Digital Mortgage 2021 Keynote: The Economic Forecast and the Unintended Consequences on the Mortgage Industry

Elliot Eisenberg, Ph.D., Acclaimed Economic Expert and Former Senior Economist at the National Association of Home Builders, GraphsandLaughs, LLC

Transcription:

Heidi Patalano: (00:07)
Good morning and welcome to Day 2 of Digital Mortgage. I'm Heidi Patalano, editor in chief of National Mortgage News on behalf of the team here. I wanna thank you for joining us for, uh, what promise to be, what promises to be another great day of conversation. Um, first of all, it's my pleasure to introduce the, uh, first keynote of the day, the economic forecast and unintended consequences on the mortgage industry presented by Dr. Elliot Eisenberg. Often called the standup economist, a claimed economic expert, Dr. Eisenberg specializes in making the minutia of economics entertaining and relevant, uh, with expertise and consultation sought out by federal state and local governments, um, and legislators, hedge funds and investment advisory groups. Uh, Dr. Eisenberg is an established authority on national and global economy and its impact on various industries. Currently as the president and chief economist and founder of graphs and laughs LLC, he conducts studies and provides economic forecasts that are featured in daily summaries on his blog. The author more than 85 articles, his research and opinions have been featured in leading publications, including Bloomberg Business Week, Forbes and Fortune. So please join me in welcoming Dr. Elliot Eisenberg.

Dr. Elliot Eisenberg: (01:28)
Wow. Thank you so much for that warm welcome. And, and let's, let's get to the data there's so much to talk about. It's crazy. And I'm gonna talk about, you know, a lot of housing, some of the economy, but the most important thing I want to get through before we get anywhere is the economy's fundamental, really good GDP growth in Q4. It's almost over. I know will be fine. Next year's gonna be quite good. Maybe be four or four and a quarter. We'll talk a little bit about that. This is an economy that's over the, the demand is too much. That's why we have inflation. This is objectively a good problem. It sure. Beats having a very high unemployment rate, let's look at the next slide. And the reason I say this is because GDPs composed of four terms, as you see the first one, household consumption 69% of GDP.

Dr. Elliot Eisenberg: (02:11)
It's doing great corporate investments and plant and equipment and inventories. The second term, 15, 16% of GDP. It's doing really well too. That's 80%, 80, you know, 85% of GDP if 85% of GDP doing well, it doesn't almost that almost doesn't matter what G government spending does or in brackets exports minus imports do so. We're going to have a good year. Yeah. Inflation, supply chain problems, labor problems. I get it right. Rising rent, not enough inventory of homes. Next slide. We'll talk about all that, but don't lose the forest for the trees, retail sales else. This is things that you buy that you bring home in a bag or Amazon or chewy ships to in a box. You can see that the trend, whoa, it goes way up. So here just before, when COVID starts, we collapse as you see. And then, so we fire half our workers or a quarter or whatever it is.

Dr. Elliot Eisenberg: (03:01)
And then demand goes, bonkers demand has completely recovered totally and completely. And then some supply, not quite so much. We'll talk about that. It's come back, but not as fast as demand. Next slide. So this is part of the reason we have this problem. Look at this graph. You see the goods. This is since COVID began since the month before COVID began in February, when COVID, wasn't a twinkle in anybody's eye, you can see the sales of goods are up 20%. This is not real. This is in with inflation, but nonetheless, this is a heady increase in good sales. And it, this 20% increase began in 2020. So already for a year, we've been having this really well above trends, demand for goods and services in the bottom right hand corners you can see have finally caught up. So our economy is now the demand for stuff.

Dr. Elliot Eisenberg: (03:51)
And our economy is well above what trend would've said two years ago when COVID began. And so it's hard to get workers there's been trauma and the, and all kinds of stuff going on. And that's why demand is here. And supplies catching up that gap is causing inflation that's and supply chain problems. And so on next slide, and look, look at Las Vegas. And this tells you how COVID influences our behavior. The first six, seven months of the year goes straight up and then a weakens for a couple months, cuz of COVID then by October, Hey, we're back with, to go again. People who are living with COVID, we, we do it as individuals, as households, as firms, as governments, right? As, as, as families, we all manage it. And each subsequent wave of COVID that we've experienced has been increasingly less economically detrimental or disturbing to the economy.

