Is the Housing Market a Bubble? (It's Complicated) | 7investing
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Is the Housing Market a Bubble? (It’s Complicated)

April 23, 2021

The housing market has been incredibly hot as the pandemic has changed where some people want to live. There has been a drive toward bigger homes in markets that have generally been cheaper than places like New York, Seattle, and San Francisco. Are these changes permanent shifts in population? Will the bubble pop if prices make even more affordable cities out of reach for more buyers.

Simon Erickson and Matt Cochrane joined Dan Kline for the April 23 edition of “7investing Now” to take a deep dive into the housing market. That included looking at the impact of interest rates and 7investing Marketing Director Samantha Bailey joining the show to talk about being a millennial home buyer.

A full transcript follows the video.

 

Dan Kline: Simon Erickson going to share a little bit of a personal story here, but it’s very hot here in Florida, and it’s very dry inside. So I’ve been getting spontaneous nosebleeds, which is really, really not pleasant. So if anyone knows a cure for nosebleeds, share that in the comments, we of course, would like to take your questions and comments. Simon, what is going on in the city of Houston? We’re going to talk about that as a real estate market. But in general, there’s a lot of people moving there, right?

Simon Erickson:  There is yeah, Houston, Austin, it seems like all around Texas, I just had a conversation about people moving to Waco, it seems like a lot of parts of Texas are getting a few more residents these days.

Dan Kline: And good for Waco getting over what it’s most known for. So that is absolutely that’s a little bit like moving to, you know, Tehran or like someplace like the reputation is not great, but we’re gonna do a deep dive into the housing market when I say that, what do I mean, at the end of 2020. Home prices were about 15% higher than a year earlier. A lot of that was pandemic driven. And the growth is widespread.

About 88% of metropolitan regions, home prices have experienced double digit price growth. We’re going to talk about our personal stories on this, but I want to get into some of the numbers. And of course, mortgage rates are near historic lows. They’ve been hovering there for a long time. Basically, mortgage companies have had to pick and choose who they process like especially in terms of refinances. There’s been quite a big line. I know one of you, I don’t know which one because there’s no note the show, wanted to talk about mortgage origination so Matt or Simon, whoever grabbed that feel free to jump in.

Matt Cochrane:  Yeah, no, it just, it just shows you that like people are, they’re out buying houses. And I mean, there’s we actually have a chart for that just like mortgage originations have just exploded in the last year. They’re at like a, I don’t know if it’s an all time high, but it’s certainly a 10 year high. Sam do we have that chart that we can put up? But like, and there’s two huge, like, demographic trends behind that. And there’s a big overlap actually, between these trends. The first one is like there’s Hispanic homeowner households has risen by more than 700,000 in 2020, to nearly 9 million. That’s according to Census Bureau data compiled by the National Association of Hispanic Real Estate Professionals. That gain marked the biggest one year increase in data on Hispanic home ownership going back more than two decades.

And so why is that growing while their buying power continues to grow, Hispanic buying power continues to grow as individuals enter their early 30’s. The most typical years for first time homebuyers and Hispanics in the US have a median age of 30 in 2019, which was about 14 years younger than the median age for non-Hispanic white Americans. So while his Hispanics make up about 18% of the country’s population, they account for more than half of the country’s home ownership growth in the decades leading up to the pandemic. And that growth is expected to continue the Urban Institute projected that between 2020 and 2040, 70% of net new homeowner households will be Hispanic.

Well, and if you look at if you if you listen to like their ages, well that’s Millennial, that’s the Millennial age, right? That’s the Millennial demographic. And so the Hispanic population has a huge Millennial population within it. And Millennials are buying houses between the ages of 25 and 29. that age group, they’re increasingly buying their first homes and 30 to 34 year olds are doing so even at higher rates. In 2019 Millennials accounted for half of all home loans and that stayed above the 50% mark through the first month of 2020. Some studies state that America’s largest generation, the Millennials could account for as many as 15 million home purchases in the next decade. That’s a lot.

