a clean, magical looking 10 square feet. It's going to have a big column, a Greek column in the corner or something.
Speaker 1:Well, I mean, keep it in mind that these folks are competing with something that they can't touch, feel, see, which is the mammoths of Black Rock and your. I mean, will we become a renters nation? I think that's a full topic for another time, but it's just something for folks to think about, because there are mass investors, in addition to mom and pop investors, first time investors getting into the market that don't bat an eye at higher rates, that don't bat an eye at having to pay a couple points to get that home because they already know as homeowners what it does for them. Beneficially. Taxes, all of those things, Well creation, Well creation, generational wealth creation. But if the bigger investment companies are buying these things left and right and haven't slowed down because of higher rates, it should tell consumers something in my opinion.
Speaker 2:Yeah, that was. I don't know if people know that, but a lot of that 2020, 2021 was institutional firms buying up real estate which was unprecedented in the sense of how much they actually acquired, and I do think they're all checking if they did the right thing or not. But if you look at the long-term trajectory of real estate, as you guys well know, it's almost unbeatable. I mean, it's steady eddy, up and up and up and that's right Good stuff.
Speaker 1:Well, any of you guys want to add anything else to this? That was. We talked about a whole lot.
Speaker 4:Yeah, we covered a lot of ground, control all the time oh yeah, that was like pop, pop, pop pop.
Speaker 1:Well, I guess folks out there listening we appreciate you tuning in, Gentlemen. Thank you for taking the time to jump on this and share your knowledge.
Speaker 2:Congratulations to you, Mark.
Speaker 1:Thank you, hey.
Speaker 4:good job by the way You're raising the bar up around here.
Speaker 1:Well, I'm glad to share that bar with gentlemen like yourselves. Truly Thank you, because I do believe that we have to continue the passion that we have for what we do. Yes, it's not about the money. It's about getting people into homes and elevating their future generations to things that, honestly, thinking back 20 years, I didn't think I would be here.
Speaker 3:No clue.
Speaker 1:This life is a life that, yes, we created for ourselves, but I had to get educated to even know what it was even about.
Speaker 2:But you and Corey, as champions, need to get out and serve some of these 30-foot wells.
Speaker 4:That's a hard pass on that, brother. But sincerely.
Speaker 1:Congratulations to both of you guys for making it All right. Well again, thank you guys for tuning into this. Thanks, you got a whole lot of knowledge in a short period of time. Thanks again, Thanks guys.