Dr. Elliot Eisenberg: (04:39)
That's why I don't see OCN mattering all that much. It's a little more contagious. It's less deadly. Yeah. Yeah. We'll get on with it. Next slide COVID is really going from the pandemic phase to the endemic phase will deal. Next slide please. And this is you put it together. Goods and services together. What do you have above trend growth. It's amazing. Yeah. Monetary policy's been wow. The expansionary fiscal policy's been really easy. Yeah. Yeah, of course. And that's helped drive this process that said when the push comes to shove and people walk in the store and wanna buy something and they can't get it it's because demand is super strong and supply just isn't there yet. Next slide. So, so consumers are very strong and look at manufacturing sentiment it's surprise high. They can't get workers, they can't get inputs. They can't get raw materials.

Dr. Elliot Eisenberg: (05:26)
They can't get parts. They can't get transportation services being a plane or a train or a shipper or, or a flatbed truck or whatever it is. But yet Institute of supply management's purchasing managers, index shows they're about as happy as they've ever been in the last 15 years with the exception of the last few months. So manufacturers are happy. Next slide. Maybe. Now we'll take this and look at services on the top panel. They're crazy happy. They weren't so happy in July, August because of the Delta variant coming and knocking wrecking their summer. And they probably went and took some, you know, went to a psychiatrist and got some Xanax or something to calm themselves down. But other than that, now it's very high. So we're saying, look, we can live with COVID. We'll be okay. Things will go on. We're all right. Next slide, please.

Dr. Elliot Eisenberg: (06:09)
The problem that we face that, that that's pervasive and I've already mentioned the supply chain problems. You can see it in the bottom right hand call owner with retailers inventory to sales ratios that went in yellow or gold. It's exceptionally low. We cannot get enough stuff on the shelves, in the trains, on the planes, in on the trucks, on the flatbed trucks in shipping containers, waiting to get somewhere. Things are just clogged. Everywhere. Supply chains are closed in China or Vietnam. People are sick in Mexico color. There aren't enough truck drivers in the us. Everything is a mess and this, this problem will persist. That's the problem. This is not a problem. That's gonna go away that fast. Next slide please. So you see in this picture here, how many ships are off the port of LA long beach? And it looks great. The blues way down, but the red has now increased.

Dr. Elliot Eisenberg: (06:55)
And the red means the ships are just parked are anchored, are anchored further out or they're or they're steaming across the Pacific ocean, much more slowly. So the problem continues. We are unable to unpack. We're unable to move. We're unable to transport and that's the root cause. There's increased demand too much demand. Not enough supply. Next slide. Um, next slide please. So what do firms do? Firms say we can't get workers. We can't get this. We can't get inputs. We can't get raw materials. Let's buy stuff, we'll buy whatever we can. Let's buy laptops. Let's buy intellectual property. Let's buy zoom. Let's buy a machine that makes hamburgers, you know, hamburger back and forth taking the, taking the, the hamburger meat and making a hamburger. And they teach the machine how to do this. This is labor saving. It's deflationary. It improves labor productivity. This and this is boost GDP.

Dr. Elliot Eisenberg: (07:47)
Cuz consumption goes up on the firm side firm investments in equipment, second term in GDP. Next slide. So this is a good thing. And corporate profits are spectacular. Firms are able to raise prices because they feel they have pricing power for the first time in 20 many years or 10 years or whatever it is. And we're producing more GDP with fewer people than we had than we did before. COVID began 2% more GDP, 2% lower payroll, total number of people in payroll. This is falling down to the bottom line as a result. What do firms do with the money? Next slide please. Oh, the, the stock market's doing well as a result, right? They're buying back shares the stock market's well up. This is an everything. Rally home prices are up. Stock prices are up. Bond prices are up used car prices for heaven's sake are up.

