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Interview With Jonathan Miller: Masters in Business (Audio) · Masters in Business

0:03
Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
0:08
Speaker 1: This week. On the podcast, We're gonna try something a
0:12
Speaker 1: little bit different, and I'll explain exactly what that is.
0:16
Speaker 1: I brought in a guest who really is kind of
0:18
Speaker 1: a Cheaty's and old friends, so experimenting really isn't I'm
0:24
Speaker 1: not out on a high wire without a net. I'm
0:26
Speaker 1: working with someone I know really well, so it allows
0:29
Speaker 1: me a little freedom to try something different. Look, the
0:32
Speaker 1: whole idea behind this show, the whole idea behind Masters
0:36
Speaker 1: and in Business is that you're eavesdropping on a conversation
0:40
Speaker 1: between at least two reasonably intelligent people having a thoughtful
0:46
Speaker 1: conversation about issues that are of significance. Ends. What ends
0:52
Speaker 1: up happening, partly through my own paranoia and partly through
0:57
Speaker 1: a desire to be thorough and prepared, is that we
1:00
Speaker 1: create a run of questions in five different segments, and
1:04
Speaker 1: each question leads to a different question, and what's supposed
1:08
Speaker 1: to be a conversation really becomes a bit of a
1:12
Speaker 1: Q and a There are a small handful of you,
1:15
Speaker 1: a very small handful of you that I know, deep
1:18
Speaker 1: down inside wish that I would just shut the heck
1:21
Speaker 1: up and let the guests uh speak and and that
1:25
Speaker 1: would be really boring for me to just sit here
1:27
Speaker 1: and read a list of questions. So for those of
1:30
Speaker 1: you who are hoping this episode is Barry reading questions
1:34
Speaker 1: and shutting up, I'm really sorry to disappoint you. In fact,
1:38
Speaker 1: this is the opposite. And instead of writing out um,
1:41
Speaker 1: normally we do four, six, five, seven, and twelve questions
1:48
Speaker 1: for each of the segments, I just have really really
1:51
Speaker 1: broad topics and Jonathan and I are by the way,
1:55
Speaker 1: my special guest this week is Jonathan Miller of Miller Samuel.
1:59
Speaker 1: I know him from mill of matrix is blog as
2:01
Speaker 1: well as his podcast. What was that like eight years ago?
2:04
Speaker 1: I started three years ago? It seemed much longer. Um
2:08
Speaker 1: that's right. Um. So, so this is gonna be a
2:12
Speaker 1: little more informal, a little more conversational, and I'm actually
2:15
Speaker 1: recording this intro before we do the show, so who
2:20
Speaker 1: knows how this is gonna come out, but I wanted
2:22
Speaker 1: to try something a little different and let's see how
2:25
Speaker 1: it how it rolls, So, with no further ado, here
2:29
Speaker 1: is my conversation, and literally my conversation with Jonathan Miller.
2:38
Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.
2:43
Speaker 1: This week on Masters in Business on Bloomberg Radio, my
2:46
Speaker 1: special guest is Jonathan Miller of Miller Samuel. Jonathan is
2:50
Speaker 1: probably best known to fans of real estate as a
2:55
Speaker 1: appraiser extraordinaire. He now really uh special shalizes not only
3:01
Speaker 1: in data crunching and looking at the analytics behind real estate,
3:07
Speaker 1: both residential and commercial, but also looking at the high
3:11
Speaker 1: ends ultra lux real estate here in Manhattan as well
3:16
Speaker 1: as around the country. Jonathan, welcome to Bloomberg. Are great
3:20
Speaker 1: to be here, Barry. So those of you who are
3:23
Speaker 1: real estate fans are certainly familiar with Jonathan's work. He
3:28
Speaker 1: is the engine that powers a number of real estate
3:31
Speaker 1: companies and agencies companies own. I shouldn't really call it
3:35
Speaker 1: internal data, but you're the driver behind some of the
3:39
Speaker 1: biggest names in real estate. The glossy brochures they put
3:42
Speaker 1: out with all the all the data. That's well, the
3:44
Speaker 1: key word there was glossy, I think, but now I uh.
3:48
Speaker 1: For twenty two years, my myself and my firm, Miller Samuel,
3:52
Speaker 1: we have published or crunch numbers for the big real
3:57
Speaker 1: estate brokerage firm in New York called glas Elman Dugan
4:01
Speaker 1: Selman is the fourth largest residential real estate company in
4:05
Speaker 1: the country after all the big franchises, the cast of characters, uh,
4:10
Speaker 1: and the idea behind it is that I can speak
4:13
Speaker 1: independently of them. You know that they know that I
4:17
Speaker 1: know what I'm talking about, and it's been a great
4:20
Speaker 1: relationship for twenty two years. I basically speak in my
4:24
Speaker 1: mind about what's happening in the housing market, and they're
4:26
Speaker 1: happy to hear the unvarnished truth and let the chips
4:29
Speaker 1: full where they make yes. And you would think that
4:31
Speaker 1: more companies would be like that because the whole they're
4:35
Speaker 1: a transaction based business. So instead of pulling wool over
4:39
Speaker 1: somebody's eyes and saying everything is fantastic, you can help
4:43
Speaker 1: your client navigate a market that is I'm sure it's
4:46
Speaker 1: a lot like the financial markets in that regard of
4:49
Speaker 1: of you know, strategies and thinking, and some people do
4:53
Speaker 1: very well in down markets. I spent the better part
4:56
Speaker 1: of the mid aughts mercilessly mocking the National Association of Realtors,
5:02
Speaker 1: better known as n a R, for there always cheerful
5:06
Speaker 1: reports and it was just a constant. It's always a
5:09
Speaker 1: great still is it less so? But it's still there's
5:14
Speaker 1: still a sunny side as the as the the the
5:19
Speaker 1: current chief economists nickname Sonny Sonny June, right, is that
5:26
Speaker 1: his name, Lauren June. Yes, I recall the infamous UM
5:31
Speaker 1: material they put out cold It's always a great time
5:34
Speaker 1: to buy or sell a house. And I think all
5:36
Speaker 1: of Wall Street laughed at that, because well, look, it's
5:39
Speaker 1: either a good time to buy something or a good
5:41
Speaker 1: time to sell something. But it can't be a good
5:43
Speaker 1: time to buy or sell something unless you're the guy
5:46
Speaker 1: getting the commission. So that was that was their reputation.
5:53
Speaker 1: You're actually telling us that not every real estate agency
5:56
Speaker 1: follows that. Yeah, I mean, you know, they are in
5:59
Speaker 1: the selling business and are you know, certainly does a
6:03
Speaker 1: lot of good things for their members. I'm sure, but
6:06
Speaker 1: it is a trade group, you can mention, I'm sure,
6:08
Speaker 1: but I can't really know. But estate, this was I'm
6:15
Speaker 1: giving you the benefit of the doubt, right, But but
6:17
Speaker 1: but you know, I think the whole idea of UM conveying, Look,
6:23
Speaker 1: the consumer has everything in their fingertips, so you could
6:26
Speaker 1: search for anything you want on Zelo A Trilia you
6:29
Speaker 1: can go to all these websites. You can find a mortgage,
6:32
Speaker 1: you could find a house, you could do uh, practically
6:34
Speaker 1: a fly through of just about any house. I think.
6:37
Speaker 1: I think the larger picture is that the role of
6:40
Speaker 1: the real estate brokerage company or agent is no longer
6:44
Speaker 1: the gatekeeper. And I think that that's that sentiment or
6:48
Speaker 1: mentality that still exists in some some firms that you know,
6:52
Speaker 1: we don't we don't want to be completely open because
6:55
Speaker 1: we want to control the transaction and U Yet the
6:58
Speaker 1: consumer now as access to virtually everything, but they still
7:03
Speaker 1: need guidance. What's really amazing is during periods where you
7:07
Speaker 1: have significant housing demand tight inventory, you see a lot
7:12
Speaker 1: of startups that hey, we're going to replace the broker.
7:16
Speaker 1: But the second that the market turns, all those companies
7:20
Speaker 1: go under and all of a sudden, everybody needs handholding again.
7:24
Speaker 1: So we have this sort of up and down psychle
7:27
Speaker 1: that we see as markets go up and down. There
7:30
Speaker 1: are some really broad and fascinating questions I want to
7:33
Speaker 1: get to in a little while, but before we do
7:36
Speaker 1: that multiple listing service was at one point in time
7:41
Speaker 1: that gatekeeper that actually had all the data, and it
7:45
Speaker 1: was unique to them. But once that went online, and
7:49
Speaker 1: not only is it MLS dot for US, it's MLS
7:52
Speaker 1: dot l I dot com, but it's whatever your local
7:55
Speaker 1: region is and they're hundreds of them, right, hundreds of
7:57
Speaker 1: versions of it, and everyone from red fin to Zillo
8:01
Speaker 1: to Trulia to you name it seems to pull that
8:04
Speaker 1: data into their web page. So it all comes pretty
8:09
Speaker 1: much from the same database. But still there are things
8:13
Speaker 1: that real estate agents know that you can't get from
8:16
Speaker 1: that in terms of what are the schools like. I mean,
8:19
Speaker 1: you could look at the ranking, but that's not the
8:21
Speaker 1: same as actually knowing unenaghble talking to somebody that has
8:26
Speaker 1: experienced in the neighbor and it talks to it. What's interesting, though,
8:29
Speaker 1: is there's a study that just came out and it
8:32
Speaker 1: was forgive me, I don't recall the three markets they tested,
8:36
Speaker 1: but it was a study that just came out recently
8:39
Speaker 1: that showed that even MLS data, which is supposed to
8:44
Speaker 1: be very clean and neutral UH is biased high. The
8:49
Speaker 1: pricing is biased high in other based high with the
8:55
Speaker 1: listing prices. And and also you know, if it closes,
8:58
Speaker 1: the agent will close the the price and report what
9:03
Speaker 1: it is, but that number they found in something like
9:07
Speaker 1: eight of the cases was a high number was higher
9:10
Speaker 1: than what the actual actual price was. You're listening to
9:14
Speaker 1: Masters in Business on Bloomberg Radio. My special guest this
9:18
Speaker 1: week is Jonathan Miller of Miller Samuel. He is an
9:21
Speaker 1: expert in real estate transactions and appraisals, both here in
9:25
Speaker 1: Manhattan and around the country. So, Jonathan, let's talk a
9:29
Speaker 1: little bit about some of the new rules that have
9:31
Speaker 1: come out over the past couple of months that have
9:35
Speaker 1: really caused the stir. The two I'm thinking of, in particular,
9:38
Speaker 1: the Consumer Financial Protection Board rules about a waiting period
9:43
Speaker 1: on a mortgage were introduced last fall, and that caused
9:46
Speaker 1: a lot of rucus. And then just recently, the Treasury
9:49
Speaker 1: Department came out with new anti money laundering rules even
9:54
Speaker 1: for cash transactions of real estate. Let's let's talk about
9:58
Speaker 1: why these rules are here and what impact they're having
10:01
Speaker 1: on the housing market. Well, the Treasury rule is a
10:07
Speaker 1: temporary rule that is starting March first, and it's supposed
10:10
Speaker 1: to last six months. And the idea is or it
10:14
Speaker 1: came about from a New York Times front page story
10:19
Speaker 1: in early two thousand and fifteen called Towers of Secrecy
10:23
Speaker 1: and It was a huge, huge article people hiding money
10:26
Speaker 1: correct right, Louise story was I believe it was one
10:31
Speaker 1: of the authors at the Times. And it was a
10:33
Speaker 1: very well written, big piece with lots of lots of
10:39
Speaker 1: data but also lots of visuals on the web and all.
10:42
Speaker 1: You know. It was very compelling stuff. And and the
10:45
Speaker 1: takeaway was they didn't really link. Uh. It said, yes,
10:51
Speaker 1: do people do wealthy people that by high end apartments
10:55
Speaker 1: for all cash? Are some of them doing something they
10:59
Speaker 1: shouldn't do? And I think the inferred answer is yes.
11:02
Speaker 1: And I think any reasonable person would assume that right
11:05
Speaker 1: when you say doing something they shouldn't do. So, so
11:08
Speaker 1: what an evolent dictator raiding rating their treasury at the
11:13
Speaker 1: in the home country and buying a twenty million dollar condo,
11:16
Speaker 1: parking it there for a rainy day? Uh, you know,
11:21
Speaker 1: a drug deal, some anything elicit where you don't you
11:25
Speaker 1: don't want to be traced. So that's the logic. Um,
11:28
Speaker 1: the problem is, uh, there wasn't. There's no proof that
11:32
Speaker 1: this is a widespread problem. I don't have any personal
11:36
Speaker 1: knowledge one way or the other, just basically on the street.
11:39
Speaker 1: It's something. It's not something that people just sort of
11:41
Speaker 1: brush aside and say let's ignore it. It just isn't
11:44
Speaker 1: something that ever comes up in conversations. And so there's
11:48
Speaker 1: all kinds of implications or problems with with going this route.
11:51
Speaker 1: Um uh in terms of look, if you're if you're
11:55
Speaker 1: a billionaire and you're buying a home in Manhattan, a
11:58
Speaker 1: pieditear uh for your family. Uh, first you fill out
12:02
Speaker 1: a mortgage applicated, right, so so that individual first of
12:05
Speaker 1: all doesn't need a mortgage. Secondly, they don't want the
12:09
Speaker 1: hassle of that and just and the third is privacy
12:13
Speaker 1: or security. You know that they become a target. This
12:15
Speaker 1: is a you know, I'm all for transparency up to
12:19
Speaker 1: a certain level. But if I recall correctly, the Time
12:22
Speaker 1: story had an thing about a number of corporate entities
12:27
Speaker 1: and some are here and some are in the camps,
12:30
Speaker 1: and they were essentially set up not to hide income
12:33
Speaker 1: from the I R s, but for exactly what you're
12:36
Speaker 1: talking about, to hide who the owner is, to prevent
12:39
Speaker 1: right safety uh, security and secure and and and and
12:43
Speaker 1: also to um you know, one of the you know,
12:46
Speaker 1: the llc um has been used quite a bit in
12:50
Speaker 1: in In fact, I believe the Times article and some
12:52
Speaker 1: other things. I've read that at the high end of
12:54
Speaker 1: the market, about half of the transactions are LLC have
12:58
Speaker 1: an LLC of some form within me, and I've I've
13:00
Speaker 1: seen that in other housing markets as well. At the
13:04
Speaker 1: high end of the market. Land sales in the Hampton's
13:08
Speaker 1: about a third of those last year were either on
13:13
Speaker 1: the bye side of the cell side had an LLC
13:15
Speaker 1: associated with them. So so let me ask you a
13:18
Speaker 1: related question, because you we referred to benevolent dictators. But
13:23
Speaker 1: but sometimes it's not such an affaious situation. I'm in
13:27
Speaker 1: Vancouver pretty regularly. I speak at a conference there every year,
13:30
Speaker 1: or at least I used to until that conference ended.
13:33
Speaker 1: And they have what are called see through uh condos
13:37
Speaker 1: and see through towers. There are these residential high rises
13:41
Speaker 1: their glass they're completely empty. You look, you could literally
13:44
Speaker 1: you're on the highway, you drive by, you see right
13:46
Speaker 1: through them. But they're fully sold and unoccupied. And I
13:50
Speaker 1: asked a couple of real estate people there and they
13:52
Speaker 1: all told me the same thing. These are Chinese people
13:56
Speaker 1: who still live in China but need to get some
13:58
Speaker 1: money out and kind of cree a life raft in
14:01
Speaker 1: case you get a little hairy in China in other
14:03
Speaker 1: words of yes, it's the same thing, uh, the same
14:07
Speaker 1: application we have here. Uh many of the newer, newer
14:11
Speaker 1: projects that are being built, especially at the high end
14:13
Speaker 1: of the market, are what we call bank safety deposit boxes.