Dan Kline: That’s a lot is putting it mildly so we lost Sam Bailey for a bit there. So I promise you there was a graphic, it was very pretty Matt put a lot of work into it, but we will have to show it on another show. We are seeing Millennials buy more houses, we are seeing the Hispanic population buy more houses. But Simon we’re also seeing a population shift. And that’s at least partly driven by the pandemic that’s happening there in Houston, where your internet is scotch tape and, you know, soup cans put together. Why don’t you talk a little bit about what some of the factors are that are driving a change in where people live and higher prices in many, many markets?

Simon Erickson: Yeah, absolutely, Dan, and great points that Matt made also about the long term trends, the demographic trends, you know, Hispanics buying houses, Millennials, buying houses. I mean, the housing market as a whole is just this giant relationship between the supply curve and the demand curve, right? You can only build new houses so quickly, and you’ve got existing homes that are out there.

And so when you’ve got more buyers that are starting to buy homes that pushes up the prices, which is exactly what we’re seeing right now. And so in addition to what you just said, and to your question, Dan, is we have a migration of jobs too, and this was kind of accelerated by COVID, which is moving people out of San Francisco and into Austin. And that’s what we’ve been seeing here, you know, so closely in Texas, is you’ve got Tesla moving out there, you’ve got a lot of the tech companies that want to be in Austin, people that are coming from San Francisco, think this is amazing, because you can now buy a much larger house for less money.

But we’re also starting to see that into other markets as well. Miami, Florida is seeing the same thing. A lot of places in the south, we’re certainly experiencing the same thing in Houston. But another one of those long term demographic shifts is with, with the with technology, jobs, kind of shifting to other parts of the country.

Dan Kline: Yeah, we’re seeing more jobs become portable. And I know that as someone who’s worked from home for the best part of like, seven years, a couple years, and I looked around and went, why exactly do I live in Connecticut, where it’s cold and uncomfortable? And that’s when I turned to my wife and I said, Do you really like your job, like, maybe we should move, and we started looking at what we could buy and for what we were spending in Connecticut, we could buy the condo, we’re in the process of selling, it was a downtown condo, walking distance, everything we could live in a sort of small city, which was always a dream of mine, tons of restaurants, tons of bars, things to do, and the lifestyle appealed. Back then not many people had that option. Now an increasing amount of people are having that option.

We’re also seeing a, let’s call it a premature shift to the suburbs, people tend to shift to the suburbs as they retire, or as they have kids that sort of no longer want to sleep in a drawer in their New York apartment. We saw those people during the pandemic go, I don’t want to live in New York City and spend five grand a month for a two bedroom while I’ll go live in Jersey City or someplace that’s you know, or Connecticut or wherever it is.

We’re seeing those multiple types of migrations. Some of it is job driven. Some of it is lifestyle driven. I’ll throw this to Simon. Simon, do you think this is a long term trend or that many companies are going to realize that they actually want workers to be back in the office at some point? And maybe, maybe this doesn’t become this whole work wherever you want revolution we’ve had for the past year?

Simon Erickson: No, I think those are long term trends. Dan, I think that it is definitely a migration of jobs to being remote. I think that some of that comes back, that is no doubt in my mind, a long term trends developing and the demographic trends that Matt talked about too are also long term trends.

If I could spend a moment to speak about some of the short term impacts to the housing market as well, I think that both of those are even more accelerated by COVID. And by of course, interest rates. Matt mentioned Millennials and Millennials are buying houses. Yes, of course, that’s a long term trend that people are getting older and buying homes and having families.

But in addition to that when you’re getting loans that are sometimes 2.5% or 3%, for a home, yeah, you take advantage of that when the money is cheap. And I just read a study a couple of days ago, that was showing that Millennials in particular now have a very, very high savings rate due to COVID.

And in fact, maybe we can try another chart here. We got a lot of charts for this on Sam. But if you can show up the Federal Reserve data that shows the personal savings rate, there it is perfect, Over the last, what is that 20 years or so, you can see we typically have people saving about 5% of the income that they make in any given year. Right. And the left hand side of this chart that they’re looking at how that’s kind of just inched up in 2010, 2015. And then, of course, the spike from COVID. We’ve had some periods of COVID there that people were saving 30% of their paychecks, just because they had nothing to spend it on. You couldn’t go out and do anything. And that’s settled down, Dan, but we’re still seeing it above 10%.