Dr. Elliot Eisenberg: (08:31)
So EV people are saying, wow, I'm so rich. Now I can retire. This is actually hurting the labor force, separate conversation, which we'll talk about briefly a little bit in soon. Next slide please. Household balance sheets are in great shape. They can afford to buy a house. People who were gonna travel to Europe last year. That didn't happen. How about going to a bar and spending a hundred bucks on beer with your friend? No, not gonna do that. We'll save the money and buy a house. Not led to a huge increase in housing demand among people who, before that really weren't able to get a house. Next slide. So bankruptcies are well down again. Bankruptcies for individuals in red corporations in blue. They're both way down and in 21, there's no evidence anywhere that there's this pent up demand for bankruptcy. Don't have a mortgage.

Dr. Elliot Eisenberg: (09:15)
Don't worry about it. Don't don't pay your mortgage. You have rent payment. Forget about it. There's a eviction Moy all over the country. Student loans, ah, take a break. If suddenly, if you don't have to pay your bills, suddenly it's a lot easier to get by. And then unemployment insurance and now job creations very strong. So the problem is largely gone. There's not gonna be households, have belly up a few. Sure, but not many next slide. This is a fundamentally solid situation. If you look at this graph year in terms of growth in 21, the consensus 5.7% terrific number next year, 4.0%. A really great number. Even in 23, the consensus is 2.4 slightly above trend we're going to decline is the economy slows down from the stemmy checks and the four savings and the pent up demand to a more normal situation. But this is not a bad slide.

Dr. Elliot Eisenberg: (10:03)
This is a return to normalcy. Next slide. Let's look at the labor market because it's nuts and workers. You can't get workers home builders. Can't get workers. Let's look at the next slide and see where we are here. Job growth has been very good. We've made up 18 or 19 million of the 22 and a half million jobs that we've lost. We've we will make up all 22 and a half million jobs in 2.7, five years a year from now, we will make up all the jobs we lost by contrast. If you look on the far left the.com bust, it took us four, four years to make up 3 million jobs in the middle of the graph, the housing bust, it took us six years to make up 8 million jobs. This will take us less than three to make up 22 and a half supply of workers are returning is really fast it's that the demand has gone way up, much faster because of some government policies that weren't all that good accidents and so on and so forth.

Dr. Elliot Eisenberg: (11:00)
Next slide. So as, and the unemployment rate has fallen precipitously. If you compare it to the.com bust and the housing bust the prior to they took much longer to go down much, longer years and years and years. This is lightening quick. And the reason for this next slide, please. And the reason is the labor force participation rate is declined. So I've given you a lot of good news, but now the bad news starts and labor force people dropped outta labor force. Home builder wants to find workers, forget it. You wanna build a multifamily house? You can't do it. There's no one to frigging hire. We need to get this, this labor force participation, right? What we need to I'd like to see it, get back to where it was pre COVID. If it did, there'd be 3 million more workers in the labor force. If they don't come back, the Fed's gonna have to raise rates to compensate.

Dr. Elliot Eisenberg: (11:48)
So why aren't they back next slide? There's a whole bunch of reasons. They're not back. They're not back because daycare's not available. They're not back because the government paid them to stay away. They're not back because they retired. They're not back because immigration policies changed and we've lost 2 million people. They're not back because 300,000 of them died. You put it all together. There's a lot of reasons why workers haven't returned. Fear of getting COVID. And so on. Now who's gotten the of this pay race. And this has been going on since 2016. If you look at this graph, it's the blue line. And what you see is the lowest wage workers have been doing the best since about 2016. And then COVID just drove it into overdrive. And you see now Amazon and all these firms, Costco and Walmart target all raising pay substantially to lure these workers back into the labor force.

Dr. Elliot Eisenberg: (12:36)
You remember, we tell them, oh, you're an essential worker and you pay them like a farm animal. They're not too happy, but then, okay, now we're gonna pay you more money. They've had a near death experience. Their mothers died, their fathers died. Someone's got sick. They've reassessed their world. They need more money to come back or they want to change their career. But lower age workers are making most of the increase in pay that we're experiencing. Next slide. That's not leading to all that much inflation because they're low wage workers, but inflation is here with a vengeance. No doubt about it. Next slide. Look at it. CPI way up. Blue headline, red core core, excludes food and energy. The question is, look at this graph. Look at the vertical increase on the very far right of the graph blue or the red, right? Either one, you just don't see that this is an exceptionally unusual situation.