14:17
Speaker 1: You put your valuables in there and then you rarely visit, right,
14:21
Speaker 1: and so so it's a it's an interesting I think
14:26
Speaker 1: that's for nuclear warhouse. But uh, what what's so there's
14:31
Speaker 1: so on one hand, there's no there's no evidence that
14:35
Speaker 1: it's um that it's a you know, a widespread problem.
14:41
Speaker 1: But on the but there's no evidence that it is,
14:44
Speaker 1: you know, one or the other. There isn't The problem
14:46
Speaker 1: I have with with this as a as a device
14:48
Speaker 1: to capture money laundering is that what you end up
14:52
Speaker 1: doing is basically throwing a wet blanket over an entire
14:57
Speaker 1: real state asset class for perhaps a few bad actors.
15:02
Speaker 1: And we don't know if it's two zero, we don't know,
15:05
Speaker 1: we don't we don't know what that is. But the
15:07
Speaker 1: but the downside to that is this only applies to
15:11
Speaker 1: properties three million and above in New York County, in
15:14
Speaker 1: Manhattan and one million dollar properties in Miami. The City
15:18
Speaker 1: of Miami that's Itami is understandable because also all Miami
15:22
Speaker 1: vice drug dealers that was the eighties, right, that was
15:25
Speaker 1: that that was that was sort of cocaine cowboys, that
15:29
Speaker 1: the whole movie of So so isn't that a little
15:32
Speaker 1: odd that it's just two places in the whole country? Right?
15:35
Speaker 1: And and so here here you know, the big thing
15:39
Speaker 1: that that sort of was a red flag for me
15:42
Speaker 1: is that this is only a six month rule. So
15:45
Speaker 1: you're encouraging people to not do transactions for six six
15:48
Speaker 1: months because all they're gonna do is wait, right, So,
15:51
Speaker 1: but you they have the option to renew. If this
15:54
Speaker 1: was a widespread, deep problem that the Treasury Department suspected,
15:58
Speaker 1: why would it be a six month rule. It would
16:00
Speaker 1: be a forever rule. Uh, it's not logical otherwise. So
16:05
Speaker 1: so I think because of the sort of political or
16:07
Speaker 1: peer pressure um to do something about it. When there
16:12
Speaker 1: was this front page New York Time story last year
16:14
Speaker 1: and hey, this is low hanging fruit for you know,
16:17
Speaker 1: money laundering. Let's you know, let's let's look at this.
16:21
Speaker 1: Are you saying this is really in the last minute
16:23
Speaker 1: we have in the segment, is this really just an
16:25
Speaker 1: optics issue? Looking for a problem or or that's what
16:28
Speaker 1: I that's what I believe because of the six month timeline,
16:31
Speaker 1: it doesn't make any sense to me. You know, normally,
16:34
Speaker 1: my knee jerk reaction isn't to react against regulation. Usually
16:38
Speaker 1: when there's regulation, you assume it's there for a good reason.
16:41
Speaker 1: You're saying that's not the case. Yeah, that's that's the
16:44
Speaker 1: way it looks. And and so what it ends up
16:47
Speaker 1: doing is you have a high end housing market that's
16:50
Speaker 1: weakening because of overbuilding. Big Bloomberg article last week saying
16:54
Speaker 1: that has the uh, the high end luxe market real
16:57
Speaker 1: estate peaked, and the article concludes it has I'm Barry Ridhults.
17:02
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
17:06
Speaker 1: special guest this week is Jonathan Miller. He is the
17:09
Speaker 1: co founder and CEO of Miller Samuel, a high end
17:13
Speaker 1: residential appraisal and data crunching shop. You know, you and
17:18
Speaker 1: I have been going back and forth over the years
17:20
Speaker 1: about the Case Shiller numbers, which are reported on a
17:23
Speaker 1: little bit of a lag, but they're still I think,
17:26
Speaker 1: pretty interesting numbers. But they run into the same problem
17:30
Speaker 1: that much of residential real estate comes into, which is
17:36
Speaker 1: the data ain't all that great. So with Case Schiller,
17:40
Speaker 1: it's interesting, Um, I don't know about you, but when
17:42
Speaker 1: you get up in the morning, do you take the
17:45
Speaker 1: look at the average temperature from six months ago and
17:47
Speaker 1: that's what you use as a basis to get dressed.
17:50
Speaker 1: I see it was raining six months ago, and then
17:52
Speaker 1: I bring an umbrella, right right. So so the problem
17:55
Speaker 1: with Case Schiller is it was never designed for consumer consumption.
17:59
Speaker 1: It was designed for Wall Street to hedge housing. The
18:02
Speaker 1: problem is is that it's a housing is a slow
18:05
Speaker 1: moving process. And when you get a number casular number
18:09
Speaker 1: released today, the meeting in the minds between buyer and
18:13
Speaker 1: seller on that data occurred six months ago, five to
18:17
Speaker 1: seven months ago. So let's let's put that into context.
18:20
Speaker 1: So data is released on January whatever. So the data
18:25
Speaker 1: that came out this month occurred in August before Labor Day.
18:30
Speaker 1: So how that's when the transaction took place, which means
18:34
Speaker 1: the offer and acceptance and contract was probably a month
18:37
Speaker 1: or two before that. So it's really no, no, no, no,
18:40
Speaker 1: it's it's that's when the that's when the contract occurred,
18:44
Speaker 1: and the transaction was when they would be two months
18:48
Speaker 1: three months later. So January we get November data reflecting
18:54
Speaker 1: a contract from August something along those lines exactly, except
18:58
Speaker 1: that the November data is the average of November, October,
19:03
Speaker 1: and September, so it's even more blended. And that's why
19:06
Speaker 1: there's really no seasonality that shows up in a Case
19:08
Speaker 1: Shiller line to nice Bell curve for the housing crash.
19:12
Speaker 1: But that that is sort of one one. It's certainly
19:16
Speaker 1: the consumer doesn't understand that as a reason as and
19:19
Speaker 1: and I think that the Case Shiller reliance on Case
19:23
Speaker 1: Schiller nothing against Robert Chiller, Nobel laureate and all that
19:27
Speaker 1: is that it was a reaction to the misinformation or
19:31
Speaker 1: spin coming out of U n a R, which was
19:35
Speaker 1: sort of the big provider with the existing homesale report
19:37
Speaker 1: and all that is still widely published. But it's some
19:40
Speaker 1: concerns about that. And by the way, we had Chiller
19:42
Speaker 1: on the show and he talked about the thinking behind
19:45
Speaker 1: Case Schiller and the report was, hey, how can we
19:49
Speaker 1: find a way for people who want to hedge real
19:51
Speaker 1: estate exposure to do that? There was no trading, transactionable
19:56
Speaker 1: way to do that. The case report and theory was
19:58
Speaker 1: supposed to generate that except for you know, these startups
20:02
Speaker 1: like Zillo can actually accurately project what the next case
20:05
Speaker 1: Shiller number will be within a few tens of a
20:07
Speaker 1: point the reverse engineer, so it doesn't matter. The other
20:11
Speaker 1: bigger problem I have with Schiller in any price index
20:16
Speaker 1: is that, to me, pricing in housing is the is
20:20
Speaker 1: the caboose on the transaction train? That is it? What
20:26
Speaker 1: matters more? Is it volume? Is it shape? Is it
20:29
Speaker 1: amount of cash versus mortgages? It's sales, sales, sales transactions. Uh.
20:36
Speaker 1: We found I was with a startup that was going
20:39
Speaker 1: to compete with Ki shill Or a while back before
20:41
Speaker 1: the stock market crash, and what we found was that
20:46
Speaker 1: say that you were, you were an advisor to Radar
20:49
Speaker 1: Logic at the time, ended up getting bought by No. Yeah,
20:54
Speaker 1: they end up going under. Uh. You were also with
20:57
Speaker 1: Truly which on the advisory board Zello Public and that's
21:01
Speaker 1: been a home run exactly. But the but the the
21:04
Speaker 1: problem with transact or the problem with pricing as a
21:07
Speaker 1: as an indicator, is that we found nationally it lags
21:11
Speaker 1: the sales activity by twelve to fifteen months. Here's here's
21:15
Speaker 1: a perfect scenario, South Florida two thousand five, housing prices
21:20
Speaker 1: are going up and at the greater full full theories
21:23
Speaker 1: and full play where sales activity is falling because affordability
21:27
Speaker 1: is going through the floor and you have fewer and
21:29
Speaker 1: fewer people to buy the next flip. And we saw
21:32
Speaker 1: that nationally in oh five oh six. Housing peaked in
21:36
Speaker 1: volume of oh five, but it didn't peak in price
21:39
Speaker 1: until the summer of oh six. So as sales are falling,
21:42
Speaker 1: prices are still rising, right, and they don't fall until
21:47
Speaker 1: there's no more buyers left that will are the greater
21:49
Speaker 1: full right, there's no buyers left that will pay. So
21:52
Speaker 1: I feel like emphasis. I'm not saying that you should
21:55
Speaker 1: ignore price trends or indexes. That's what people understand. Watch
21:59
Speaker 1: volume US. It's a it's ahead of pricing and and
22:03
Speaker 1: and the interaction with inventory. So in the last minute
22:06
Speaker 1: we have in this this segment we had mentioned previously
22:10
Speaker 1: the MLS data was pretty dirty as well. It wasn't
22:13
Speaker 1: updated and sometimes it seemed to be misrepresented by agents.
22:18
Speaker 1: How significant is that? And what can a buyer do
22:22
Speaker 1: to make themselves more So? I think it's less of
22:24
Speaker 1: a problem than it appears because it's a random problem.
22:28
Speaker 1: In other words, I don't think it impacts trends. I
22:31
Speaker 1: think it's it impacts specific references to properties that that
22:37
Speaker 1: and of itself is a problem. But from a trend,
22:39
Speaker 1: if you're trying to understand whether market is rising or falling,
22:42
Speaker 1: I don't I don't think it is. I'm Barry ri Hults.
22:44
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
22:48
Speaker 1: special guest this week is Jonathan Miller, and we have
22:51
Speaker 1: been discussing real estate, both the regulatory side of it
22:56
Speaker 1: and some of the data reporting problems. Now let's get
22:59
Speaker 1: into the stuff. Let's talk about the crazy expense of houses, apartments,
23:05
Speaker 1: and various numbers that are just I popp in. I
23:09
Speaker 1: know here in Manhattan, there have been a few hundred
23:12
Speaker 1: million dollar units. There's a there's a hundred million dollar
23:15
Speaker 1: unit that closed. There's Bill Ackman bought a ninety three
23:18
Speaker 1: million dollar but he got a deal. That is a deal.
23:21
Speaker 1: He got seven million off the hundred Well, no, no,
23:23
Speaker 1: it wasn't that. His price per foot was about three
23:26
Speaker 1: thousand of foot less than the hundred million dollars sail
23:29
Speaker 1: and he's up on like the ninety three or ninety
23:32
Speaker 1: four floor. It's a different kind of unit. Have you
23:34
Speaker 1: been in that building, that unit, not that unit now,
23:36
Speaker 1: but pretty much been in. You and I have talked
23:39
Speaker 1: about time. You've been in just about every major house
23:43
Speaker 1: in Manhattan. It's like it's like a it's like a
23:46
Speaker 1: work bucket list, Like I want to be in the
23:48
Speaker 1: Penthouse of you know, the Sherry Netherlands Hotel, or or
23:54
Speaker 1: the eight million dollars Sandy Wild or but other than
23:57
Speaker 1: a handful of them, you've pretty much walked your way through. Yeah. Yeah,
24:00
Speaker 1: I've been in about eight thousand Manhattan apartments in my career,
24:04
Speaker 1: which is probably more than I should admit. Um. But
24:07
Speaker 1: but it's interesting because there's actually right now, it's probably
24:12
Speaker 1: more than a rumor, but there is a two million
24:14
Speaker 1: dollar contract right now at two twenty Central Park South,
24:19
Speaker 1: the new development for that Vernado is building right on
24:22
Speaker 1: the park. Um. I just read yesterday that there is
24:27
Speaker 1: right now a hundred and ten million dollar contract in
24:30
Speaker 1: the Hampton's. Uh, it's a flip and it's what do
24:34
Speaker 1: you mean a flip? Well, and they went in, they
24:37
Speaker 1: painted it, they made it pretty well. Someone someone bought
24:39
Speaker 1: it like a couple of years ago for in the nineties,
24:42
Speaker 1: and then I guess they decided it wasn't whatever, you
24:47
Speaker 1: didn't have enough space. But but it's interesting because um,
24:51
Speaker 1: we didn't. And so I actually, as a hobby track
24:58
Speaker 1: actual close transaction of all sales in the US fifty
25:03
Speaker 1: million or above? How many of those? How many? How
25:06
Speaker 1: many actual transactions something in the order of sixty So
25:09
Speaker 1: not a lot. This is really a unique one off market. Yeah,
25:14
Speaker 1: and a big part of that that it comes out
25:16
Speaker 1: of New York and and I and I also play
25:21
Speaker 1: around a little bit looking around the world. There was
25:23
Speaker 1: just a sale in Paris or three one million, yes, yes,
25:28
Speaker 1: so so, So now that we've gone undred and ten,
25:32
Speaker 1: three hundred, I have to ask you about this hard
25:36
Speaker 1: to fathom. You know where I'm going. There's a spec
25:39
Speaker 1: house being built supposedly in l A for five hundred
25:44
Speaker 1: million dollars. Now is that a real number of these
25:46
Speaker 1: people just making stuff up at this point? You know,
25:50
Speaker 1: I think it's so. Yeah, I think they probably feel
25:53
Speaker 1: strongly about it. I'm sure it's expensive to build, but
25:57
Speaker 1: not half a billions. It's not a it's not a
26:00
Speaker 1: hundred stories skyscraper. No, no no, no, it's it's a house.
26:04
Speaker 1: It's a house on a hill. Uh So, so you know,
26:08
Speaker 1: I think that'll end up probably being you know, like
26:11
Speaker 1: a corporate retreat or something outside of a single family residence.
26:15
Speaker 1: But but but I think it begs the question is
26:19
Speaker 1: there a real market, say north of a hundred million dollars?
26:23
Speaker 1: Is this a because that's been you know, you certainly
26:26
Speaker 1: read in the news. There's the last couple of years
26:29
Speaker 1: across the US, there have been these press releases. Hey,
26:32
Speaker 1: I'm putting my market on Jeff Green, the hedge funder
26:35
Speaker 1: that bet right on the market. Um, you know the
26:39
Speaker 1: last down cycle. Uh, he built a house in Los
26:43
Speaker 1: Angeles that is on was on the market for it's
26:46
Speaker 1: sat for eighteen months, reduced, he dropped it to a
26:51
Speaker 1: much more reasonable hundred forty million, and he said this
26:55
Speaker 1: time now I'm serious, and then he took it off
26:57
Speaker 1: the market. So so the question is does this market
27:01
Speaker 1: actually exists? And my theory is that the market actually
27:05
Speaker 1: was triggered by this the eight eight eight million dollar
27:09
Speaker 1: sail in two thousand and twelve by Sandy while where
27:13
Speaker 1: he arbitrary his he bought it for forty one he
27:18
Speaker 1: you know a couple of years now, well you know,
27:21
Speaker 1: he fixed and then he put it on for eight
27:25
Speaker 1: eight and then a Russian oligarch came in and I'll
27:29
Speaker 1: take that. But as it turned out, he was going
27:32
Speaker 1: through a divorce and he was buying property and hiding.
27:36
Speaker 1: He just was moving right, But that became a symbolic price,
27:40
Speaker 1: and so shortly after that and it really was like
27:43
Speaker 1: a three year window twelve thirteen, fourteen where we started
27:46
Speaker 1: to see all these press releases from you know, high end,
27:50
Speaker 1: and we're seeing, uh, Manhattan, all these penthouses priced a
27:53
Speaker 1: hundred above. Look, I'm not saying these Manhattan prices. Penthouses
27:57
Speaker 1: won't get these numbers, but I think that this market
28:00
Speaker 1: was really there was a misperception of whether it was
28:04
Speaker 1: actually a market and not just random one off transactions.