Thanks very much, Sam for the chart. There’s part of that is is especially Millennials that say hey, I don’t know what to do with my money. I’m sitting on a lot of cash right now. 57% of Millennials say they have more than $10,000 in their bank account right now compared to 41% a year ago. And so where do you put it to use? You go after real estate which is at historically low interest rates.

Dan Kline: There’s only so much you can spend on Grubhub there are only so many dumb purchases you can make on Amazon. I don’t think we’re playing up enough in the overall housing market, the incredible benefit of low mortgages. So Sam if you want to share that chart, I will share that when we bought our first house. My mortgage rate was roughly 8% when we bought our most recent house, our mortgage was like 3.75%. And now, Matt, you can see this better than I can met where our mortgage rates coming out right about now?

Matt Cochrane: They’re almost right at 3%. And that’s like, I mean, that’s just at a low from. I mean, like you said, Dan, like, I mean, when my parents bought a house in the 80’s, I mean, the mortgage rate was probably in double digits, you know, and even the last 10 years, while interest rates have been very low, we’re at a like, you know, this last year, we’ve seen a new 10 year low. So even amongst this period of historically low interest rates, we’re still at a new all time low.

Dan Kline: So we’re gonna see some long term shifts that in a minute, we’re gonna bring in Sam Bailey, because we’re going to talk about Millennial home buying with someone who is a Millennial. But the one shift that I think that gets overplayed, and Simon, I’ll get your opinion on this, because you live in a tech city.

There’s been a lot of talk. And of course, we’ll take your questions and comments, we see them piling up a little bit. There’s been a lot of talk about sort of like the death of New York City and Seattle and San Francisco. And here’s the reality, available apartments for sale in New York hit like a 10 year high, it was still only like 22,000 apartments. Yes, it is easier to rent an apartment in New York and rates are down.

But you have to put that in perspective, when my brother lived in New York in a one bedroom, that was $5,000 a month, he is now living in London, in a much nicer two bedroom for less than that. So New York, Seattle, San Francisco were very, very expensive. And there’s some pullback, but it’s not like you’re gonna walk into New York and buy a, you know, two bedroom on the Upper West Side for $400,000, you’re gonna spend maybe $780,000 instead of $800,000. These aren’t giant collapses, and all the reasons people wanted to live in those cities.

You’re not seeing tech companies pull out of Seattle, they may move some workers to Austin, they may open in, you know, the greater DC area or Microsoft has people in Boston, you might see a spread out, you’re seeing Miami offices, and that makes sense to learn more talent, but I don’t think you’re going to see the leadership of big companies pull out of these cities. I don’t think you’re going to see you know, the financial services industries that are based in New York, I don’t think you’re going to see them leave New York.

Now, might some of them move some offices to Stamford, Connecticut, or White Plains? Yeah, that’s been happening. So I do think you’re gonna see a spread out. Simon, you talked about how in Houston, you expect to get some business. When people get fed up with the traffic in Austin, I feel the same way here in West Palm. I think they are building office space, a top tier office space, multiple buildings, and way above market apartments, you’re not building $600,000 two-bedroom apartments, because you think the existing populace is going to buy it. You think there will be some shifts Simon, which of these shifts are permanent? And which are sort of being overplayed?

Simon Erickson: Man, what a great question. I mean, we kind of think migration like you remember, remember the the shale boom of the kind of you know, North Dakota and South Dakota, where just everybody was flooding into those areas because the price of natural gas was going up. So they’re all the energy companies were sending people out and paying them $200,000 to $300,000 to go out there. And it was just a spike that was not sustainable. It did not last, it’s the commodity price, it was cyclical. The question here is, if people are moving from San Francisco to other areas, those going remote doesn’t just mean going remote anywhere, right? That’s a big jump to go from, from San Francisco to Topeka, Kansas, or Oklahoma City.