Dr. Elliot Eisenberg: (13:24)
This doesn't resemble anything we've seen before in the last, I don't know, 40 50 years. I mean, in the middle of the graph, you see a little bit of the blue declining rapidly and then coming up. But to do this exceptionally rare, this is a weird confluence of a huge increase in demand and supply. Simply unable to catch up. You could offer a car company a million dollars and they couldn't increase the car production. They make cuz they can't get ships and they can't get chips. For example, next slide. So the supply curve doesn't upward slope. It's it's it's vertical economist would say where you cannot elicit more output. Look at where the inflation's coming. It's very illustrative. It's coming in goods and energy goods are in turquoise blue, right? Turquoise. This is because a supply chain problem supply chain problems will go away. It may take six months.

Dr. Elliot Eisenberg: (14:11)
It may take 12 months. It may take a year, but they will go away. That that's the key thing. This is not a permanent problem. So if you're a home builder or you're looking to build homes and you can't get roof trucks, you can't get nails and you can't get washing machines, dishwashers, microwave, ovens, doors, windows, and there's a 14 week delay and there's allotment on everything. This will go away. And again, it won't go away right away. The inflation's peaking probably about now over the next couple of months, it peaks. And then it begins to go down. How fast it go goes down is the key question. Next slide that though the fed will have to wrestle with the other reason. I'm not terribly concerned about inflation. Although I am in the short run is look at disposable income on the very far right for the last couple months.

Dr. Elliot Eisenberg: (14:53)
What's it been doing? Declining, you know, declining, declining. Yeah. It's wages are up, but inflation's higher. So that's why a lot of workers aren't terribly happy cuz they're not getting the benefit if you will, of the wage increases that they're seeing because inflation's cutting it away. Next slide please. So what's the fed gonna do next hit let's hit forward. So the fed funds is right now between zero and a quarter point. Next slide. I think that end of this year, two weeks, nothing happens by mid next year. They raise it once next slide. And then by the end of the year, they raise it again. So I think the fed raises rates twice. The reason they don't, they don't raise three times is inflation will be subsiding come next, June, July, August. So there'll be less pressure. And the full impact of monetary policy takes 18 months to be fell.

Dr. Elliot Eisenberg: (15:40)
So the increases that we're gonna see in June, July, August of next year will be fully felt the end of 23. And by the end of 23, the economy's gonna be substantially slower than an is. Now you don't wanna have a slowing economies experiencing rising interest rates. I mean, that's something you want to generally avoid unless there's some weird labor stuff, which is possible. So the fed will see the fed will raise rates as fast as they have to, but as slowly as they can, hoping inflation comes down and solves the problem for them. Next slide. Now the fear do I have about in about inflation is rents. Rents are going up relatively rapidly. Again, no matter how you measure shelter, home ownership, owner occupied. This is owner equivalent rent. There are a couple different measures. They're all woo up. And it takes 12 months for these rent increases to show up in the CPI data cuz the way that the government samples the data.

Dr. Elliot Eisenberg: (16:32)
So there could be a few more months before it tops out. We'll see. But if rents rent are 30% of CPI. So if rents keep going up, this may force the Fed's hand, even if inflation elsewhere and the economy comes down. So we'll see this. And the other thought is mindset. Once workers begin to expect the 5% pay raise, cuz inflation's 5% next year, they're gonna want the 5% pay raise. Even though we don't know what inflation will be and that might create 5% inflation, then you have cost push inflation, which is very bad. And that's why the Fed's gonna raise rates to calm the economy down and importantly keep long term interest rates 10 year treasuries off of with 30 year mortgages based. Keep them down by telling people look we're on top of this. We're not gonna let inflation get out of the bag.