28:09
Speaker 1: It's so funny you say that. I've spent the better
28:11
Speaker 1: part of the past five years arguing with people who
28:15
Speaker 1: have been consistently calling a market top. Look, it's a
28:19
Speaker 1: bubble in name your one off, it's a bubble in art,
28:23
Speaker 1: Therefore the market has to roll over. It's a bubble.
28:26
Speaker 1: And vintage collectible ferraris, therefore the market has to roll over.
28:30
Speaker 1: And the answer to these things are how many people
28:33
Speaker 1: are buying a Jacome Eddie or a Picasso or name
28:37
Speaker 1: your artist for a hundred million dollars, how many people
28:40
Speaker 1: are looking for this specific Lamon's race to seventy five
28:44
Speaker 1: Ferrari GTB from one or sixty two. That's a unique creature.
28:50
Speaker 1: And someone who has more money than they know what
28:52
Speaker 1: to do with says, I'll pay thirty million dollars for that,
28:55
Speaker 1: even though it's barely worth a million or two. It's
28:58
Speaker 1: a one off. And Drew, are you saying real estate?
29:02
Speaker 1: I'm saying, I'm saying when you get to that extreme,
29:06
Speaker 1: that that's what it seems to be. It's not that
29:08
Speaker 1: you won't have those transactions going forward. We absolutely will
29:12
Speaker 1: and there will be, you know, a steady procession of them.
29:15
Speaker 1: But I don't at least we saw on the spec
29:17
Speaker 1: houses built across the country. I'd like to say the
29:20
Speaker 1: plural of anecdotal is not data. So but what the
29:23
Speaker 1: these developers that are building these houses are saying is, look,
29:27
Speaker 1: they're they're asking this price, and there's twenty people asking
29:30
Speaker 1: this price. It must be worth it. Yet none of
29:33
Speaker 1: them ever sell well that that what it does is
29:35
Speaker 1: creates an anchor. And when you hear seventy and eighty
29:38
Speaker 1: and a hundred often enough. You know, if it's million dollars,
29:41
Speaker 1: this looks pretty reasonable. Maybe maybe that's what the net
29:44
Speaker 1: effect is. Then in the lower end of the high market,
29:48
Speaker 1: you know, all things considered, twenty six million dollars, it's
29:50
Speaker 1: a deal for all right, it's a So now let's
29:53
Speaker 1: go to the opposite ends and talk a little bit.
29:56
Speaker 1: You brought to my attention the mark micro apartments are
30:01
Speaker 1: being proposed as a way to combat the affordability problem
30:05
Speaker 1: cities like New York. What is that about? So so
30:10
Speaker 1: much is made in the city. Uh, certainly. Uh, I'm
30:13
Speaker 1: a user of the terminology price for square foot and
30:17
Speaker 1: but ultimately, when you get to a small apartment like
30:20
Speaker 1: in Manhattan, say a studio or in Boston studio feet,
30:25
Speaker 1: the average the average studio Manhattan's four fifty square feet. Uh.
30:29
Speaker 1: My parents have a piano tear in the city that's
30:32
Speaker 1: three d square feet on a good day. And in
30:35
Speaker 1: the today it's a kitchen, bathroom, and a bedroom. Right,
30:38
Speaker 1: My sister and I call it the kitchen because it's
30:40
Speaker 1: mostly a kitchen with a couch on the side. But
30:43
Speaker 1: but there are thousands of those units already in existence,
30:49
Speaker 1: so it isn't about whether the market will accept micro units,
30:53
Speaker 1: which are about usually about three square feet. Um uh.
30:58
Speaker 1: It isn't whether there will be a sceptance because you
31:00
Speaker 1: already have a long, storied history of people living in
31:03
Speaker 1: three under square foot departments. It's the pricing and so
31:07
Speaker 1: what we're seeing what we're starting to see in the
31:10
Speaker 1: micro unit phenomenon. Remember land, the lands. The person selling
31:14
Speaker 1: the development site doesn't care what they're They're just looking
31:18
Speaker 1: at what the maximum um value they can get for
31:22
Speaker 1: the land, which usually implies you're gonna build a super
31:25
Speaker 1: luxury condo or if you want to max out, you
31:28
Speaker 1: want to optimize your return on a dollar invested, at
31:32
Speaker 1: least from a business perspective. From a policy perspective, there
31:35
Speaker 1: are counter arguments to having a variety of income and
31:39
Speaker 1: making keeping housing correct. And one of the biggest problems
31:42
Speaker 1: that New York has right now is that we're seeing
31:44
Speaker 1: record job growth, the highest number of employees of those
31:49
Speaker 1: employed in the city and history, and we have this
31:52
Speaker 1: disconnect between what new housing we're building and what we
31:56
Speaker 1: actually need. And a lot of that has to do
31:59
Speaker 1: with of um the price of land. So in the
32:03
Speaker 1: case of micro units, what's really fascinating is and you
32:06
Speaker 1: can see this in the regular rental market, traditional rental
32:10
Speaker 1: market and the sales market. Is when an apartment gets
32:16
Speaker 1: to a certain price, down to a certain price point,
32:19
Speaker 1: whether it's a rental or purchase, no matter how much
32:22
Speaker 1: smaller it is, it doesn't the price doesn't go down
32:25
Speaker 1: anymore because you're paying for common facility areas. And well,
32:29
Speaker 1: what you see is the price for script It skew
32:31
Speaker 1: up at the bottom because the price won't go below
32:34
Speaker 1: a certain number in a certain market. So what's happened?
32:37
Speaker 1: Why is that? Is that? Is that common areas? Is
32:39
Speaker 1: that taxes? What? What puts the floor? It's it's it's
32:43
Speaker 1: it's the seller. What the sellers are willing to sell
32:46
Speaker 1: for basically, or what they need to get in order
32:48
Speaker 1: to cover their operating costs of the building. What's interesting
32:52
Speaker 1: about the micro phenomenon? And uh, a friend of mine
32:55
Speaker 1: runs a website that's going to launch called neighborhood X
32:58
Speaker 1: and they did study and ball Austin and um and
33:01
Speaker 1: I believe the one coming out in New York and
33:03
Speaker 1: the price per foot of a micro unit in terms
33:06
Speaker 1: of what a consumer will handle, is actually fifty to
33:10
Speaker 1: a hundred percent higher than say a traditional sized rental.
33:15
Speaker 1: So in other words, the price per foot is significantly higher.
33:20
Speaker 1: So say in New York on a studio, say it's
33:22
Speaker 1: eight hundred of foot, a micro might go for without
33:26
Speaker 1: a problem, but it's you know, it's much smaller. Quite fascinating.
33:29
Speaker 1: So if people want to find you, what's the best
33:32
Speaker 1: way they can track you down? On Twitter? On the web.
33:34
Speaker 1: The two best ways to reach me Twitter Number one,
33:36
Speaker 1: which would be Jonathan Miller and it's you know original,
33:41
Speaker 1: I was an early adopter. And then the second is
33:44
Speaker 1: our website, which is Miller Samuel dot com, which has
33:46
Speaker 1: lots of data and information. If you find that you
33:49
Speaker 1: enjoy this sort of chat about things finance related, you
33:54
Speaker 1: can look up an inch or down an inch on
33:56
Speaker 1: iTunes and see the other seventy five or so conversation
34:00
Speaker 1: is of the sort that we've had. Be sure and
34:02
Speaker 1: follow me on Twitter at rid Halts. Check out my
34:05
Speaker 1: daily column on Bloomberg View dot com. I'm Barry rid Halts.
34:10
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.
34:14
Speaker 1: Welcome to the podcast. This has been a fun and
34:17
Speaker 1: interesting approach. So so you've done both the long winded
34:24
Speaker 1: questions written out and this kind of free form version.
34:29
Speaker 1: What what? What's my takeaway from doing it this way?
34:32
Speaker 1: Free form is the way to go. See. I don't
34:34
Speaker 1: know if I could do free form with a guy
34:37
Speaker 1: like Howard Marks or Leon Cooperman, who are so fastidious
34:41
Speaker 1: and organized, and I think you're just gonna have to
34:43
Speaker 1: do it case by case. I guess it's or maybe
34:46
Speaker 1: certain segments you win it. In certain segments you have it.
34:49
Speaker 1: I'm a big fan of no preparation. Well, it's not
34:52
Speaker 1: so much no prep so let me let me qualify this.
34:56
Speaker 1: There's a difference between no preparation and and so literally,
35:02
Speaker 1: Mike Batnick is my head of research. So just as
35:05
Speaker 1: an example, the next podcast after you is Ethan Harris.
35:09
Speaker 1: He's the chief economist of Bank America. Mary Lynch. I
35:13
Speaker 1: don't think I could sit down with someone like that
35:16
Speaker 1: and say, yo, man, what's going on? So what's happening
35:19
Speaker 1: in the world of economics? Anything good going on? But
35:23
Speaker 1: with you, I know I could say what up with housing?
35:26
Speaker 1: And you offen the races? We You and I could
35:29
Speaker 1: talk about this stuff we can talk about I'm sure
35:31
Speaker 1: your wife says the same thing as my wife. You
35:33
Speaker 1: know they are. My kids will say, uh, you know,
35:36
Speaker 1: can you stop talking? And my answer is you should hope.
35:40
Speaker 1: I don't stop talking. It depends if you want to
35:43
Speaker 1: eat tonight. If you want to eat tonight, you're okay.
35:46
Speaker 1: So before I forget, I'm gonna set up initializing video stream.
35:51
Speaker 1: I'm gonna just do a quick Uh. I'm just gonna
35:54
Speaker 1: do a quick Paris Curt Jonathan Miller uh. And we're
35:58
Speaker 1: talking about real estate so um and this will run
36:02
Speaker 1: this weekend, which will be exciting. So we we covered
36:06
Speaker 1: four really interesting subjects during the show. So the new
36:10
Speaker 1: Treasury rules about three million dollar apartments in New York
36:14
Speaker 1: and a million in Miami. UM, their anti money laundering rules.
36:18
Speaker 1: We talked about white case shilla data is so problematic.
36:22
Speaker 1: We talked about the ultra lux um hundred million dollars
36:26
Speaker 1: in up market, and then we talked about the micro apartments.
36:31
Speaker 1: But by the way, you mentioned the three hundred million
36:34
Speaker 1: dollar apartment or unit in in Paris outside was that
36:39
Speaker 1: before or after the terrorist attacks? I think it was after.
36:46
Speaker 1: I think it closed. That's an interesting votic. I think
36:49
Speaker 1: it closed in December. And what is a three hundred
36:52
Speaker 1: million dollars it looks like a palace like Versailles. It's
36:55
Speaker 1: it's that sort of Actually that's the architecture. Oh really yeah,
36:59
Speaker 1: it's meant to And it was interesting because I thought
37:03
Speaker 1: there would be this insane world interest on it, but
37:08
Speaker 1: there really wasn't. And you would think Europe is far
37:11
Speaker 1: more concerned with income inequality and and and a level plan.
37:15
Speaker 1: Was a Middle Eastern buyer and a Middle Eastern developer.
37:19
Speaker 1: Really yeah, wait, so this is a new development. This
37:22
Speaker 1: isn't like it's a new world cast. No, no, no,
37:24
Speaker 1: this is a new I believe it's all newly constructed.
37:28
Speaker 1: But it looks like a castle. So so how many
37:34
Speaker 1: acres is this and how many square foot feet is
37:36
Speaker 1: the I don't I want to say a hundred thousand
37:40
Speaker 1: square feet and fifty acres, but I'm guessing. But it's substantial.
37:46
Speaker 1: There's a lot of lands. So that's three thousand dollars
37:49
Speaker 1: a square foot. That's pretty prices. Yeah. Actually, when you
37:51
Speaker 1: look at the very high end of the market, no
37:53
Speaker 1: matter what the land amount is, they tend to they
37:58
Speaker 1: tend to fall within like the two to four thousand
38:03
Speaker 1: a foot. The variation is the size of the land. Right,
38:07
Speaker 1: So now so let's let's keep talking a little bit
38:09
Speaker 1: about the luxe end of the market, because it's so
38:13
Speaker 1: to me, it's so lux or mega ultra super. So,
38:19
Speaker 1: so here's what I find fascinating. And in my let's
38:22
Speaker 1: start from the bottom up, because that's how most humans
38:25
Speaker 1: interact with real estate. So when you think about real estate,
38:29
Speaker 1: I think about and everything tends to be a chain
38:32
Speaker 1: because you have to sell this house to buy that house,
38:34
Speaker 1: and I believe it's an average of seven transactions that
38:38
Speaker 1: are linked in one home sale. So so down in
38:42
Speaker 1: the United States, we'll start with the starter home, right,
38:45
Speaker 1: So you buy a start at home, which used to
38:47
Speaker 1: be to fifty or so depending on where you are
38:50
Speaker 1: in the country, not in the US, not in here
38:52
Speaker 1: in this area, but in the US, I mean the averages.
38:57
Speaker 1: So a start of home is more in that range.
39:02
Speaker 1: Around here. A starter home is if you can find
39:04
Speaker 1: a place for three four that's a relatively inexpensive home
39:09
Speaker 1: in the New York area. But the person selling that
39:12
Speaker 1: house is trading up to something. Maybe it's they're going
39:16
Speaker 1: from a two or three bedroom to a four bedroom
39:19
Speaker 1: with a couple extra baths. So now we're in the
39:22
Speaker 1: half a million to seven hundred thousands, or they're just
39:24
Speaker 1: trading up to a better location, better same size, and
39:28
Speaker 1: every better school district. But I'm trying to come up
39:31
Speaker 1: with a different stratus. So so assuming variables like location, water, view, etcetera.
39:38
Speaker 1: Aren't a key consideration, although I imagine somewhere in the
39:41
Speaker 1: chain that probably isn't the case. Those do become key issues.
39:46
Speaker 1: But so you go from starter home to little bigger
39:49
Speaker 1: three bedroom to bath or four bedroom to bath, and
39:53
Speaker 1: around here that's five, six, seven, and then from seven
39:57
Speaker 1: to nine you're talking out of four or five bedroom house.
40:01
Speaker 1: Maybe you're on a half acre of lands um, probably
40:06
Speaker 1: a better school district, maybe an easier commute. That's the
40:09
Speaker 1: other thing I noticed. Obviously, the closer you are two
40:11
Speaker 1: major sources of employment, the more expensive it is. And
40:15
Speaker 1: also commuter lines, you know, are are a big factor.
40:19
Speaker 1: Just as a side. And I'm dating myself, but I
40:22
Speaker 1: moved out of the city, my wife and I in
40:25
Speaker 1: and we moved to Fairfield County, Connecticut, And there's an
40:29
Speaker 1: express stop on the commuter train in Stanford, Connecticut. After Stanford,
40:34
Speaker 1: moving away from the city, every ten minutes on the
40:37
Speaker 1: commuter train. Housing prices dropped a hundred thousand dollars. Really,
40:41
Speaker 1: that's amazing comparable houses. Yes, yes, because we were actually
40:45
Speaker 1: looking at the time when we first moved out there,
40:48
Speaker 1: and it was unbelievable. And that's still true today. That's
40:51
Speaker 1: that ratio the progression is but the numbers are much higher.
40:55
Speaker 1: But but it was about a hundred thousand every ten minutes,
40:58
Speaker 1: so you know, so I'm out on Long Island. When
41:00
Speaker 1: you look at the major train lines, the most desirable
41:04
Speaker 1: train line is the Port Washington line, which really is
41:08
Speaker 1: that the north shore of Long Island is a series
41:11
Speaker 1: of peninsulas, and so the first peninsula is the Port
41:15
Speaker 1: Washington line. The next peninsula is actually in between that.