But if there is a surrounding ecosystem, so to speak, you know, you’ve got accelerators, you’ve got access to financial capital, if you’ve got, you know, angel investors, people that want you know, like minded tech people, it’s kind of cities are trying to create these innovation hubs, which we’re very aware of here in Houston. And I know that from living in Austin, Austin is exactly the same way where you try to attract those jobs, you try to attract those people. But you also put a lot of money into supporting entrepreneurs and kind of starting that same startup mentality.

And so I think that you’re right Dan, that this isn’t just happening where people are migrating all across the world, you’re starting to start seeing these hubs kind of popping up. They might not have been thought of as tech, entrepreneurial cities like Houston or Miami might have been thought of differently 20 years ago than today. But I do think that there’s going to be a lot more attention to local governments and kind of the surrounding ecosystem that’s supporting entrepreneurs and startups because all of that bubbles up in terms of housing in terms of the community.

Dan Kline: You also need physical infrastructure. So besides housing, you need internet. And so there are opportunities there. We’re already seeing T-Mobile take advantage. T-Mobile is going into underserved internet markets and putting in 5G. Now, that probably doesn’t mean downtown Houston, but if you’ve ever been to Houston, it is a sprawling metropolitan area that frankly, so is Orlando or West Palm Beach. There are lots of places you could live as a tech worker adjacent to those cities that are underserved when it comes to internet.

So you’re gonna see opportunities, you know, do I I think the Comcast’s of the world, and not too bag on them, are necessarily going to take advantage. No. But I do think T-Mobile has been very proactive in identifying areas. They’ve really expanded into rural New Hampshire. Why? Because people who work in Boston might have moved to rural New Hampshire because houses are cheaper. And if you only have to go in two days a week, that hour long commute, which turns into two hours, because Boston is a terrible traffic city becomes much more viable.

So when people are looking at investing plays here, yes, there are some home builders you can buy there, obviously, some suppliers, but you can also look at who’s going to take advantage of gaining new customers. And if you look at companies that have gained the most new customers consistently, it’s been T-Mobile, I’ll joke a little bit. There’s a massive opportunity for Domino’s and Chipotle and Starbucks because I’ve driven around Texas. And when you drive around Texas, you actually see them serial constructing look-alike towns, and then you drive four miles down.

And you’ll see roughly the same town and it’ll have this similar town center with a grocery store, a Starbucks a Chipotle, a whatever, you’re going to see a population shift that adds opportunity. Now, does that mean suburban stores that served office buildings might close? Yes, you’ll see, you know a little bit of that shakeout.

But I want to talk personal experiences on the home market and bring Sam Bailey in. So all of us, I’ve bought something like 18 homes in the past, like 20 years, and I’m in the process, I just sold my condo, and I’m trying, or haven’t sold it, we’re under contract, and I’m desperately trying to buy a resort property.

And we literally made an over-offering price bid that we don’t expect to be accepted. So we have a cash bid above what they’re asking, and we don’t expect to get it. But Sam, you’ve only lived in your house for a few years. And you’re looking at the situation of, Oh my God, I could sell my house for dramatically more than I paid for it. But there is a drawback to that. Right?

Sam Bailey: Well, that’s we were saying we could sell our house make an enormous profit. But where do we go, we can make this have all this extra money in the bank and be homeless. So that kind of defeats the purpose of, you know, having a pretty flush savings account.

Dan Kline: And that is, so Sam’s house is worth roughly what $200,000 more than you paid for it.

Sam Bailey: Yes.

Dan Kline: And that difference could buy you a perfectly nice home in many parts of the country. The problem is you have physical ties to where you are. So as we see this market shakeout there are going to be people who can take advantage like you’re seeing some some smaller states or some states with less population, offer tax incentives, or sometimes flat out payouts for people to come live there. Go live in Vermont, and we’ll give you $12,000.  I don’t think that’s still in existence. But that was a program early on in the pandemic.

Matt, I’ll come back to you here. Is there anything else you’re seeing? And then we’ll take some of the questions and comments. And Sam, feel free to stick around if you’d like?

Matt Cochrane:  Well, the only thing I would say Dan is you always have this this perfect storm driving up housing prices, you have long term trends, like demographic trends, where Millennials are buying their first homes, you have short term catalysts like COVID, where people wanted to move out of the city and have a house with a backyard during like stay at home orders and things like that.