Dr. Elliot Eisenberg: (17:20)
Next slide please. Let's now focus our attention on housing. We've touched on it already in a, in a couple of spheres. Let's now go into it for real. Next slide, please. The problem with the housing market is you probably all know is a complete lack of inventory because we underbuilt tremendously. Since the end of the housing bust in 2008, builders just forgot to build homes. They had other things to do. They went fly fishing. They opened up a new business. They became dry cleaners. They went into artificial intelligence, whatever it is, facial recognition, they stop building homes. So we're short 3 million homes, 4 million, 2 million, 5 million we can argue, but we're short as a result of that next slide. Look what happens. Inventory has steadily declined for a decade and a half since 2007. Okay? In the middle of the graph, we can say that's the housing bus.

Dr. Elliot Eisenberg: (18:08)
There were many too many homes being built. People lost their jobs and so on. So ignore that. But look at 2013, the bottom third where it's a steadily declines, that didn't matter cuz no one wanted a house. Cuz the memories of the housing bus were fed, but then comes COVID and it puts everyone who wants to buy a house and there's fore and people who couldn't afford to buy a house can and you can work from home and the vigor O hits the Mixmaster and price a home skyrocket. Next slide. You can see it here. The problem is one of inventory. There's not enough homes for sale. This inventory that just shows you roughly if you move it across to the Y axis from, from where the arrow is in the top right corner, we're about two, three months inventory at that level annual price appreciations about 18%.

Dr. Elliot Eisenberg: (18:55)
And that's what we're getting inventory will eventually begin to rise. Rates will go up. People run outta money. Desperate autos will want a house will already purchase a house. And there won't be this driving demand for homes that we still see. I mean in places like Denver or for example, inventories four tenths of a month, four tenths of a month, this is crazy. Prices are up 20% and sales are down by a trivial five or 8% despite so sales are down slightly, but in the face of vast declines of inventory and huge increase in prices, the demand for a homes remains unsatiable in.

Dr. Elliot Eisenberg: (19:32)
So look at price appreciation. I think maybe we've seen the peak. If you look at the far right of this graph, you can see it's sort of curving down ever so slightly. So I would like to see price appreciation fall from now the upper teens or near 20 down to seven or eight or nine over the next 12 or 14 months, that would be more manageable, more doable. It's it's almost like you're you see a police man, you slow down the car. Something's gonna give here. You can't have 20% home price appreciation indefinitely. It's got to subside. It will continue to grow because the deficit and home construction and home inventory is is, is it seems perpetual. And home builders can't fix this per we'll talk about that momentarily, but I don't see 20% appreciation either. That's really much too much to stomach over a much long, over a long period of time.

Dr. Elliot Eisenberg: (20:20)
We've already had it. You've already had it rising for some time. It's gonna come back down. You can see in the graph, if you look at the graph and of various years of the graph, the peaks are they're very, very rarely sustained. So I don't think this peak is any different than the prior peaks it comes. And then it goes, next slide. Existing home sales are spectacular, spectacular. So they, they, they crash during COVID. We see that. Then they skyrocket like the Phoenix out of the ashes. Then they come down and then they go back up again. So of late on this graph on the far, right? There's a rising trend. This is remarkable in the face of again, as I mentioned in Denver, but it's true in so many other places, home prices are well up inventories. Well now yet sales don't see into be influenced in the slightest because it's just working from a home it's we've got more money it's oh, I used to live on the 13th floor in a condo, pushed the button, scratched my eye and died to COVID and maybe there'll be, and then Delta comes and says, whoa, there might another variant.

Dr. Elliot Eisenberg: (21:22)
Then OCN comes, oh, people who held out, didn't buy a house. Now finally throw in the towel and say, ah, you know, there's gonna be another variant and another and COVID is not gonna go away. And this nightmare's not gonna be quick over as fast as I thought I'm gonna be working from home longer than I thought let's buy a house and people there's this. And then there's demographics, which we'll talk about shortly. Next slide please. So there's U tremendous amount and look at more mortgage applications. They're well up again, as you can see on the very far right, it declines and then it goes up again. So we see the sales numbers are good here. We see mortgage application numbers are terrific. So again, it doesn't seem to matter. What's thrown at home buyers as long as there's a sensational demand price appreciation can continue at the high levels.