41:20
Speaker 1: The third peninsula is the Oyster Bay Line, which passes
41:23
Speaker 1: by the second peninsula. It's the same thing. The further
41:25
Speaker 1: out you go, the more expensive, also too, on the
41:27
Speaker 1: commuter lines, or it's also the uh you know, whether
41:32
Speaker 1: you're on a main line, which there's a premium for
41:35
Speaker 1: that in not change you can get an express you
41:38
Speaker 1: can go and also that you know, the spurs on
41:40
Speaker 1: a commuter line are the ones that tend to have
41:42
Speaker 1: more problems because there's only one track and they can't
41:45
Speaker 1: go around. The other thing too, is that when when
41:47
Speaker 1: you're talking about Long Island is um And this is
41:50
Speaker 1: an interesting when you look at the Hampton's luxury market
41:55
Speaker 1: to the east end of Long Island, one highway right
41:59
Speaker 1: and and one train line and one train line and
42:02
Speaker 1: this congestion, it's it's, you know, very difficult to get something.
42:06
Speaker 1: So they're trying to preserve the character of the area
42:09
Speaker 1: but not having an overbuild. But they're still building like crazy.
42:12
Speaker 1: So that's why you just helicopter out right go over
42:16
Speaker 1: the traffic. Yes, don't these pleabs know anything but traveled
42:20
Speaker 1: by car? Yeah, that's we'll talk about cars in a
42:23
Speaker 1: little bit. But before we get two cars. So I
42:27
Speaker 1: mentioned seven to nine is now you're talking five bedrooms.
42:30
Speaker 1: Then somewhere in the nine to a million to about
42:32
Speaker 1: a million and a half you're looking at bigger houses.
42:36
Speaker 1: The lands starts getting two acre zing like that. But now,
42:41
Speaker 1: how does this breakdown above two million dollars? Is there
42:45
Speaker 1: a gradation or is it just bigger? Whatever, all these
42:49
Speaker 1: accoutrements and people just charge with it, can get away with.
42:52
Speaker 1: I think I think another way to look at it
42:54
Speaker 1: is um the bigger the logical step is as you
42:59
Speaker 1: move up in price, the bigger the sort of change
43:02
Speaker 1: in amenities or not the big just you know, whether
43:06
Speaker 1: it's square footage or land size, the jumps get further
43:10
Speaker 1: and further apart. Let's bang for the buck for each.
43:14
Speaker 1: A simpler a simpler scenario would be just for the listeners,
43:18
Speaker 1: is if you're in Manhattan and you have a studio
43:20
Speaker 1: and then you trade up to a one bedroom, Uh,
43:23
Speaker 1: let make these numbers up. Maybe it's maybe it's thirty more.
43:28
Speaker 1: And then you trade up to a two bedroom and
43:30
Speaker 1: it's double, and then you trade up to a three
43:32
Speaker 1: bedroom and it's triple, and then you trade up to
43:35
Speaker 1: a four bedroom and it's you know, exponential. So so
43:38
Speaker 1: so you're not just paying for the extra bedroom. You're
43:40
Speaker 1: paying for bigger all around square footage, nicer amenities, location,
43:47
Speaker 1: you know, school district, all those sorts of things. But
43:51
Speaker 1: the problem in a market, and this is this is,
43:54
Speaker 1: this is the problem right now with a housing market,
43:57
Speaker 1: and why there's so much to talk about affordable for
44:00
Speaker 1: ability and affordable housing is that the vast majority of
44:04
Speaker 1: people that have a lot of equity in their home
44:06
Speaker 1: or not. I don't want to say a vast majority,
44:08
Speaker 1: but certainly many. Uh it's called money on paper because
44:13
Speaker 1: unless you're up right or even make a lateral move
44:17
Speaker 1: because maybe your credit score is because credit conditions are
44:21
Speaker 1: tighter than they were. Well, there were no credit standards
44:24
Speaker 1: during the housing bubble, but it's it's still skewed very tight.
44:29
Speaker 1: There's many people that can't make a lateral mover, downsize
44:32
Speaker 1: or trade up. It's uh either kind of stuck. And
44:37
Speaker 1: and part of the problem is to be able to
44:39
Speaker 1: jump to the next level as your family grows and
44:42
Speaker 1: as there as everything was rising in price. You know,
44:46
Speaker 1: you can look at it as percentage, but if you
44:48
Speaker 1: look at as dollars, the dollars are spreading and and
44:52
Speaker 1: and that's been part of the challenge, is sort of
44:54
Speaker 1: trade up of of consumers when they're moving from one
44:59
Speaker 1: uh one home to the next size. I'm gonna kill
45:01
Speaker 1: the periscope just so everybody. This is what it looks
45:04
Speaker 1: like here in the studios. And uh, my candy are
45:09
Speaker 1: now that's right. That's that's from the Bloomberg yep um
45:14
Speaker 1: and I'm gonna so much for that. Um so, so
45:18
Speaker 1: that's kind of fascinating. You know, I love playing with
45:23
Speaker 1: the various apps, so people should realize this. Jonathan and I.
45:26
Speaker 1: Jonathan comes from Connecticut. I come from the North Island.
45:30
Speaker 1: We take our boats. We meet in the Long Island Sounds,
45:33
Speaker 1: and neither of these are yachts. These are just midsize
45:36
Speaker 1: workaday twenty footers. We tie up. We have a couple
45:39
Speaker 1: of beers. Has a bathroom? I have a bathroom. Well,
45:43
Speaker 1: I have a small head, not that I use it,
45:45
Speaker 1: but uh, in both in both senses, but it's uh.
45:50
Speaker 1: And I was thrilled when I discovered my marina has
45:52
Speaker 1: free pump out services. Really, let's start using the bathroom. Um.
45:56
Speaker 1: But what's fascinating? And I think I showed you this
45:59
Speaker 1: a couple of summers ago. You take the Zillo app,
46:02
Speaker 1: you launch it, you say, show me what's around me.
46:05
Speaker 1: It zooms in on on the map and says, starts
46:07
Speaker 1: to show you all of the houses along the waterfronts
46:12
Speaker 1: that you can now see from the boat, that you
46:14
Speaker 1: can't see from the road because and it gives you, right,
46:17
Speaker 1: it gives because they're sitting there on an acre or two,
46:20
Speaker 1: they're set way off the road. You can't even see them.
46:23
Speaker 1: And there are some really insane properties. So it tells
46:27
Speaker 1: you if they were recently sold, what they were sold for,
46:30
Speaker 1: if they're up for sale, what the asking prices, and
46:33
Speaker 1: you could pull up all the details of them, including
46:36
Speaker 1: the taxes and everything else. It's really quite fascinating. That's
46:43
Speaker 1: of seven. That's transparency one o one. But when you
46:46
Speaker 1: say there's a chain of seven transactions from starter home
46:50
Speaker 1: to the three bedroom, one and a half bath, to
46:53
Speaker 1: the five bedroom to the you know, two acre, two
46:56
Speaker 1: million dollar place, I'm trying to figure out, how do
47:00
Speaker 1: you break down those gradations from what did I just
47:04
Speaker 1: mentioned starter? Three? Five? How do you get from the
47:09
Speaker 1: fourth step up to these twenty million dollar waterfront mansions?
47:15
Speaker 1: What are their legitimate gradations between or is it just
47:20
Speaker 1: I think negotiable. Yeah, I think you're looking at it
47:23
Speaker 1: to compartmentalized. They're they're there, it's it's more of a
47:29
Speaker 1: hot mess. It's just smeared over and um. And and
47:34
Speaker 1: also to that, what is when when when someone's in
47:39
Speaker 1: the house and they want to make a trade up, Um,
47:42
Speaker 1: there's many layers that they could you know, they could
47:46
Speaker 1: you know, you go from a dollar house to a
47:49
Speaker 1: three million dollar house, so you go from a five
47:51
Speaker 1: you know, there isn't this sort of you know, tradition
47:55
Speaker 1: necessarily regimented sort of Uh, well, I'm thinking so in
48:00
Speaker 1: other words, what happens typically typically married family buys a
48:04
Speaker 1: small house your income, We have a couple of career, right,
48:08
Speaker 1: they get they get a couple of kids, they get
48:09
Speaker 1: a little more money, and so now they go from
48:12
Speaker 1: a three. But see but see also in this region
48:15
Speaker 1: you have another thing where you have you have uh,
48:20
Speaker 1: you know, a second home in the Hampton's or you
48:22
Speaker 1: have or in any any or tear you know at
48:28
Speaker 1: a you know, a weekend place, and and so like
48:32
Speaker 1: you you know, there's all this uh you know that
48:35
Speaker 1: we have the multi the super luxury towers that people
48:38
Speaker 1: aren't necessarily living in. But there are thousands of studio
48:43
Speaker 1: and one bedroom apartments in Midtown where a U a
48:49
Speaker 1: former resident kept it. They moved to the suburbs. They
48:54
Speaker 1: they kept the piano tear, maybe they rented it, maybe
48:56
Speaker 1: they used it for their kids and they're in college.
48:58
Speaker 1: But they have this flexible ality, so so they're they're
49:02
Speaker 1: they're paying for the upkeep of that. Maybe they don't
49:06
Speaker 1: trade up as big in the suburbs to the next
49:08
Speaker 1: house because they're going back and forth. So what you
49:11
Speaker 1: have in a pretty dynamic you know, in any sort
49:15
Speaker 1: of dynamic urban market surrounded by um suburbs, is there's
49:20
Speaker 1: this interplay between suburban and urban and and right now,
49:24
Speaker 1: with housing prices pushing UH record highs and actually pushing
49:32
Speaker 1: UM consumers seeking out affordability to you know, the outer
49:36
Speaker 1: boroughs to the suburbs. You know, when you're sitting here
49:40
Speaker 1: in Manhattan and you're saying, boy, it's really expensive to
49:43
Speaker 1: live here. Um. Right now, sales activity in the outlying
49:47
Speaker 1: suburbs is at record highs. Really because people can't afford
49:51
Speaker 1: to buy in Manhattan. Well, I think because they're priced
49:55
Speaker 1: out of Manhattan, they're going to the burbs, whether it's
49:59
Speaker 1: Long Island, Fairfield County, Westchester, New Jersey. So the linkage
50:05
Speaker 1: with Manhattan is really important. But you're seeing a tremendous
50:09
Speaker 1: outflow because housing prices are up, changes, changes, sort of
50:15
Speaker 1: lack of better word, migration patterns of people moving outward.
50:19
Speaker 1: That's really fascinating. You know, I always thought I wanted
50:23
Speaker 1: a Piatra tear, and then when I finally more or
50:27
Speaker 1: less can afford one, when it comes time to actually
50:31
Speaker 1: firstly start looking at prices there insane And you know
50:34
Speaker 1: my old apartment was in the Gramercy Park area. That's
50:36
Speaker 1: where I would want a pier a tear. But then
50:39
Speaker 1: when you look at wait, why would I want to
50:41
Speaker 1: spend a million dollars plus some ungodly monthly maintenance of
50:47
Speaker 1: two thousand dollars a month? Wait for twenty four grand?
50:51
Speaker 1: Maybe this is going to appreciate in value, maybe it
50:54
Speaker 1: outpaces inflation, Maybe it doesn't. Aren't I better off not
50:58
Speaker 1: having a pier a tear staying in whatever hotel I
51:01
Speaker 1: want for a long weekend um twenty times a year.
51:05
Speaker 1: Doesn't that put me well ahead of not having a
51:08
Speaker 1: tie up all this money and heading So I've wrestled
51:11
Speaker 1: with that back because it could be you could also
51:14
Speaker 1: viewed as you know, I'm gonna hold it for twenty years,
51:17
Speaker 1: and there's upside potentially to that as well, but also
51:23
Speaker 1: to you know, some people want to go to a
51:25
Speaker 1: place that is there's where clothes, there their furniture, and
51:29
Speaker 1: that's why there there is no sort of regiment to this.
51:32
Speaker 1: It's just flexibility. You and I talked, I want to say,
51:36
Speaker 1: eight years ago about Miami. Aside from the fact that
51:40
Speaker 1: the odds. Well, there's a couple of issues aside from
51:43
Speaker 1: the fact that it's sinking into the sea. It's not
51:48
Speaker 1: just the sea is coming up, it's Miami is sinking.
51:50
Speaker 1: That's what happens when you build on a coral basis,
51:54
Speaker 1: a porous coral rock um and the fact that they're
51:59
Speaker 1: winters aren't consistently you know. Yeah. But the other issue
52:06
Speaker 1: is same situation. You could steal a condo down and
52:09
Speaker 1: I'm told it's still even though prices have bounced up,
52:12
Speaker 1: it's still relatively inexpected. So I tracked the Miami market
52:16
Speaker 1: as well. And if you just look at Miami as
52:20
Speaker 1: a whole and not differentiate between condo and single family,
52:24
Speaker 1: it's about twice or about a third distressed, meaning oh yeah,
52:31
Speaker 1: that's you more inland than on the beach. On the beach,
52:36
Speaker 1: it's more like non distressed distress just rentals anyway. But
52:41
Speaker 1: buts but so so. In other words, you have a
52:46
Speaker 1: dramatic it's actually kind of surprising that you don't have
52:50
Speaker 1: a great differential, uh in terms of geographic difference or
52:55
Speaker 1: proximity between um sort of areas that have very little
53:01
Speaker 1: distressed real estate in the areas that have a lot
53:02
Speaker 1: of distressed real estate, and they're pricing you know, can
53:05
Speaker 1: be multiples of three or four or five for similar houses.
53:10
Speaker 1: Um uh. So, so the market is polarized. In other words,
53:14
Speaker 1: they're mutually exclusive for the most part, which I find,
53:19
Speaker 1: uh sort of odd, but but it really is has
53:23
Speaker 1: been the way that the market is morphed. So Miami
53:27
Speaker 1: is seeing has seen tremendous development growth. Um. I was
53:32
Speaker 1: just down there last week, cranes everywhere. You would think
53:35
Speaker 1: there was never a housing crisis, right right. It's interesting
53:39
Speaker 1: because also what you're seeing now with Miami is there's
53:43
Speaker 1: this so like New York, the new development market is
53:47
Speaker 1: seeing a slow down, right, stronger dollar uh, more building,
53:53
Speaker 1: So the consumer of these properties is taking a longer,
53:57
Speaker 1: you know, to make a decision because they have a
53:58
Speaker 1: lot more choices in their trying to make sure they're comfortable.
54:02
Speaker 1: Still a lot of activity, but not to the degree
54:04
Speaker 1: it was a few years ago. Um. You're seeing people
54:10
Speaker 1: now talk like in the last housing cycle, Miami was
54:15
Speaker 1: the first to fall. So does this mean with Miami
54:19
Speaker 1: now um uh, showing some weakness at the top of
54:24
Speaker 1: the market, not the but the top of the market.
54:26
Speaker 1: Is this a leading indicator, and I sort of chuckle
54:29
Speaker 1: that because because the last go round it was about
54:33
Speaker 1: doctor I like to say, uh, like nurses and carpenters
54:39
Speaker 1: quitting their jobs and flipping real estate for a living.
54:42
Speaker 1: In the movie The Big Short, it's the stripper who
54:45
Speaker 1: owns six rental properties and and the Steve Carrell character
54:50
Speaker 1: is talking about, what are you gonna do, uh when
54:53
Speaker 1: your mortgage resets? And she goes, mortgage resets, what are
54:56
Speaker 1: you talking about? And he explains us there and she
54:58
Speaker 1: goes expletive, I have six properties I bought. And it
55:03
Speaker 1: dawns on him. Wait, if strippers are buying, are able
55:06
Speaker 1: to get credit to buy six properties and then rent
55:10
Speaker 1: them and don't even know their variable mortgages, how is
55:13
Speaker 1: this going to end? It's well, it's it's gonna end
55:16
Speaker 1: badly and and so so what And what's interesting now
55:20
Speaker 1: is that, unlike many other markets, the Miami market is
55:26
Speaker 1: still heavily all cash, so the the cash buyer and
55:31
Speaker 1: not just at the tie and but the is that
55:33
Speaker 1: why the Treasury Department is looking at Manhattan ends Miami.
