What happened?

Well, unfortunately, mortgage rates went the wrong way.

Um, early in the year, in 26 in March, we actually started seeing rates come down, and it...

And really, there's always been a rule of thumb.

If you have a 50 basis point change in direction of rates up or down, that could be a catalyst, and I think we did see green shoots more in the resale market.

As we know, the builders are already offering 499.

But I do think that the prices have been coming down, and that really hasn't been as significant as it might be nationally.

How is that gonna change the dynamic in the builder sector? And also, do you think that's actually gonna help make housing more affordable?

Yeah, so talk a little bit more about that, about the household formation and how you think about that longer term from a secular standpoint as it relates to your bailiwick.

You know, we have been in the camp and recently published a report called A Decade Divided that we are... fairly in balance as a nation right now.

So the rhetoric around that we have a housing shortage, 3 million, 5 million, depending on who you're talking to.

We don't hear as much rhetoric when you have empty houses and empty apartments that they're having difficulty filling up right now.

But clearly what we've seen and what the work we've done is that we are seeing significant population deceleration.

So you have three inputs.

Birth rates are below replacement right now.

So, do you think that that... shift in just a desire to want to own is also secular, or that's just a sort of a vestige of things that happened during COVID?

um Ivy talk through this slide for a moment as it relates to you know what this is showing because it's just such a the the thing that struck me about it is it's not that long ago that this number was wildly positive close to two million and now we're down to almost flat

Yes, unfortunately, it's not a positive trajectory as we know, and it's quite troubling.

I think it starts with the three components I mentioned, birth rates.

Young women today are opting to have children later.

Part of that is assumed because they're pursuing higher education.

They're also dealing with uncertainties in the economy and affordability concerns, inflation.

So many are opting to be one and done or not at all.

are people missing the value of real estate as it relates to an inflation hedge as they look at nominal returns on real estate rather than looking at it from an inflation adjusted basis

What do you see from the data? What do you think is going on?

Well, you know, July was the second month that we saw sequentially, uh, slowing, or se- sequential declines.

Prior to that, we had seen s- what I'd call green shoots.

So definitely seeing things soften a bit.

Um, overall, inventories were down about 1%, which was the first tick down in inventory since '23, and there are markets where we've seen really definitely improvement, like Miami for instance, and San Francisco.

Inventories are down 17% from a year ago, where other are still up double digits.

So I think it's really dependent on the market, Kelly, and we are seeing a lot of choppiness, and mortgage rates keep moving higher, and affordability is still a big problem.

I don't know if there's any national trend to glean out of this."

Mm-hmm.

And so even though demand is necessarily not that strong, there is more demand than supply, so home prices are rising.

So an example would be if you looked at Hartford, Connecticut, that compared to inventories pre-COVID, they're down 80% to- compared to where they were in, in '19.

So home prices are up mid-single digits there and likely to continue to rise.

I live in Cleveland, a similar story.

Really no development.

Home prices are still up mid-single digits.

So we'll, we'll, we'll pick up on the why do you say not very promising?

But, uh, w- which of those four things is gonna happen? It seems like all those things are going the opposite direction.

Well, I think right now the way that you'd position it is that there is a ton of inventory on the ground, spec inventory.

And let's just pick on a market, let's say in Dallas.

And that inventory, that standing completed specs or partially completed specs, is gonna continue to put pressure on price in those local markets where consumers are seeing all these for sale signs and, you know, partially to fully built completed homes.

And until you work through and absorb all that spec, then you really can't see the light at the end of the tunnel.

So that has to happen first.

We need the builders, and they're pulling back on starts now because it was like full speed ahead, let's keep bringing more product to market, and now they're seeing that-The writing's on the wall.

I just, I see my neighbor got two months free rent, so if I'm gonna renew, not only is it going up, you're coming down to market, market rent." So I, I, I wonder if that's gonna kinda, I don't wanna say crash, but if that's gonna come crashing closer to the, the baseline market rate.

How much of that is rising oil prices making, um, you know, consumers worried about spending on big-ticket things like a house, and how much of it is just interest rates being sticky and stubbornly higher than maybe people were expecting as they were looking into the spring selling season?

You know, I think we have a tale of two price points still.

The, you know, move-up buyer tends to be more, uh, in tune to what's happening, whether geopolitical risks or what's happening from a, you know, high-end anxiety around job losses.

But the, you know, I guess high-end is ha- continued to outperform, and I think in certain markets it's actually still doing fairly well.

So as we have a tale of two price points, we still have a tale of two geographies, and I think that the first time buyer, it's really about rates.

You know, I think that the rate movement, you know, has been relative to, um, I guess where we were last year.

We're down a little bit, but, you know, we are down call it 25 basis points, but it's 6.4% on 30-year fixed.

Where specifically, uh, are there opportunities being generated by the spring selling season, and where are things still pretty high and supply pretty tight?