Dr. Elliot Eisenberg: (22:09)
But as the demands WANs, a little bit inventory will rise and then price prices will appreciate at a more slow at a slower poor English at a slower rate. Next slide, if you will. So this is, this is all pretty good news. Next slide please. Now this is the same graph I showed you a minute ago, but now I've overlaid every year of mortgage applications. One on top of the other. And if you look at this graph, look at the blue on the center, right? That's 2021. So COVID year it's comparing it to the red, the very high red that's the second half of 20, which is post COVID or COVID in, was already there. And you can and see the gap between the blue and the reds dig because the blue 21 is kind of back to where it was in 19 in purple, but then it begins to go up and of late it's approaching the red.

Dr. Elliot Eisenberg: (23:03)
This is saying, so we had tremendous demand LA half last half of last year, the first couple months of this year, that's the blue on the fall are left. And then it waves in March, April, may, June, July, August, and then it starts to ratchet up again. Maybe it's Delta variant related or now and coverage as well, but there seemed to be a weakening of demand and then suddenly it, it starts taking off and approaching the peaks of last two year. So sales are good pending, uh, uh, uh, uh, uh, mortgage apps are good. Next slide, please. This is clearly pending. Sales are also terrific. So suddenly in the last couple of months, there's been a noticeable increase in the, in the demand people making plans to buy a house, be buying a house pending sales, which are gonna occur in two or three months or first time mortgage applications, which are further behind in the process. Dr. Elliot Eisenberg: (23:56) But clearly there's remains insatiable demand. This I, as I said earlier, I think this demand slowly weakens at some point, but not a lot. And as inventory rises, price appreciation will come down. But this is certainly an incredibly strong area of the economy that will continue to experience strong price appreciation. Next slide. We can argue how much but good numbers home builders, they're happy out of their minds. You can see the graph on the top far right top right corner. They only were happier about a year ago when things were just unbelievably good and they were able to produce slightly more homes than they can now, cuz they took lots that were developed and drew them forward from 21 into 20 and from 22 to 21, as a result of that, now the covered somewhat bare and home production. Isn't really increas leasing at all. Dr. Elliot Eisenberg: (24:46) It's kind of flat like a pool table. We'll show that shortly, but home builder sentiment. Terrific. Next slide. And look at the inventory and the bottom in red, there's nothing to purchase. You want existing home, nothing available. We've talked about that short supply, you know, two, three months. That's why price appreciation 18% a year. How about going to a builder? Can I buy a home from you? No, there's nothing to buy. This data goes back to 1973. There's nothing out there. Next slide. So you can't get existing house. You can't get a new house. Why can't you get a house? Cause in because because regulatory costs are very high for home builders, about a hundred thousand dollars, low cost of a house is now a regulatory burden that should be reduced in some shape where for, but whatever next slide. That's the first problem. The second problem workers, we, they builders cannot get workers like all other industries, home construction employment is now higher than it was at COVID pre COVID. Dr. Elliot Eisenberg: (25:40) One of the very few sectors in construction that that's the case that having been said, they need more and they can't get it so you can't get land essentially. You can't get labor. Next slide. You can. There's also tons of renovation going on. Why home price appreciation is very high. Interest rates are very low. That's a magical formula for rental work out of floor out a pool, do a rental kit, a kitchen rental or a bathroom rental or whatever it is. So workers that could be building new homes are doing rental instead SIFI away workers. So land is a problem. Labor's a problem. Labor's a problem because of rental work. Next slide please. And lumber costs and input cost of gone and lumbers. Now back up again, lumbers. Well up, there's been flooding in British Columbia, washing out roads tariffs on Canadian soft with lumber imports went from 9% to roughly 18% dry. Dr. Elliot Eisenberg: (26:30) The price of lumber up. So input costs jam more and all these things collectively make it hard to build a house. Next slide please. So here, here it is. Lumber prices are now back up near their highs. This is the, uh, Chicago Meile lumber future for Jan 22. You can see whoa because of the, a little bit more demand and this lack of supply because not coming from British Columbia. Next slide please. So, and