55:38
Speaker 1: That's one of the reasons. Part of the reason that
55:41
Speaker 1: Miami has heavy cash is because lenders are still very tight,
55:45
Speaker 1: credit tight credit. And also, you know, there's a legacy
55:48
Speaker 1: of foreclosures and distressed real estate not so long ago.
55:52
Speaker 1: So they they're just very conservative. And that's so So
55:57
Speaker 1: to think of that as some sort of leading indicate
56:00
Speaker 1: it's unique to Miami. It's not a national trend. It
56:03
Speaker 1: doesn't seem to be. I I don't get the connection.
56:06
Speaker 1: Are you seeing anything else? Well, let's look at some
56:08
Speaker 1: of the other problem areas last go around. In addition
56:11
Speaker 1: to South Florida, it was Arizona, it was and it
56:17
Speaker 1: was the eastern part of Las Vegas. So so what
56:22
Speaker 1: are you seeing in in Nevada, Arizona and and the
56:25
Speaker 1: non coastal regions in California. So still you know, the
56:30
Speaker 1: foreclosure crisis, while it's certainly has eased dramatically from where
56:36
Speaker 1: it was at the peak. Uh, you know, I'd say
56:39
Speaker 1: it's stabilized. These markets Uh wildly overbuilt during the period.
56:46
Speaker 1: You know that. Do you mean you don't want to
56:47
Speaker 1: commute two hours? Right? The ex serbs right doesn't make
56:51
Speaker 1: any sense? So um in you know, the sort of
56:54
Speaker 1: rule is if you're in a market like Phoenix or
56:57
Speaker 1: Las Vegas where land is cheap, endless. It it's not.
57:04
Speaker 1: You shouldn't expect it to rise dramatically unless there's some
57:08
Speaker 1: external stimulus like credit. Yeah, no credit standards, and which
57:13
Speaker 1: is exactly what happened. What about an area where let's
57:16
Speaker 1: let's look at d C or New York or San Francisco,
57:20
Speaker 1: where there isn't an endless supply of lands and there
57:23
Speaker 1: are all sorts of restrictions on on buildings or at
57:26
Speaker 1: least regulations on how much we can build, then we
57:29
Speaker 1: have a housing affordability crisis, which is a national condition
57:33
Speaker 1: right now. Every it just seems like every major I
57:37
Speaker 1: get calls from its cities or or or so it's
57:41
Speaker 1: a combination. It's there's no doesn't matter whether you're a
57:45
Speaker 1: big or small or middle midsize. It doesn't matter whether
57:50
Speaker 1: you're you know, sort of a region with similar employment. UM.
57:55
Speaker 1: It's it's the fact that when credit conditions are tight,
57:59
Speaker 1: it places outsized demand on the rental market because the
58:03
Speaker 1: consumer that organically would have transferred from the rental market
58:06
Speaker 1: to the purchase market become a first time buyer. Which
58:08
Speaker 1: guess what we have shortage of UM. The uh, the
58:13
Speaker 1: the supply is relatively inelastic, and the rents go up,
58:19
Speaker 1: and and in fact, in you know, credit is there
58:24
Speaker 1: is the reason why. You know, if you look back
58:26
Speaker 1: over the last five or six years, the rent rents
58:29
Speaker 1: got expensive during the foreclosure crisis, you would think that
58:32
Speaker 1: they would get cheap because you have the opposite, people
58:37
Speaker 1: who can't afford a house so they're forced to be
58:39
Speaker 1: a renter, would be buyers, become renters, would be mortgage
58:43
Speaker 1: applicants become renters because the bank's credit line. Look, I
58:47
Speaker 1: just bought a house, you know, a year and change ago. Um,
58:51
Speaker 1: I tell the story all the time. It's and I
58:53
Speaker 1: think it's hilarious. The first house we bought out in
58:56
Speaker 1: the Bourbs was in a little town called green Vale.
58:59
Speaker 1: I think we picked sixty for this. Fifteen plus years ago,
59:03
Speaker 1: we did a refi in I want to say, oh
59:06
Speaker 1: five or oh six, And I'll never forget. And I
59:09
Speaker 1: had already been pretty t clued in to what was
59:12
Speaker 1: going on on the real estates. I have been writing
59:14
Speaker 1: about it, but I'll never forget. We did the refi
59:17
Speaker 1: and the plan was to take thirty grands out, lower
59:21
Speaker 1: our costs and redo the kitchen. And now the house
59:23
Speaker 1: value goes up and the guy literally pulls into the driveway,
59:27
Speaker 1: flings the card door open, leaves the engine running, and
59:30
Speaker 1: you hear on the front porch we had it was
59:32
Speaker 1: an old style Victorian with a covered front porch, and
59:37
Speaker 1: hear him run up the up the porch into the house. Hey,
59:40
Speaker 1: I'm really sorry. I have another closing of of a
59:43
Speaker 1: sale of a house four blocks away. Sign sign initial initial,
59:48
Speaker 1: here's your check, gotta go. And the guy was in
59:51
Speaker 1: and out more than sixty seconds. And I looked at
59:55
Speaker 1: my wife and I said, well, the good news is
59:56
Speaker 1: we we're gonna get a kitchen. The bad news is
59:59
Speaker 1: the is going to end badly. There's no other way
1:00:02
Speaker 1: that this sort of stuff Like we looked at each other,
1:00:05
Speaker 1: like what just it was a cartoon where where bugs bunny?
1:00:08
Speaker 1: Where where the witch zips out? You see the lines
1:00:11
Speaker 1: and the hair prints hanging in the air. That that's
1:00:14
Speaker 1: what it's like. Fast forward fifteen years where I'm trying
1:00:18
Speaker 1: to get a jumbo mortgage and the torturous process the
1:00:21
Speaker 1: banks put us through, where I have Mike Bloomberg co
1:00:25
Speaker 1: signing my mortgage. It's still took that's a joke, it's
1:00:29
Speaker 1: still but it took forever to get this process because
1:00:34
Speaker 1: you know, credit in auto loans and credit cards is
1:00:38
Speaker 1: fast and loose. Yeah, you know, that's why auto sales
1:00:41
Speaker 1: are doing so well. Right, it's you could well but there. Now,
1:00:45
Speaker 1: let's let's talk about auto biles for a second. Because
1:00:47
Speaker 1: I love this area. So I read this fascinating article
1:00:51
Speaker 1: about repose and in college. I love the movie Repoman.
1:00:55
Speaker 1: That's my favorite movie. Get out of here. Yeah, you're
1:00:57
Speaker 1: you find one in every car. I got it on
1:00:59
Speaker 1: my phone. That's hilarious. So they not you know the
1:01:04
Speaker 1: I think the average time. Now I really respect you, Barry,
1:01:07
Speaker 1: like you've you've elevated to another people man. Absolutely. Um So,
1:01:12
Speaker 1: so when you look at a house that goes into foreclosure,
1:01:15
Speaker 1: so it's it's you miss a payment, it's it's what
1:01:18
Speaker 1: are the three stages delinquent default? And then so but
1:01:23
Speaker 1: from from that default where you haven't made payments in
1:01:26
Speaker 1: ninety days to the actual foreclosure and they take possession
1:01:30
Speaker 1: of the house and throw the it's five hundred days
1:01:33
Speaker 1: on average. New York State and New Jersey are a
1:01:36
Speaker 1: thousand days. Okay. Now, I thought Miami was worse, but
1:01:41
Speaker 1: they had those had those rocket courts, which were disasters.
1:01:44
Speaker 1: Into themselves. Now take an automobile, you miss a payment,
1:01:48
Speaker 1: they know you work, They have a tracker in the car. Anyway,
1:01:52
Speaker 1: your cell phone is trackable. And now these REPO guys
1:01:56
Speaker 1: are paying malls and other places to have these cameras
1:02:01
Speaker 1: at the entrances and exits of every major shopping center.
1:02:05
Speaker 1: They read the license plate as it goes in. There
1:02:08
Speaker 1: are some amazing things about this. So if you assuming
1:02:11
Speaker 1: you're not taking your car and saying I'm going to
1:02:15
Speaker 1: ship it to overseas to be sold and I'm never
1:02:18
Speaker 1: gonna make another payment again. Assume you're a typical car buyer.
1:02:22
Speaker 1: You borrow money, or you do a lease, or you
1:02:24
Speaker 1: do a financing. You get a car, and you go
1:02:26
Speaker 1: home and you're going back and forth to work. If
1:02:29
Speaker 1: you decide to stop making payments on that car, you
1:02:32
Speaker 1: miss a payment, thirty days later of those cars have
1:02:37
Speaker 1: been repossessed, and I think the numbers go practically to
1:02:41
Speaker 1: days later. Right. But the problem of foreclosure, you know
1:02:44
Speaker 1: that the house side of the story is that no
1:02:47
Speaker 1: one really knew knows who wants that. Well, that's a
1:02:50
Speaker 1: whole different match. Thanks and other other things. It's it's
1:02:55
Speaker 1: really been a uh and if those thousand day houses
1:02:58
Speaker 1: are because the uh, the mortgage side of things decided
1:03:02
Speaker 1: to bypass. There is a I have a whole monograph
1:03:07
Speaker 1: on this, and I won't go into it here, but
1:03:10
Speaker 1: there is a whole process for making sure we know
1:03:13
Speaker 1: the exact survey of the land, the chain of title,
1:03:18
Speaker 1: and and any changes we've made to the legal status
1:03:22
Speaker 1: of that land. Did you give this person a neasman,
1:03:24
Speaker 1: did you subdivide? Did you do this? And that worked
1:03:26
Speaker 1: really well for a long time until we decided to
1:03:29
Speaker 1: bring until the mortgage people on their own, till the
1:03:32
Speaker 1: banks on their own decided to put together to save
1:03:35
Speaker 1: money on transaction fees, transaction fees filing costs local taxes.
1:03:40
Speaker 1: In many ways, I have argued that what they did
1:03:43
Speaker 1: was tax evasion and in other ways fraud. They have
1:03:48
Speaker 1: got argued that, well, we've got an approval or at
1:03:50
Speaker 1: least and no no fal to that people that are
1:03:54
Speaker 1: challenging them, when yeah, so so, I can't so it.
1:03:59
Speaker 1: But it's so widespread it was. It was a huge
1:04:02
Speaker 1: swath of the mortgage business went through this vehicle. And
1:04:06
Speaker 1: if you and and again another another fascinating discussion. If
1:04:10
Speaker 1: this vehicle didn't exist, and here's the best reason for
1:04:14
Speaker 1: dissembling it and making it illegal, which is very tough
1:04:17
Speaker 1: to do when you own Congress, but um, when they
1:04:22
Speaker 1: own you want to do something different. You could not
1:04:25
Speaker 1: have had a secure mass securitization to the degree we did,
1:04:30
Speaker 1: where the paperwork was a mess without this electronic system,
1:04:34
Speaker 1: believe it or not, the old fashioned land record system
1:04:37
Speaker 1: where someone takes a paper, goes down to the county
1:04:40
Speaker 1: clerk and he takes out his big stamp and okay,
1:04:43
Speaker 1: this mortgage has been filed, and now we're taking these
1:04:45
Speaker 1: papers and sending it to the lawyers. It's fascinating. We
1:04:51
Speaker 1: have a deep, a deep special effects team. But that process,
1:04:54
Speaker 1: if you have to send someone down to the county,
1:04:58
Speaker 1: you're not going to be flipping this property every fifteen seconds.
1:05:01
Speaker 1: You're not gonna have high frequency trading of mortgages the
1:05:04
Speaker 1: way we more or less did. And it was just
1:05:07
Speaker 1: one of those things where, hey, this system works really
1:05:10
Speaker 1: well and has for hundreds of years. Let's it's funny.
1:05:14
Speaker 1: A parallel, maybe a distant parallel is appraisal licensing didn't
1:05:19
Speaker 1: come into nine and and it was a byproduct of
1:05:24
Speaker 1: the SNL scandal, and with thousands of people went to
1:05:28
Speaker 1: jail right right, exactly unlike the last. But what was
1:05:34
Speaker 1: fascinating is the way that that worked is they would
1:05:37
Speaker 1: they would find a chrony appraiser and they would appraise
1:05:41
Speaker 1: the value of a house every hour. Come on. So
1:05:47
Speaker 1: it's changed so much because apparently the data was that
1:05:51
Speaker 1: granular that you could you could you could sort of
1:05:55
Speaker 1: extract a value change from ten fifteen in the morning
1:05:59
Speaker 1: until too already five in the afternoon. Here's the great scam.
1:06:03
Speaker 1: Now I know you no longer do the sort of
1:06:06
Speaker 1: mass appraisals that that there. What you mean is for
1:06:10
Speaker 1: like the big retail banks. And that's the whole discussion
1:06:14
Speaker 1: about that. Well, let's let's quickly have that discussion, because
1:06:16
Speaker 1: that's fascinating. If the basis of giving let's step back
1:06:22
Speaker 1: when when the famous uh Benjamin Graham quote is in
1:06:28
Speaker 1: the short run, the market is a voting machine, but
1:06:32
Speaker 1: in the long run it's a weighing machine, meaning opinion
1:06:36
Speaker 1: and sentiment affects short term prices, but of a long haul,
1:06:39
Speaker 1: intrinsic value will ultimately win out. Now, the entire appraisal
1:06:45
Speaker 1: system is I've witnessed it as a buyer or seller
1:06:48
Speaker 1: of a house seems to be based on comps on
1:06:52
Speaker 1: comparable homes in the area. But stop and think about
1:06:55
Speaker 1: what that means during a credit bubble or a housing boom.
1:07:00
Speaker 1: Because that house sold for a hundred grand more than
1:07:03
Speaker 1: we You and I know, wink wink, nudge nudge, it's
1:07:06
Speaker 1: really worth. But it's similar to my house. Now I
1:07:10
Speaker 1: could get in my house to go up in value.
1:07:13
Speaker 1: All you're doing is ratifying an upward spiral. There is
1:07:17
Speaker 1: no you're not looking at at how home price is
1:07:20
Speaker 1: relative to income in the area. You're not looking at
1:07:23
Speaker 1: the Holmes price relative. There is a check to that
1:07:27
Speaker 1: because because we also look at contract activity, contract prices,
1:07:31
Speaker 1: and you can see a market turn whether going up
1:07:34
Speaker 1: or down. Do appraisers not not approved houses for for
1:07:38
Speaker 1: in those circumstances. So so think of what's happened since
1:07:41
Speaker 1: Dodd Frank and financial reform is that they have installed
1:07:47
Speaker 1: or legitimized a middleman called an appraisal management company or
1:07:51
Speaker 1: a mcswards. The bank isn't hiring a favorite appraiser because
1:07:56
Speaker 1: the implication is the bank knows me for thirty years, uh,
1:08:01
Speaker 1: and they trust me that somehow morphed into you know,
1:08:06
Speaker 1: I'm on the doll you know, because and I understand that,
1:08:09
Speaker 1: you know, there certainly is that component to but but
1:08:13
Speaker 1: the idea was every major bank had an appraisal panel
1:08:16
Speaker 1: that you were a member of, and they were hard
1:08:19
Speaker 1: to get on, and you were vetted and they review
1:08:22
Speaker 1: your work and they constantly go after you. It's not
1:08:24
Speaker 1: like some guy at a death says, hey, I needed
1:08:26
Speaker 1: to come in. Uh. You know. That was a widespread
1:08:29
Speaker 1: practice until the housing bubble, when when credit are uh,
1:08:37
Speaker 1: collateral value didn't matter because everything was already sold off.