You have low interest rates, another short term catalyst, and you also have like a lower housing supply out of the great financial crisis, home builders have not ramped up their their home builder, the number of new homes being built for almost a decade. So you have like a lower number of homes like new homes being built than you might have had historically.

So you have this like almost this perfect storm like so our homes an inflated asset? I don’t know. Like I mean, with the low interest rates, people can afford more, more home for the same monthly payments. And there’s a lot of you know it at the end of the day, it’s gonna be a supply and demand question. I don’t know that I don’t think they can go up like this forever, obviously. But like, you know, I don’t think it’s a it’s a bubble by any means.

Dan Kline: And here’s the bet you’re making. So it’s a bubble in some markets. The example I’ll give is a mutual friend of ours is looking to buy a very high end home in the Orlando area. And they’re priced double at what they were a year ago, because there’s so much interest and at a certain price point, it almost doesn’t matter to people. So that is a bubble that could pop. The bet Sam would be taking and Sam this is why I wanted you back on. You could in theory, sell your house and rent, maybe live someplace less nice, less comfortable.

If you believe that two or three years from now the Houston market is going to burst and you can buy back in. That’s essentially what my wife and I are doing. But we’re doing it with the idea that our geography once we don’t have a kid in school doesn’t matter as much so I could move anywhere within like an hour radius of her office. And that gives me the ability to move to markets that are less expensive. If you’re stuck to one market with kids in school, you have to bet that that market is going to tank and Simon I do not expect that Houston is not going to be a long term climb. Do you agree?

Simon Erickson:  Oh, go ahead, Sam. I’ll chime in too, but go ahead.

Sam Bailey:  I don’t know what I missed already. But Simon and I were talking about this before the show that some of these tech companies don’t want to go to Austin anymore. And they’re coming to Houston. So I don’t know if we’d be able to buy back in. So we’re just going to hold tight and hope that that’s the right decision.

Dan Kline:  Yeah, I think

Simon Erickson:  The biggest winner is if you want to retire, right? If you’ve if you’ve had a house in the city, and you’ve been commuting for 20 years, and you say, Gosh, my house is worth $200,000 or $300,000 more than I paid for it. And you know, we’re gonna put that money right into retirement and I don’t really want to go back to work when they start sending me back to the office. Again, that’s the best case scenario. Maybe that has an impact on the labor markets. We’ll see.

Dan Kline: I also think we’re gonna see some new innovation here. We’re gonna take Mike [name not known] question on lumber after I finish here. But one of the buildings that’s built near me, it’s actually at the base of that high speed train we were talking before, it’s literally on top of the station. And it’s tiny apartments and tiny apartments had generally been something that sells for vacationers, or low income housing. These are very expensive, like $2,000 a month, you know, 300 square foot apartments, based around the idea of that there’s communal space, there’s a pool, there’s a clubhouse, and that younger people might live there, because most of their living is going to occur outside. It’s, you know, the house is like, it’s kind of like your room on a cruise ship, like, yeah, you go there to change and take a shower. It’s not really that important.

I think you might also see and I’ve talked about this before, some co-living spaces with the idea that you might live two hours outside of San Francisco or Seattle. And frankly, two hours outside of Seattle is like six miles when you look at the commute. And you might live in a house that’s still crazy expensive, still $800,000 for three bedroom, but three or four days a week, you might sleep at sort of a modified hotel where you have like a sleep bunk and everything else is shared space. There’s obviously legal concerns there and, and lots of things you have to do.

But I do think you’re gonna see some shifts. You might even see some companies operate commuter flights where you know, Monday morning, you get on a plane in the Las Vegas area and fly into LA or San Francisco or wherever, work there for the week, because it’s much more affordable to live in the Las Vegas area, you can buy a really nice house for a couple hundred thousand dollars, you can’t buy a really nice shoe box for that in San Francisco. So I think we’re gonna see big changes.