lumber prices are under pressure because there's, it's a very elastic industry. If demand is a little bit ahead of supply, boom prices go up and if demand little weaker, then supply boom prices collapsed. So you have this boom and this Bo that's been going on for quite some time. Next slide please. So lumber and so what do builders do? They build no cheap homes? The homes in red under 200,000 in the middle of the graph, 10, 12 years ago, almost half of all homes built were under 200,000. Dr. Elliot Eisenberg: (27:22) Now the bottom right hand corner, it's freaking zero. There's no entry level homes being in San Francisco for a million and a half dollars or in El Paso, Texas for 150,000. Nowhere can a builder build an affordable home next slide. And this is a problem down the road. So look at home starts. This is starts red, single fan declining from the peak at that peak a year ago. That's when buyer sentiment was spectacular since then, it's still very high, but it's come down because they're struggling to get land and labor and inputs. And so on multifamily and blue flour and a pancake and overall green, total construction, single and multi flat. So here you have price appreciation that's spectacular. And what you should have is builders building 2 million units a year and chipping away at that two or 3 million unit shortfall that develop over the last decade. Dr. Elliot Eisenberg: (28:10) Now they can't, all they can do is keep up with current demand. Therefore inventories are gonna remain tighter than they should because builders can't build enough units as many units as they should. Next slide. Credit's gonna get easier over time. This is from NBA will get easier. More people will go to buy a house. Next slide. That's gonna make it worse down the road and demographics are working to home builders favor right now and renters. This big cohort of persons, the biggest cohort in the us. They're 25 to 30 in five years. They'll be 30 to 35 prime home buying time. Credit gets easier. Demographics are easier or builders don't build enough homes. We have a chronic shortage. This is a great sector to be in. There's no question, price appreciation. Next slide. And I wanna close out this section by telling you why I see what's going on. Dr. Elliot Eisenberg: (28:57) Look at apartment vacancies. They're trivial. There's nothing you wanna buy a new home. You can. You want an existing home. You can't. You want a rental home? You can next slide please. How about mobile home? This is the simplest home you can buy. This is a single wide home home. The price has gone up from, from 52,000 to 75,000 huge increase. Most basic next slide, please. This is a double wide. It's gone up by 30,000 from 110 to 140. You can't buy a single wide. Can't buy a double wide. You can't rent a home. You can't buy an existing home. You can't find a new home. That's why home prices are up so much. Next slide please. We'll wrap it up with two oh refi. Activity's gonna decline. Of course, because rates are gonna dribble up a little, maybe 50 basis points by the end of next year on a 30 year mortgage. Dr. Elliot Eisenberg: (29:42) But that's enough to continue to weaken the refine. Move. Next slide. We'll wrap it up with two slides. Uh, oh, employees working from home. Look at this. The longer we go with this, working from home, people learn to like working from home. So it's gonna be harder to unwind this, which is gonna make home prices higher because you're not only live in your home after work. You now you sleep at work. You don't work from home. You sleep at work now. So you want a nice place to work. If they're gonna sleep at work. Next slide please. Now next slide. But conditions in the us economy. They're terrific. They really are. There's no real problem. GDP next year, 4%, maybe 4.1, 3.9. Solid next slide. Enter, wrap it all up. 20 Q is gonna be a good year. The Fed's not gonna raise rates for at least four months. Dr. Elliot Eisenberg: (30:25) They'll raise it twice. Next year, possibly three times. We'll see we should create 4 million jobs and all the jobs lost in COVID will be back by the end of next year. Less than three years, inflation will peak out now or over the next two or three months and then begin to subse. It's the how fast it subsides is the question and will determine how much the fed raises rates spending on services will rise as we get out of our home and travel and do all fun stuff. This is my name, my cell number, phone number, Twitter handle. I put out 70 words a day. As Heidi mentioned, the easiest way to subscribe is to take your phone. Text the word bow tie one, no H and no space to the five digit number 2, 2 8 2 8 2 2 8 2 8. You'll be prompted for an email address. You'll hear from me every day. It has been a pleasure. I hope I've given you some food for thought on the economy on interest rates, labor markets, new and existing housing supply, and other myriad topics. Thank you very, very much.