1:08:42
Speaker 1: You could offload the risk to some unwitting investor, a
1:08:45
Speaker 1: school system in Minnesota, or the Icelandic banking system, whatever,
1:08:49
Speaker 1: whatever you happen to pick. So so, so the point
1:08:52
Speaker 1: is is that what happened to take away the control
1:08:56
Speaker 1: that the lender or influence a lender would have over
1:08:59
Speaker 1: the appraiser. Maybe it was best intentions, but it was
1:09:03
Speaker 1: it was idiotic because what it ended up doing was
1:09:07
Speaker 1: putting installing a middleman, which is essentially think of them
1:09:10
Speaker 1: as a giant automated conveyor belt. The faster you do work,
1:09:14
Speaker 1: the faster you get more work. And the only standards
1:09:17
Speaker 1: they use, uh, first of all, the bank doesn't pay
1:09:21
Speaker 1: for that. The appraiser pay for that by giving up
1:09:24
Speaker 1: half their fee. So right now there is an app
1:09:27
Speaker 1: the the banking industry is saying there's an appraisal shortage
1:09:32
Speaker 1: in the US undesirable. No no, no, no, no, no no.
1:09:38
Speaker 1: There are plenty of appraisers. They're just are not enough
1:09:41
Speaker 1: praisers that are willing to work for half the market rate.
1:09:45
Speaker 1: So so what's happening is you have a misalignment of
1:09:49
Speaker 1: the talent pool against what the wages are. So what
1:09:53
Speaker 1: appraisers like myself and others left retail banking and where
1:09:57
Speaker 1: we do you know, litigation, cort testimony, estates and trust, matrimonial.
1:10:02
Speaker 1: And I'm never going back because because to to the
1:10:06
Speaker 1: retail banking side, because it's so distorted and dis sort
1:10:11
Speaker 1: of disconnected from any worry about collateral value. So the
1:10:17
Speaker 1: old problem was, and you had a bunch of appraisers,
1:10:20
Speaker 1: it was mortgage brokers that were controlling the appraisal the appraiser.
1:10:26
Speaker 1: They were essentially the bank is saying to the mortgage broker,
1:10:31
Speaker 1: find the appraiser. Now, remember the mortgage broker only gets
1:10:34
Speaker 1: paid if they get it, if the deal closes, right,
1:10:37
Speaker 1: So there's a complete conflict. And then as who's going
1:10:41
Speaker 1: to rubber stamp, who's Gonnas, Who's no longer an appraiser,
1:10:45
Speaker 1: they're a deal enabler, and so that so that loan closes,
1:10:50
Speaker 1: and and then the appraiser gets another assignment and you know,
1:10:52
Speaker 1: they get higher comparable and higher prices are immediately just
1:10:56
Speaker 1: and all the appraisers that I knew in this area
1:11:00
Speaker 1: at all of a sudden exploded. They went from two
1:11:03
Speaker 1: or three people to a hundred people. And we're you know,
1:11:06
Speaker 1: the owners are driving in limos with cell phones doing
1:11:09
Speaker 1: deals with banks. They're all gone. They all exploded because
1:11:14
Speaker 1: because when the credit uh bubble popped, uh, that was
1:11:20
Speaker 1: it for the mortgage brokerage industry as well. That's been
1:11:23
Speaker 1: decimated since the financial crisis. So so the problem that
1:11:28
Speaker 1: we had was that you had, I want to say
1:11:33
Speaker 1: it was oh four. You had a bunch of appraisers
1:11:36
Speaker 1: go down to Congress and complain about this, saying, look,
1:11:40
Speaker 1: something's going on in the housing market where we can't
1:11:44
Speaker 1: do a legitimate appraiser. The prices are coming in crazy,
1:11:48
Speaker 1: and if you don't approve it, you don't get used anymore.
1:11:51
Speaker 1: So it's either rubber stamped this nonsensical price, or I'm
1:11:55
Speaker 1: not sending you any business. It's similar to what took
1:11:58
Speaker 1: place in the credit rating agency. Hey, if you don't
1:12:02
Speaker 1: give me triple A, I'll go down to the praisers.
1:12:04
Speaker 1: Predicament is exactly the positioning that the credit rating agent
1:12:08
Speaker 1: are in, UH with the investment banks. I mean that
1:12:12
Speaker 1: that is the problem is that you're you're at the
1:12:16
Speaker 1: trough being fed and you can't disappoint your provider. And
1:12:21
Speaker 1: then so what does this new model do? Does it
1:12:23
Speaker 1: do anything better or is it just it doesn't It
1:12:25
Speaker 1: actually is does things worse. It relies on automated valuation,
1:12:29
Speaker 1: which is um wildly inaccurate. Certainly will improve over time.
1:12:34
Speaker 1: But the problem with data, as we we've touched on
1:12:37
Speaker 1: before is that UH public record data, the quality of
1:12:41
Speaker 1: public record data varies significantly from municipality. In the municipality,
1:12:46
Speaker 1: New York City has the most archaic, primitive raw for
1:12:51
Speaker 1: being the financial capital of the world in quotes, the
1:12:54
Speaker 1: raw data here through the AQUAS system is the most primitive,
1:12:58
Speaker 1: raw inaccurate data I cover. I do research in eighteen
1:13:02
Speaker 1: different housing markets across the country. By far, New York
1:13:06
Speaker 1: City is the dirtiest raw data that we come done.
1:13:10
Speaker 1: Not cheap, dirt cheap. That's amazing. You would think if
1:13:15
Speaker 1: anyone has good data, maybe this is home country bias
1:13:19
Speaker 1: here for me as a New Yorker sitting here in
1:13:22
Speaker 1: Data Central and Bloomberg. But that's amazing that that is
1:13:26
Speaker 1: still so. I guess it works good enough. So there's
1:13:29
Speaker 1: no incentive to replace it, right, or it's just been
1:13:33
Speaker 1: that way for a long time and no one's bothering
1:13:35
Speaker 1: to to look at it. The the you know, in
1:13:38
Speaker 1: the research we do, like I publish a report, for example,
1:13:42
Speaker 1: on the Manhattan sales market, fifty of our research time
1:13:46
Speaker 1: is spent cleaning and verifying public record, which to me
1:13:50
Speaker 1: is insane. Uh. There's lots of issues with wrong numbers,
1:13:56
Speaker 1: you know, zero's missing punctuation. Uh, combined departments given the
1:14:02
Speaker 1: wrong square footage. Um, it just goes on and on
1:14:06
Speaker 1: and on in public record. Really is only the buyer
1:14:09
Speaker 1: and the seller, the address, the apartment number and are
1:14:13
Speaker 1: the unit number if it's a condo, the price, the
1:14:16
Speaker 1: closing and recording date. That's it. There's no ard put.
1:14:20
Speaker 1: That's a simple database to assemble. But is it manual.
1:14:25
Speaker 1: Is it not on a there's enough manual to make
1:14:28
Speaker 1: it really dirty and in a and and it I've
1:14:32
Speaker 1: been doing this in the market for thirty years now,
1:14:36
Speaker 1: started when I was five, as I say, and uh
1:14:39
Speaker 1: and and the data is exactly the same in the
1:14:42
Speaker 1: mid eighties when I started, as it is now. No
1:14:45
Speaker 1: no upgrade due to technique zero. So so in the
1:14:49
Speaker 1: last five or ten minutes that we have are there
1:14:53
Speaker 1: any real estate? I mean, We've already done these standard
1:14:55
Speaker 1: questions before, so I'm not gonna ask you who your
1:14:58
Speaker 1: mentors were or what your favorite books were, although I
1:15:00
Speaker 1: can ask you have you read any interesting books since
1:15:03
Speaker 1: the last time we've had you on. By the way,
1:15:05
Speaker 1: you're only our third repeat guest, and so it's an honor.
1:15:09
Speaker 1: I appreciate that you took you took the bronze. Well
1:15:12
Speaker 1: enough stuff has changed in the housing market that I
1:15:15
Speaker 1: thought it would be interesting to chat about. Hey, what
1:15:18
Speaker 1: what's different? What's going on? And we still have a
1:15:21
Speaker 1: fairly okay housing market, it sounds like, but lots of problems,
1:15:26
Speaker 1: lots of distortion from FED policy and um, you know,
1:15:30
Speaker 1: the whole idea of of type credit conditions that are
1:15:34
Speaker 1: being created from the distortion. So so we basically have
1:15:39
Speaker 1: a an okay housing market, but it's it's we're dealing
1:15:44
Speaker 1: with these distortions from the FED. We're dealing with some
1:15:46
Speaker 1: of these other issues. So if I were to ask you,
1:15:49
Speaker 1: what's the state of the housing market here and now,
1:15:52
Speaker 1: how do you contextualize it? What do you say? The
1:15:55
Speaker 1: uh U S state of the housing market is it's
1:15:58
Speaker 1: still very uneven around the country. Your what do we
1:16:01
Speaker 1: basically seeing? So sorry, I don't think that that the
1:16:06
Speaker 1: unevenness description applies anymore. I'd say that it certainly has improved.
1:16:12
Speaker 1: Uh it is in this transition period from UH weak
1:16:16
Speaker 1: to it, but it has not normalized. And do we
1:16:20
Speaker 1: still have the same inventory issue we have? I remember
1:16:23
Speaker 1: you we have chronically low inventory across the you know,
1:16:27
Speaker 1: that's driving prices, that's driving prices higher that don't match
1:16:30
Speaker 1: wage growth. So so that's what you also had previously
1:16:33
Speaker 1: wrote a long piece about the number of homeowners that
1:16:37
Speaker 1: either have are either not We all know about underwater
1:16:41
Speaker 1: homeowners whose house is worth just low equity, but you've
1:16:44
Speaker 1: talked about no equity or low equity, and that locks
1:16:47
Speaker 1: them in place. They can't roll into the next link
1:16:51
Speaker 1: in the chain in houses. Right, if you're a homeowner
1:16:53
Speaker 1: and you don't, uh, you don't have any financial problems,
1:16:57
Speaker 1: you're honor d arrest, You have your job, everything's rate,
1:17:00
Speaker 1: and you keep reading about record low rates or rates
1:17:03
Speaker 1: are very low. You apply for a mortgage and you
1:17:07
Speaker 1: don't qualify because you have low equity. You don't have
1:17:10
Speaker 1: enough for a down payment. Uh you And I'm not
1:17:14
Speaker 1: saying that's bad, but it is. There's no but it's
1:17:17
Speaker 1: it's impacting the market. It's impacting the market um to
1:17:21
Speaker 1: the point where Uh so now you, as that homeowner,
1:17:24
Speaker 1: are you going to list your property for sale? Of
1:17:27
Speaker 1: course not, even though you have all that money on paper. Uh,
1:17:30
Speaker 1: you know, even if you only have phantom equity. Yeah,
1:17:32
Speaker 1: even though even if you only you don't have enough
1:17:34
Speaker 1: to buy the trade up, but you still have, you know,
1:17:37
Speaker 1: a hundred thousand dollars in equity in your house. You
1:17:40
Speaker 1: can't realize that or do anything with it because you
1:17:43
Speaker 1: probably can't get a home equity loan credit standards I
1:17:47
Speaker 1: believe are the standard is sort of I call it
1:17:51
Speaker 1: quadruple A, like irrationally, it's irrationally tight that any concert
1:17:59
Speaker 1: you talk to anybody going to a closing, the impression
1:18:04
Speaker 1: they get from the lender is the bank is up
1:18:06
Speaker 1: until the day of the closing, are looking for reasons
1:18:10
Speaker 1: not to close. Let me tell you when I and
1:18:13
Speaker 1: again not to make this personal about my transaction. I
1:18:17
Speaker 1: had a stock option issue and oh four and I
1:18:21
Speaker 1: resolved it a decade ago. It shows up on the
1:18:24
Speaker 1: credit report. I actually had to go to forty Street
1:18:28
Speaker 1: to the I R. S Building, take a number, go
1:18:31
Speaker 1: to a thing, and and get proof that. So there
1:18:35
Speaker 1: are apparently multiple levels of If it says tax paid, uh,
1:18:41
Speaker 1: tax lan sat up because I didn't even know I
1:18:43
Speaker 1: had a tax lan and the accountant found it. We settled,
1:18:45
Speaker 1: took care of this a decade ago, no exaggeration, a
1:18:48
Speaker 1: decade ago. Now I had to go and get this
1:18:51
Speaker 1: taken care of. And the hoops they make you jump through.
1:18:55
Speaker 1: So you go there, you have to sign this thing.
1:18:57
Speaker 1: You have to prove you have no outstanding taxes, you
1:19:00
Speaker 1: owe no money, you have none of this. So it's
1:19:02
Speaker 1: not just satisfied, it's satisfied, discharge, fully, caught up, etcetera.
1:19:07
Speaker 1: That was a crazy hoop to jump through. And then
1:19:09
Speaker 1: they would say, so I get paid certain things, certain
1:19:14
Speaker 1: things on a normal W two And it's not like
1:19:18
Speaker 1: it's a variable. It's each month the same amount of
1:19:20
Speaker 1: money hits. It's more or less the same day. It
1:19:23
Speaker 1: comes from the same source. Hey, what's this on the dude,
1:19:27
Speaker 1: I've told you this every month for the past three months.
1:19:30
Speaker 1: That's a ten. Here's the source. Here it is, and
1:19:33
Speaker 1: it's like an odd amount ending in nine thirty three
1:19:36
Speaker 1: spot six six. It's the same thing month after month.
1:19:40
Speaker 1: It's like you realize that this isn't like, Okay, we're
1:19:43
Speaker 1: gonna do a cocaine run and and here's what we
1:19:46
Speaker 1: got for the haul. It's to the penny, the same
1:19:49
Speaker 1: exact amount. Why can't you figure this out? And I
1:19:53
Speaker 1: was lamenting about this to our real estate attorney and
1:19:56
Speaker 1: he said, well, welcome to housing, and well, well we'll
1:19:59
Speaker 1: think about why that's happening. Is is uh rapidity over compensation?
1:20:06
Speaker 1: They were so completely responded my last time. Now they've
1:20:11
Speaker 1: gone the opposite. But the mindset and banking um in
1:20:15
Speaker 1: mortgage lending, that is um for you know, the big
1:20:18
Speaker 1: retail banks is uh. The legacy of bad decisions in
1:20:23
Speaker 1: the last cycle, forced by backs by the former g
1:20:27
Speaker 1: s c S on on loans issued in oh six
1:20:31
Speaker 1: with a typo a typo or or we're warranting that
1:20:35
Speaker 1: this is a seven score with someone making dollars and
1:20:41
Speaker 1: it turned and a loan to value of of when
1:20:45
Speaker 1: they had a four hundred score they were making thirty
1:20:48
Speaker 1: grand and the loan to value was a correct So
1:20:51
Speaker 1: I don't believe if it was like a mere typo.
1:20:54
Speaker 1: And yes, if they wrote street instead of lane, that's
1:20:57
Speaker 1: material and they could put the mortgage back. So so
1:21:00
Speaker 1: that's but that is we're seeing an extreme um overreaction
1:21:06
Speaker 1: on that. Uh it's you know, not like oh and
1:21:08
Speaker 1: E should have been typed as an a. But but
1:21:11
Speaker 1: it's not material to the collateral to the value is
1:21:14
Speaker 1: what we're seeing. UM. And on top of that, um,
1:21:18
Speaker 1: you know, I think low interest rates are also keeping
1:21:21
Speaker 1: credit tight. Ten year by the way, as as of
1:21:24
Speaker 1: this recording is to zero zero percent in the United States.