But there are some other pressures on the housing market. Sam, if you want to bring up Mike [name not known] comment on lumber, we are happy to take that.  “Lumber prices are up 230% in the last year, fixed costs for building an 1800 square foot house cost $20,000 to $25,000 more now than a year ago”. Matt, you’re going to talk about this.

I’ll say I have first hand experience on this. I used to buy wooden planks for scaffolding when I worked in my family business. And I would have to constantly negotiate, you know, with with my aunt who was essentially the bank who runs the company, when prices were low, could I buy some and just sit on it because when prices were high, they could double and you’re still renting it at the same rate. But Matt, what’s your take on how this is impacting the housing market?

Matt Cochrane:  No, it’s absolutely right. I mean, there’s not too much to add. I mean, like lumber prices are absolutely up. A lot of commodity prices are up in the last year. Now a lot of those are coming off of like we’re coming off lows, but I mean, like there’s no doubt like lumber prices are up a lot. There’s a meme the other day going around on on like some Twitter accounts like you know, where there was a picture of a guy going down the highway with a truck loaded up with lumber.

And the caption was I passed a billionaire today on the way to work, you know, lumber prices are just an extraordinary amount over the last year, there’s no doubt there’s no doubt like building costs like that will absolutely. You know, we’re talking we already talked about home builders building less homes, well, you know that those kinds of things are going to make home builders, like more reluctant to like really ramp up their inventory in schedule two, because they’re going to be investing a lot of money right now in these kinds of supplies to build houses. So all these things like will definitely pressure the market

Dan Kline:  Matt, a lot of houses here in Florida are built with cinder blocks. In fact, I think anything new of a certain in most areas has to be built with cinder blocks. That doesn’t mean there’s no lumber but there’s significantly less lumber than a house in say, Massachusetts, do you think we’re going to see, you know, new building materials and sort of added innovation in that area?

Matt Cochrane:  I have no idea. Possibly, possibly. I really don’t know. It’s it’s definitely possible, like cinder blocks and concrete really all I know, I’ve lived in South Florida almost my entire life. But like so, so who knows?

Dan Kline:  I don’t know. I actually think you’re going to see an increase in modular homes. I don’t mean modular homes like mobile homes. I mean, a home built in a factory that gets put on a foundation that becomes something permanent. I want to take Max Lucas’s first comment and then Simon, I’ll let you pick a comment to take as we close up here.

“In my town of 300,000 in Washington state, we saw our housing inventory which had stayed steady at 1500 for over the past 10 years, and is now at 150 homes available down 90%”. Yeah, this has been happening all over the country, especially places that have infrastructure that are nice places to live. Prices in, say, like, you know, the major cities in the Carolinas have gone up dramatically, because you’ve got a combination of decent weather and low prices. Simon, I see a lot of comments. So feel free to tee up whichever one you’d like.

Simon Erickson: Well, maybe one from Mike, you know, Mike’s got some great comments on the site. And the one that I like is is one that he says, “People might want to buy a new house, but will eventually be priced out housing looks like an inflated asset”. Yeah. So I mean, like, what is the long term or short term trend, if people are moving to different cities, and businesses are moving to different cities, I think my, my sneaky play on this as an investor might be Airbnb.

And I say that because as someone who traveled basically every month for four years to conferences and to businesses to speak, and get interviews. Unless you were wanting to pay $600 for a courtyard Marriott, just to be close to the conference dinner, you had to stay at Airbnb. And people were super excited to have guests that were trustable, you know, pay them for those nights. Yeah, because it helped them offset their own costs, too. So we’re seeing inflated housing prices and kind of new pockets of people moving, I kind of think this distributed Airbnb model might have kind of some interesting implications for that.

Dan Kline: You’re also seeing a lot of investor money, buy homes that previously would have been owner occupied, and they’re putting them on the long term rental market. We’ve gone through this before, but where I’m living now, basically, if a unit comes up, it has three or four offers sight unseen, you know, and that’s not typical in rentals. So we there were places where we wanted at least four bedrooms, where we couldn’t see a four bedroom unit, we would literally just have to make an offer based on a floor plan and some pictures.