1:21:28
Speaker 1: And two years ago I told people, hey, if you
1:21:30
Speaker 1: have a variable mortgage, you might want to think about
1:21:33
Speaker 1: locking in these low rates while they're here. And here
1:21:36
Speaker 1: it is two years later, and we still have well
1:21:39
Speaker 1: even after the FED right right at the first FED
1:21:42
Speaker 1: rays and and we have rates drifting lower. So what
1:21:46
Speaker 1: does that mean? That means that things are not necessarily
1:21:50
Speaker 1: that great um demand for or it means there's still
1:21:53
Speaker 1: such a demand for low demand for capital. Uh that
1:21:58
Speaker 1: that's what tends to it to some degree course competition
1:22:02
Speaker 1: for mortgages and rates. But it's an amazing, amazing and
1:22:08
Speaker 1: also to also too that you know, the sort of
1:22:12
Speaker 1: the media conversation about rising rates, it was, it was
1:22:17
Speaker 1: it was like, you know, it was like waiting for
1:22:20
Speaker 1: the ball to drop on New Year's Eve that you
1:22:22
Speaker 1: know that what's you know, the housing markets going to implode,
1:22:25
Speaker 1: and nothing happened because because it's first of all, um,
1:22:32
Speaker 1: the the rise would be very was anticipated to be
1:22:35
Speaker 1: very small, and it was. And what what are they
1:22:38
Speaker 1: they're saying under the best of conditions, it's it's gonna
1:22:41
Speaker 1: they're gonna take it up four quarter point increases over
1:22:45
Speaker 1: a year, which which still I think the inordinately low
1:22:49
Speaker 1: rates one that would be one I think the markets
1:22:51
Speaker 1: are saying there's a fift chance of that or something
1:22:53
Speaker 1: like that. I am skeptical that they'll be any when
1:23:00
Speaker 1: the actual rates are drifting lower, but I know that
1:23:02
Speaker 1: their FED isn't only looking at housing um obviously UM.
1:23:06
Speaker 1: But but the idea that low rates are keeping credit
1:23:10
Speaker 1: conditions tight as well, because there's no margin, there's no spread,
1:23:14
Speaker 1: there's no money to be made, there's there, there's there's
1:23:16
Speaker 1: no there's no room for error. And and so it's
1:23:20
Speaker 1: part it feeds this sort of paranoid or conservative UM mindset.
1:23:25
Speaker 1: I I use uh, you know, it's it's just the
1:23:30
Speaker 1: free money out of the FED, which is not really
1:23:32
Speaker 1: an accurate thing to describe it as. UM is allowed
1:23:34
Speaker 1: banks to grow their lines of business, you know, rebuild
1:23:37
Speaker 1: their capital, but it allows allow all this bad debt
1:23:41
Speaker 1: that are on the books to gradually run off, either
1:23:45
Speaker 1: through foreclosure or rising home prices. That took what was
1:23:50
Speaker 1: once a wildly underwater mortgage and say, okay, tell you what,
1:23:55
Speaker 1: we'll take the house, will forgive the loan. You're done
1:23:58
Speaker 1: with it, and now we could sell this and unless
1:24:02
Speaker 1: you're in Spain, and then you're like on the hook
1:24:05
Speaker 1: for life. Well, you know, the US has some states
1:24:07
Speaker 1: that will recourse, some states that noncre recourse. Different countries
1:24:11
Speaker 1: don't necessarily have that same dichonomy. There there are some
1:24:16
Speaker 1: uh any so too. In in New York, I believe
1:24:20
Speaker 1: we're a nonrecourse state. And basically the contract says, you
1:24:26
Speaker 1: lend me a more money to buy a house, and
1:24:29
Speaker 1: I'll give you an interest in the house as collateral
1:24:32
Speaker 1: to make sure you get repaid. Hey, and if I
1:24:34
Speaker 1: ever stopped paying the mortgage, you get the house. That
1:24:37
Speaker 1: seems like a fair deal, assuming the house price is
1:24:40
Speaker 1: reasonable and stable. I put ten or down, So I'm
1:24:43
Speaker 1: not just gonna walk away. I have skin in the game.
1:24:46
Speaker 1: H an expression I've come to despise and and that's
1:24:49
Speaker 1: very different then then saying hey, you owe this money
1:24:53
Speaker 1: and we don't really care what happens. Well, just just
1:24:56
Speaker 1: sort of a piggyback on this. But maybe maybe I'm
1:24:59
Speaker 1: going off on a tangent. One of the things I
1:25:01
Speaker 1: learned in in the last down cycle is that in
1:25:05
Speaker 1: the new development world, the deposits that a that a
1:25:09
Speaker 1: buyer would put on a purchase was ten percent. That
1:25:13
Speaker 1: was the That was the standard deposit. So it's a
1:25:16
Speaker 1: million dollar you know, you put a hundred thousand down.
1:25:20
Speaker 1: When Lehman collapsed and September sales stalled, uh for the
1:25:28
Speaker 1: next excuse me? In two thousand nine, many many consumers
1:25:33
Speaker 1: walked away from that ten percent. How do you walk
1:25:36
Speaker 1: away as opposed to take in the house as opposed? No,
1:25:38
Speaker 1: because no, they hadn't closed yet. It was just a
1:25:42
Speaker 1: contract waiting for the building to build. But they walked
1:25:45
Speaker 1: away from the from the deposit. Because because they did,
1:25:50
Speaker 1: they did not close. The consumer is out the hundred
1:25:53
Speaker 1: thousand dollars and they don't have a million dollar mortgage
1:25:57
Speaker 1: on a five correct, except for the market came back
1:25:59
Speaker 1: in like three years. So what I learned from this
1:26:02
Speaker 1: is that's fascinating by distress real estate, right. So so
1:26:07
Speaker 1: what I learned though, is that uh, the the developers
1:26:11
Speaker 1: were the deposit was twenty or no. One walked away,
1:26:16
Speaker 1: and um, you know, the developer was in better shape,
1:26:21
Speaker 1: you know. As as a result, the last house, this
1:26:25
Speaker 1: house that we we live in now, I think I
1:26:29
Speaker 1: think the mortgage was either a ten or deposit and
1:26:32
Speaker 1: we ended up putting down well over, which is really
1:26:36
Speaker 1: tying up money you can otherwise use for other things.
1:26:39
Speaker 1: But from my wife's perspective, she's like, I want to
1:26:42
Speaker 1: know that there's a huge buffer and we don't have
1:26:45
Speaker 1: to worry about anything, and and the peace of mind
1:26:48
Speaker 1: and psychology of not feeling like, you know, is this
1:26:52
Speaker 1: an optimal financing. No, but it's that place you live
1:26:56
Speaker 1: in and it's not a place where you want to
1:26:59
Speaker 1: want to be a source. Well, the problem in the
1:27:00
Speaker 1: last cycle, the housing bubble, is that there was a
1:27:03
Speaker 1: mistaken the fact that was not that securitation. Securization was
1:27:10
Speaker 1: the problem, but the securitization vehicle and all the financial
1:27:15
Speaker 1: engineering that went on gave a sort of false security
1:27:19
Speaker 1: that risk could be managed and and that the the
1:27:23
Speaker 1: the consumer, uh, you know, thought that prices would go
1:27:27
Speaker 1: up forever there. It was just leverage the heck out
1:27:31
Speaker 1: of it. Uh. And you offer people free money. And
1:27:34
Speaker 1: I just remember the mindset during that process like oh yeah,
1:27:37
Speaker 1: you know, I'll just REFI again, or you know, like
1:27:39
Speaker 1: that was the thinking. But that's what people were told
1:27:41
Speaker 1: when you went when you went to So I spoke
1:27:44
Speaker 1: to a number of mortgage brokers in that period. I've
1:27:46
Speaker 1: always you know, what some people call shopping, I call
1:27:49
Speaker 1: economic research. And I've spoken to a number of people
1:27:52
Speaker 1: and I said, why would I want to do variable
1:27:55
Speaker 1: with rates as low as they are? By the way,
1:27:57
Speaker 1: they're much lower today is the joke. But why would
1:28:00
Speaker 1: I want to do that? You know, the odds are
1:28:02
Speaker 1: that ten years from the other rates are much higher,
1:28:04
Speaker 1: And the answer was the same thing, by as much
1:28:06
Speaker 1: house as you can afford. And if you if you
1:28:09
Speaker 1: you run into an issue, if rates go up, you
1:28:10
Speaker 1: could refly, you could do the The assumption was always
1:28:14
Speaker 1: that the conditions at present would continue into the future.
1:28:18
Speaker 1: And you know, when you see aberrational conditions, that's a
1:28:21
Speaker 1: bad assumption to make, right. You can't assume stuffing is
1:28:25
Speaker 1: going to stay the same. Actually, the mindset during the
1:28:29
Speaker 1: bubble was you don't even look at the price, you
1:28:33
Speaker 1: look at the payment, the monthly nut. I've written about that.
1:28:38
Speaker 1: That's exactly right, and so it was. So as the
1:28:41
Speaker 1: rates went down, the home price went up, but the
1:28:44
Speaker 1: monthly payment was still more or less the same, And
1:28:47
Speaker 1: that's something that low rates drive prices up, at least theoretically,
1:28:51
Speaker 1: if people are buying houses based on what they can
1:28:53
Speaker 1: afford to pay, right so at once that became unhinged,
1:28:57
Speaker 1: then all bets were off. Um. So we've talked a
1:29:00
Speaker 1: lot about about the current housing situation. We've talked about
1:29:04
Speaker 1: what went off the rails during the boom and bust,
1:29:07
Speaker 1: um any any important thing we might have overlooked in
1:29:11
Speaker 1: terms of housing before we get to automobiles. No, I
1:29:15
Speaker 1: think I think you've drained my housing song. Okay, so
1:29:18
Speaker 1: now let's talk about So everybody thinks that you're sort
1:29:22
Speaker 1: of the middle of the road conservative guy. I think
1:29:25
Speaker 1: more accurately, I'm a dull and boring number. He's a John. Yeah.
1:29:29
Speaker 1: I like Miller. I look at his stuff. He's interesting,
1:29:32
Speaker 1: he really knows his stuff. He's kind of a data wank.
1:29:37
Speaker 1: But you're really kind of a gadget head as well.
1:29:42
Speaker 1: I see you have your Apple watching on and your
1:29:44
Speaker 1: other stuff. But you recently came into possession of a
1:29:48
Speaker 1: hillacious vehicle, and I love this story. What are you
1:29:54
Speaker 1: driving these days? Um, I'm driving a buy American. I
1:29:58
Speaker 1: know that absolutely, a two thousand sixteen Dodge Challenger s
1:30:05
Speaker 1: RP coupe with a V eight hemy Is that Is
1:30:08
Speaker 1: that the hell Cat version? It is not. It is
1:30:11
Speaker 1: one step below the hell Cat. And I only did
1:30:13
Speaker 1: that because I didn't want to wait four months this
1:30:16
Speaker 1: one was available, and so what's the horsepower on this?
1:30:21
Speaker 1: And it shaved twelve seconds off my commute, So I
1:30:24
Speaker 1: feel like it's a there's like a benefit. But by
1:30:27
Speaker 1: the way, the joke is your commute is how far
1:30:30
Speaker 1: you drive to the trade. It's about a mile and
1:30:32
Speaker 1: a half, but you took twelve seconds off. Yeah, you know, efficiency,
1:30:37
Speaker 1: you know it. So what's the difference between this and
1:30:40
Speaker 1: the hell cat? That's seven I think, so yeah, it's
1:30:43
Speaker 1: like just under seven maybe, uh yeah, it's it's it's
1:30:47
Speaker 1: a little unnecessary. But so what on earth made you
1:30:51
Speaker 1: buy such a ridiculous So there's the thing. I have
1:30:54
Speaker 1: four kids. We have like an auto dealership in our
1:30:59
Speaker 1: driveway with all the and let me let me just
1:31:01
Speaker 1: stop you there and say, you have a driveway full
1:31:04
Speaker 1: of rust bucket pickup trucks, and there isn't a nice
1:31:08
Speaker 1: car any The last time we drove by, even the
1:31:11
Speaker 1: little two seat sports car you had was rusting and
1:31:15
Speaker 1: a little dinged up. There wasn't much. Yeah, it's it's
1:31:18
Speaker 1: six three kids in college and and six cars besides
1:31:22
Speaker 1: mine with my wife and my son. So so I've
1:31:26
Speaker 1: been holding off for a while. And uh my my
1:31:31
Speaker 1: my wife, who incidentally, today is our thirty second anniversary.
1:31:35
Speaker 1: So you can see I'm a great husband. I'm here
1:31:37
Speaker 1: talking to you, but we're happily married. She's awesome, but anyway,
1:31:42
Speaker 1: just alone, she's awesome at alone where we're going to
1:31:46
Speaker 1: six thirty now and you're not just see her till
1:31:48
Speaker 1: later class tonight, honey, wake up, Happy anniversary. But but anyway,
1:31:54
Speaker 1: what it was funny because I had long eyed the
1:31:57
Speaker 1: Tesla and and also just in car d yes, so
1:32:02
Speaker 1: I and that insanity mode is pretty zero to sixty
1:32:05
Speaker 1: and that's mostly it's amazing crazy, but that's faster than
1:32:09
Speaker 1: any production guest line car in the world. It's it's amazing.
1:32:12
Speaker 1: And I'm a Mac nuts. So the whole idea of
1:32:14
Speaker 1: updating your software overnight and plugging in and you know,
1:32:19
Speaker 1: the interstate next to me, there's a supercharge station and
1:32:22
Speaker 1: I could put one in my house, and you know,
1:32:24
Speaker 1: the whole sort of you know, uh n Musk called
1:32:31
Speaker 1: the whole sort of Internet, right. It was. It was
1:32:34
Speaker 1: just sort of that feel that appealed to me. And
1:32:36
Speaker 1: I was looking at the prices, you know, for somewhere expense.
1:32:39
Speaker 1: I drive three thousand miles a year, so so it
1:32:42
Speaker 1: was without the incentives, it was like eighty five thousand
1:32:46
Speaker 1: dollars for the mid size model and without the full
1:32:49
Speaker 1: insanity mode pack, correct, And it was eighty five thousand,
1:32:53
Speaker 1: And I thought, well, you know three thousand, wells here
1:32:55
Speaker 1: eighty five thousand. This seems excessive. You're not really pull it.
1:33:00
Speaker 1: You're plluting more with the both than you are with
1:33:01
Speaker 1: the car, right, like in multiplied by six cars, it's
1:33:05
Speaker 1: a difference, right and then uh, and then the other
1:33:07
Speaker 1: one was um just looking at like a used like
1:33:10
Speaker 1: a Porsche. Uh, Panamera. I wanted an adult car, but
1:33:15
Speaker 1: so I've been I have to tell you my wife
1:33:20
Speaker 1: first saw that car and she is not a go
1:33:23
Speaker 1: get something expensive. She's like, you know, we could get
1:33:26
Speaker 1: a used hand to be fine. I'm the ones like shiny,
1:33:29
Speaker 1: I want that. The Panamera is gorgeous, but having two
1:33:33
Speaker 1: giant dogs. The back seats are buckets. You can't put
1:33:36
Speaker 1: dogs back the Um, we don't have any dogs, so
1:33:40
Speaker 1: that was never factored into the math. Now, if you
1:33:42
Speaker 1: like the Panamera and you need a back seat, they're
1:33:46
Speaker 1: mccan s. They're small, small, which is based on the
1:33:50
Speaker 1: outer Q five. Every review I've seen of them are
1:33:54
Speaker 1: off the charts. You've you've seen my driveway, which is
1:33:57
Speaker 1: like a a cross country mountain climbing expeditions, and people
1:34:03
Speaker 1: who follow me on Twitter have seen my orange crush,
1:34:08
Speaker 1: my midlife crisis, which I picked that up. That was
1:34:10
Speaker 1: a salvage vehicle that some idiot had fried the electrical system,
1:34:15
Speaker 1: and the the insurers sold it for you know, pennies
1:34:18
Speaker 1: on the dollar, and it it costs next to nothing
1:34:21
Speaker 1: to turn that into a full I was never a
1:34:25
Speaker 1: jeep guy. I always thought they were bouncy and idiotic vehicles.
1:34:29
Speaker 1: And after last winter, I am a full blown convert
1:34:32
Speaker 1: I used to get into. So I remember last year,
1:34:35
Speaker 1: I think, I don't think I've told this story on
1:34:37
Speaker 1: the air. Go to work, a foot of snowfalls, come
1:34:41
Speaker 1: home the Long Island Railroad and all their wisdom decides
1:34:44
Speaker 1: to plow the parking lot, and of course plow everybody in.
1:34:48
Speaker 1: So everybody comes in and people are digging out. My
1:34:51
Speaker 1: buddy with his out he is trying to is in
1:34:52
Speaker 1: a suit and tize digging out. And I get into
1:34:55
Speaker 1: the jeep and go, let's see what happens. And I
1:34:57
Speaker 1: put into reverse. This is like a three ft hill
1:34:59
Speaker 1: because go right over it, up and over it. And
1:35:01
Speaker 1: I'm the first guy out of the parking lot. And
1:35:03
Speaker 1: I just laughed at the thought of this guy's grimace
1:35:07
Speaker 1: as I drove by and making a gesture as I
1:35:10
Speaker 1: as I drove by, So I'm a convert into that.
1:35:13
Speaker 1: And every review I've read of the mccan s, which,
1:35:16
Speaker 1: by the way, the interior very much looks Porsche Panamara.
1:35:19
Speaker 1: That's the whole thing with the luxury. Porsche's the uh
1:35:24
Speaker 1: we could talk about the pronouncement and Porscha. Porscha is
1:35:29
Speaker 1: really top notch. That's one of my attractions. But again,
1:35:32
Speaker 1: I drive three thousand miles a year, so so I
1:35:35
Speaker 1: have like all my monitors open. I've got, you know,
1:35:37
Speaker 1: the website for Tesla, for Porsche, and uh, I pull
1:35:41
Speaker 1: up the Dodge option only because it's much Dodge. Are
1:35:46
Speaker 1: you looking? At the time, I was looking at the Challenger,
1:35:49
Speaker 1: which for my whole life, I've always wanted one, the
1:35:51
Speaker 1: old Challenge of the class. But I'm not American Monkey.
1:35:56
Speaker 1: I don't want to or I don't want to like
1:35:59
Speaker 1: have a mechanic auto mechanic be part of my family,
1:36:02
Speaker 1: can't say so. So I I just love the lines
1:36:06
Speaker 1: and and it was so much less expensive orders of
1:36:10
Speaker 1: magnitude or it retailed for fifty two, which which you know,
1:36:15
Speaker 1: compared to eight five. Uh. And not only that, but
1:36:19
Speaker 1: it's got a heavy and it's your wife tells the
1:36:21
Speaker 1: story that you guys went to the Yeah. Yeah, So
1:36:25
Speaker 1: what happened was I showed my wife and she and
1:36:28
Speaker 1: I said, well, let's go just check it out, and
1:36:30
Speaker 1: she said yeah sure. And um and in the parking lot,
1:36:34
Speaker 1: you know, you're you're worried about what the uh. We
1:36:37
Speaker 1: go to this dealership, which is the only one in
1:36:39
Speaker 1: Fairfield County that has this car. And ironically, twenty years ago,
1:36:43
Speaker 1: when our kids were young, we bought a Dodge Caravan
1:36:48
Speaker 1: and uh and I and I said a joke to
1:36:52
Speaker 1: the sales guy because we're looking at caravans and grand
1:36:56
Speaker 1: caravans and the difference in you know, they're about fourteen
1:36:59
Speaker 1: inch is different in length behind the back seat, so
1:37:03
Speaker 1: there's still and but the difference in retail price was
1:37:06
Speaker 1: about a thousand dollars. So I said, oh that's how,
1:37:08
Speaker 1: that's why it's a grand caravan. It's a good it's
1:37:11
Speaker 1: a good grand bar and find humor in that. Anyway.
1:37:14
Speaker 1: So we go to this deal ship and the and
1:37:17
Speaker 1: the guy um uh walks out to the parking lot
1:37:20
Speaker 1: and all he did I couldn't see the car is
1:37:21
Speaker 1: he turned it on and it was he wasn't just
1:37:24
Speaker 1: the idling of it. I turned to my wife and said,
1:37:27
Speaker 1: that's it. And then we did a test drive and
1:37:29
Speaker 1: she loved it. She loved it. And hey, we've been
1:37:33
Speaker 1: married thirty two years, so I'm twenty three years and
1:37:37
Speaker 1: I'm so I'm the irresponsible one in the family. My
1:37:41
Speaker 1: wife is down to earth. Look, we've we've hung with
1:37:44
Speaker 1: each other and the four of us have gone out.
1:37:48
Speaker 1: I'm the one, Hey, what's this new restaurant. Let's go
1:37:50
Speaker 1: try this. So I'm usually the one who is pointing
1:37:54
Speaker 1: at the shiny objects and my wife is like, down, boy, sit, stay.
1:38:02
Speaker 1: So so we were driving the other day, uh, and
1:38:07
Speaker 1: this before the snow had come down, and we come
1:38:10
Speaker 1: across the new corvette, which is also about fifty grand
1:38:15
Speaker 1: about fifty horse and she's I go, is it just me?
1:38:18
Speaker 1: Or is that a really good looking corvette? And she's like,
1:38:22
Speaker 1: I would have that in the minute. The trick is,
1:38:24
Speaker 1: there are only a handful of cars left that you
1:38:26
Speaker 1: can buy with a stick shift, and if you want
1:38:29
Speaker 1: to drive us old guys who like to shift our
1:38:33
Speaker 1: own gears and not use a ridiculous flappy uh the
1:38:39
Speaker 1: paddle flippers um, which on my infinity is titanium. I
1:38:45
Speaker 1: don't need a titanium paddle shifter. I want a proper
1:38:49
Speaker 1: three pedal car. But anyway, UM, she's like, you want
1:38:53
Speaker 1: to go get that and we have another car that's
1:38:56
Speaker 1: all will drive feel free. We have the jeep. You
1:38:58
Speaker 1: could do that. The problem that I'm run into is
1:39:01
Speaker 1: so I start looking at the VET and then the
1:39:03
Speaker 1: next step up from the VET is the L T one,
1:39:05
Speaker 1: which is the six horse engine. UM. And then if
1:39:09
Speaker 1: you've ever seen that Jaguar F type, I have never
1:39:13
Speaker 1: I have never desired a Jaguar since the E type,
1:39:16
Speaker 1: which is spectacular. Every Jaguar ever since has been Yeah, okay,
1:39:20
Speaker 1: let me know when you make something during the during
1:39:25
Speaker 1: every era from the E type until last year, the
1:39:29
Speaker 1: new F type, which you can get the six cylinder
1:39:34
Speaker 1: with the stick. You can't. I don't believe you get
1:39:36
Speaker 1: the eight cylinder with a stick, but you can get
1:39:37
Speaker 1: the six cylinder, which according to UM, according to top gear,
1:39:44
Speaker 1: you really don't need more than that for that car.
1:39:47
Speaker 1: That's kind of so that My problem is the same
1:39:49
Speaker 1: thing happened with the boat whenever I start shopping. So
1:39:52
Speaker 1: my wife, right, So my wife grew up her brother
1:39:56
Speaker 1: had to sail both. The other brother had a motor boat.
1:39:58
Speaker 1: I will live on an island by the water. I
1:40:01
Speaker 1: want a boat. Who needs a boat? After not eleven
1:40:04
Speaker 1: she said, all right, go get yourself a boat. And
1:40:06
Speaker 1: then I spend the next seven years researching boats until
1:40:08
Speaker 1: I finally then the financial crisis hits, and then I
1:40:11
Speaker 1: buy a boat. I have a different relationship with my
1:40:13
Speaker 1: wife because I was at a little league game and
1:40:16
Speaker 1: we're talking to this woman's single mom with two kids.
1:40:19
Speaker 1: And she said, uh, and she had a boat, and
1:40:23
Speaker 1: she had a boat, single mom, two kids, right, And
1:40:25
Speaker 1: so my wife said really and uh, and told her,
1:40:30
Speaker 1: you know how you do it? You know, go to
1:40:31
Speaker 1: this marina blah blah blah and uh and she said,
1:40:34
Speaker 1: well that sounds great, and I we took her. I
1:40:37
Speaker 1: just I said, let's go. Look, we went and bought
1:40:40
Speaker 1: a boat that day. Really, Now, you didn't disclose to
1:40:44
Speaker 1: your wife that this woman has a trust fund and
1:40:46
Speaker 1: that you know the marina fees are five grand a
1:40:48
Speaker 1: year and it's not. Listen, the only thing that makes
1:40:52
Speaker 1: the toys fun is if your partner has fun with it.
1:40:57
Speaker 1: Because if it's a source of agitation or it's not
1:41:00
Speaker 1: worth it, and so I only want to do things
1:41:02
Speaker 1: like that that she's on board with because that's what
1:41:05
Speaker 1: makes it fun. I'm the same way we I occasionally
1:41:10
Speaker 1: have to twist her arm on vacations, and look when
1:41:13
Speaker 1: when I show her vacation goes gee, that's awfully expensive.
1:41:17
Speaker 1: I'm not talking like a forty dollar lux vacation package.
1:41:21
Speaker 1: It's like a six or seven or an eight thousand
1:41:24
Speaker 1: dollar vacation, which is not cheap, but it's not egregious
1:41:30
Speaker 1: for two people who work, have no debt and no kids.
1:41:34
Speaker 1: It's not a crazy number. Look if I said to her,
1:41:37
Speaker 1: look at this package, we're gonna go to Bali. It's
1:41:39
Speaker 1: only ninety dollars, she would hit me in the head
1:41:42
Speaker 1: with a frying pan. But when I show her, look
1:41:45
Speaker 1: this is St. Thomas, it's eight grands. Really, isn't that
1:41:49
Speaker 1: a lot of money? No, I take a week off
1:41:51
Speaker 1: a year. I think we can. But you're absolutely right.
1:41:55
Speaker 1: If your partner is not on board, it's right. It's
1:41:58
Speaker 1: it's not worth it. It's so she signed off on
1:42:02
Speaker 1: on the h on the house, she signed off on
1:42:05
Speaker 1: the boat. The smartest thing I did in my relationship
1:42:09
Speaker 1: was when we were dating. I taught her to drive
1:42:12
Speaker 1: a stick. So the Jeep is a stick, the BMW
1:42:15
Speaker 1: is a stick, and whatever replaces that car is gonna
1:42:19
Speaker 1: be a stick. And she couldn't be happier. And my
1:42:22
Speaker 1: wife can drive a stick. You have to because one
1:42:24
Speaker 1: day you'll be drinking and somebody has to get you
1:42:27
Speaker 1: home or uber well that's the other option, but then
1:42:30
Speaker 1: you're leaving a car in some restaurant or bar. That
1:42:33
Speaker 1: was literally my thinking. I said to her, I like
1:42:36
Speaker 1: a stick. Trust me, you'll learn to like a stick.
1:42:39
Speaker 1: But one day, listen, it's it's yeah, absolutely, you know.
1:42:45
Speaker 1: I could digress about automobiles over and over again. The
1:42:49
Speaker 1: five series BMW, if you've ever driven one, I think
1:42:53
Speaker 1: they're pigs. That's just my opinion outside of the M five.
1:42:57
Speaker 1: But about ten years ago, maybe it was close of
1:43:00
Speaker 1: fifteen years ago, we were gonna buy a five with
1:43:04
Speaker 1: a stick and it was one of the nicest driving cars.
1:43:08
Speaker 1: We drove it, we went home, we made an offer,
1:43:10
Speaker 1: it was accepted. The next day, the guy's wife hit
1:43:12
Speaker 1: a pole. That was the end of the car. But literally,
1:43:16
Speaker 1: that was just a beautiful car. And my wife says,
1:43:18
Speaker 1: I love this car. I never liked the five series.
1:43:21
Speaker 1: This drives like a dream. And the difference is, you know,
1:43:25
Speaker 1: the floaty automatic versus a proper versus a proper three
1:43:31
Speaker 1: pedal car where you're controlling the power man, you're controlling
1:43:35
Speaker 1: where now, where you are, you're not that far from
1:43:37
Speaker 1: Lime Rock. You should get up to that. We have
1:43:40
Speaker 1: not to race, but no, I mean to to do
1:43:42
Speaker 1: the either the advanced driving classes or put in some laps.
1:43:46
Speaker 1: It's ridiculous amounts of fun and you come away feeling
1:43:50
Speaker 1: like I'm a much better driver now because I know
1:43:53
Speaker 1: I know what I'm doing, all right. So it's way
1:43:56
Speaker 1: after six thirty. I know you have to take a
1:43:59
Speaker 1: train home eventually. My train just left, so I'm good
1:44:02
Speaker 1: for another forty five minutes. Um. Any other subjects that
1:44:06
Speaker 1: we haven't touched on that are relevant to the three
1:44:10
Speaker 1: or four listeners who are still hanging around at this point.
1:44:14
Speaker 1: To get a prize or award, that's right, anybody who's
1:44:17
Speaker 1: listened this far, send an email to tweet me or
1:44:22
Speaker 1: Jonathan Miller either at Jonathan Miller or I was even clever.
1:44:25
Speaker 1: I'm at rid Halts and and we'll we'll arrange some
1:44:29
Speaker 1: special prize for people whoever, at least you'll have our
1:44:33
Speaker 1: respect and admiration for listening to and that's got to
1:44:36
Speaker 1: be worth Where something did we Did we leave anything out?
1:44:39
Speaker 1: Have we probably left? And I think there is nothing
1:44:41
Speaker 1: left on the carcass, So I'm again. I started out
1:44:45
Speaker 1: by saying, this is a little different type of podcast
1:44:48
Speaker 1: where I'm not going to just put out a list
1:44:51
Speaker 1: of questions. We're just gonna kinda I don't want to
1:44:54
Speaker 1: say wing it, but have broad topics and and very
1:44:57
Speaker 1: Larry David like improv. You know, Curb is an improv,
1:45:01
Speaker 1: but it's it's loosely defined in the actual dialogue itself
1:45:06
Speaker 1: is within the framework is pretty improved, and I think
1:45:10
Speaker 1: we kept this fast and loosen. I don't know if
1:45:13
Speaker 1: I can I'm gonna be able to do this with
1:45:14
Speaker 1: Muhammed Alarian or somebody else like that. I think I
1:45:18
Speaker 1: have to be a little more structured like that. But
1:45:20
Speaker 1: by the way, if if you guys, if the listeners,
1:45:23
Speaker 1: that both of you guys who are still left listening,
1:45:27
Speaker 1: if you go to dinner with Jonathan and myself and
1:45:31
Speaker 1: our wives, this is pretty much dinner count It's it's
1:45:35
Speaker 1: boats and houses in real estate and cars other than
1:45:40
Speaker 1: the food and we actually we have some Bloomberg sponsored yep.
1:45:46
Speaker 1: This this is pretty much it. So I want to
1:45:48
Speaker 1: thank you again for doing this and being so generous
1:45:52
Speaker 1: with your time. Um So to to reiterate for for
1:45:56
Speaker 1: those people who want to find Jonathan's search and work
1:46:00
Speaker 1: in addition to Douglas Aleman, you'll see it at Jonathan
1:46:03
Speaker 1: Miller on Twitter or at Miller Samuel dot com, and
1:46:08
Speaker 1: the blog and the podcast regularly all showing up at
1:46:13
Speaker 1: Miller Samuel dot com. I would be remiss if I
1:46:17
Speaker 1: did not thank my recording engineer, Mark, my producer Charlie Vohmer,
1:46:22
Speaker 1: and today my head of my head of research, Michael
1:46:26
Speaker 1: bat Nick, got the day off because this was a
1:46:29
Speaker 1: less deeply researched than usual podcast. I'm Barry Ridults. You've
1:46:35
Speaker 1: been listening to Masters in Business on Bloomberg Radio. Michael
1:46:45
Speaker 1: Bloomberg is the founder and majority owner of Bloomberg LP,
1:46:49
Speaker 1: the parent company of Bloomberg Radio.