And we weren’t willing to do that. So it was really tricky to find a place to live. You know, right now, there’s plenty of one and two bedrooms. But when you get into three and four bedrooms, it’s very difficult because you did have an influx of people which may not be permanent from New York who wanted to live in Florida during the pandemic, and the prices here and I’m paying $2,500 a month for a four bedroom 2200 square foot house with a pool and a luxury gym. In New York. That’s a studio.

So you know, the prices seem very, very low, hard to know. And from an investing point of view, I’m not so sure I’m buying a four bedroom house as a rental in an area that, West Palm is not a touristy area. So that might be a different play in say, Orlando or someplace where you could Airbnb it, or you you could you know, rent it to a Snowbird, seasonally. So I do think people should be careful with their investment.

We’ve got a couple of comments about inflation, “inflation is a risk”. And Matt, I know you want to talk about this. But I don’t view inflation is that much of a risk. If you’re buying a home that you intend to live in for the long term, if you’re buying a home to flip it, inflation is a risk if you’re buying a home for three to five years, absolutely short term market conditions. But if you’re buying a home to live in, you know to raise your family, I’m not so sure you really want to factor in because as much as you have to think about prices, you also have to think in what value did I get on this home? Did I raise my kids here? Did we enjoy the backyard? You know, did Matt’s kids play in the pool? Whatever it is, but Matt, I know you want to comment on this one as well.

Matt Cochrane: Yeah, absolutely. So like, what I would say is it’s like actually, I think like buying a home on a long mortgage at a low interest rate is a terrific hedge against inflation. If you’re really worried about inflation, and trying to predict the inflation is above my paygrade, I do see reasons why there are concerns for inflation. I don’t know if those reasons are going to come to fruition, because there’s a lot of like factors at play there.

But if you are concerned about inflation, I actually think again, borrowing a lot of money to buy a fixed asset, at a very low interest rate is a terrific hedge in 30 years, the monthly payment you’re paying on your house, if inflation becomes a big thing, that payment’s gonna seem very, very, very small, and in your home value will have gone up because of inflation. So I’m buying a home, if you’re worried about inflation, I think is a terrific hedge.

Dan Kline: I’m an aggressive home buyer and seller, my wife and I literally moved buying and selling the first 11 years we live together and we’ve done it four or five times. And the idea was I would look at the market, I would see that we could sell our house at a significant premium. And that either unlocked a nicer place to live for us or put some cash in our pocket.

So that’s kind of what we’re doing now we’re selling out at a pretty significant premium on what we paid about 50% higher than we paid and then we’re going to buy an income producing property and in theory, use that money that we produce to, at some point, buy back in when the market where we live has come down and our needs become more flexible in a year or two when my son is no longer in school. I want to close out I’ll give Simon a chance to to make one more comment.

Simon Erickson: Dan, I just wanted to ask, did you say that you bought 18 houses into 20 years? Did I hear that correctly?

Dan Kline: I think that’s roughly. I think that’s roughly the number if you count. We owned a vacation property in West Palm before we lived here. We also currently own a manufactured home in the Orlando area that we will sell, once we buy the place where we’re looking. Yeah, and Simon, I am kind of day trading houses.

Simon Erickson:  Impressive. That’s impressive.

Dan Kline: You know, when you look at an asset, we only got burned once we in 2008, we needed a nicer place, we bought it. And the builder paid our mortgage for four months. And it took us the full four months to sell our existing place because the housing market crashed. We didn’t take a bath, but it wasn’t great. And when sold our house in Connecticut to move here.

If we’d sold it about three months later, we probably would have done about $30,000 better the market really, you know, caught on fire. But we sold our vacation property here that we paid $80,000 for which we sold for I want to say $113,000. So we made up a lot of what we did, but I do look at you know what is in my hand, how many chips do I have to put on the table. And if I can turn it into some cash, or in this case, the vacation property we’re looking at, we’re gonna own fully so it’s kind of a hedge against retirement or things going wrong. But Simon Erickson, I will give you the last word before we move to What We’re Watching.

Simon Erickson:  No great points, I don’t actually have anything else to add. I think we hit the high notes. This is a trend you got to keep an eye on for what’s long term and what’s short term and play accordingly.