Speaker 1And so we did some math and in DFW, so big Metro, very sprawled, lots of dead space in parking. It's around 10,000 acres, 10,000 acres. It's unutilized. And so it's infill, right? If somebody said, Hey, I have a, you know, an opportunity, there's 10,000 acres of infill, well-located dirt to build apartments. Are you interested? Oh my gosh. Right. Everybody would jump at it. Hey, what's going on, everybody? Welcome back to the Land Development Podcast.
Speaker 2I am your host, Ryan Glick. We have an industry news episode for you today. And joining me as always is Charles Covey. What's going on, Charles? Hey, Ryan. Good to see you. Good to see you too. Well, I think the last one of these that we did, we talked about the Fed increasing rents. Rates, of course, which we're now seeing kind of what that is leading to. We'd always talked about the, you know, interest rates already being priced in usually in anticipation of things, but we have seen mortgage rates go up above 7%. So we're going to get into that to start today's episode. From there, we're going to take a look at the innovative housing showcase that took place at the National Mall in Washington, D.C. And then we're going to finish up with a look at parking minimums being removed in many cities across the country. So I'm sure that's music to a lot of developers' ears. And we'll see how many cities it actually is being removed in. So with that said, let's go ahead and get into our first article. This one comes to us from the U.S. Census Bureau. Mortgage rates cross 7% and builders are cutting prices to keep moving. Mortgage rates are back above 7%, hitting 7.03% last week. That's the first time we've been above 7% since January. January of 2025. Rates have now moved higher for five straight weeks. Nationally, new home sales were up 6.4% in August, but builders are cutting prices to keep homes moving. The median new home price is down 5.8% from a year ago. There are now 483,000 new homes for sale, which works out to about 8.5 months of supply. Existing home inventory is climbing, too, passing 1.6 million homes for the first time since 2019. And so a quick look at some of the metros, and this is from Zonda's New Home Pending Sales Index. So these are year-over-year percentages. So New York is up 8.4%, Austin up 5.3%, Atlanta up 1.6%, Orlando down 0.7%, Dallas is down 6.1%, Charlotte down 6.5%, Houston down 7.1%. San Antonio down 11.5%, L.A. or Orange County is down 19.5%, and Raleigh is down 23%. So we saw overall, when we look back at that, the previous numbers there. So nationally, new home sales were up 6.4%, but when you look at these different metros, we always talk, or you always talk, Charles, about how, you know, looking at the national number can be misleading if you don't look market by market. So here are some of those top markets to look at this. What are your thoughts on this, Charles? As far as what we're seeing in the housing market right now?
Speaker 1Man, interest rates are such a major factor in this whole process, aren't they? You know, real estate in general, whether you're developing or buying a house, real estate is so susceptible to the rate because there's so much capital involved in doing any of these transactions. It's definitely, definitely a challenging time. It's not what I would have expected a year ago or two years ago. What do you think is going to happen next, Ryan?
Speaker 2Well, it feels like we're going to see another rate hike. But we don't know, you know, when that's going to come, if it's going to come in the next meeting or the meeting at the end of the year, which I think is after the midterm election. So it feels like that's where we're headed, just based on, you know, what we've been seeing with some of that lagging data related to inflation in the market and everything. And I've been doing quite a bit of reading, and it's hard to know for sure because you see surveys and stuff that are put out by different groups. But I like to go to the comments on different posts to see what people are saying there. Just to get the temperature. And I know a lot of times it's going to be the most outspoken people who are on social media talking. So it's not always the best measurement. But you definitely have a lot of dejected people who want to buy homes and are almost eliminating themselves from being able to own a home. And a lot of these people are in that millennial age group and still don't own a home. And they've essentially got to the point where they're saying, you know, they're still renting and with rates the way they are and everything else in their life being so expensive. They don't know how they're ever going to own a home. And so I can't imagine with rates continuing to go up what that's going to look like. And I want to add one other thing here, too, because I've also seen a lot of people post. I think the favorite thing for people to do is to post the comparison of rates right now compared to the 80s and when rates were really high. And then there's that comparison. But then you've got a lot of the younger generation looking at that and saying, yeah, sure, rates were higher then. But let's look at some of the. The other metrics to see what the cost of living was like, then what the cost of a home was compared to the average salary, the percentage of the salary. And so there's a lot of very different. Yes, it's very different. And so it's it's just interesting. I feel like we're seeing some butting of heads between generations right now.
Speaker 1Yeah, because my dad brings this up and he bought a house in the in the 80s and it was in the teens, mid teens percent. But it was a single income and I don't think we were rich by any means. But we were OK. Right. We got by. That's an almost impossible situation now. And I don't know that that people realize how dramatically different it is and the percentage of income that goes to housing. So it's tough. And I don't you're looking ahead trying to see what what is the solution. I don't see this just working itself out. Right. This is pretty tough. And we see other societies that have had this same issue where you get. Cost of housing keeps going to a higher and higher and higher percentage of the total income and it can end up crushing an economy. So I'm really I'm concerned with what can happen there and what can be done because it's really getting out of hand. I don't want to sound doom and gloom at all, but I just don't have I just don't have the solution.
Speaker 2Yeah, I mean, I expect to see us to see rates continue to go up and I think we're going to continue to see inflation go up unless there are certain. geopolitical things that get under control and I mean quite a few other things there's just so many different areas and I will actually get into it here in a second and in this in the next section when we talk about some of the comments that we got but there are just so many different areas where people are hurting right now and just in everyday life and so it starting to feel like the home is just off their radar like they're just trying to think about some of the other things and I know that's not it's not good for our society. And it's not good for our industry either. So we'll obviously keep an eye on this as as this continues to go forward and we'll follow those the next couple of meetings through the end of this year with the Fed.
Speaker 1Well, this thing kind of feeds on itself a little bit this problem because the home building portion of the of the CPI is pretty significant. So the GDP and the CPI both very significant portion of that is construction of new homes. And so when that starts to slow down that hurts the inflation scenario, which then. Drives the rate up, which then makes it harder to buy the homes, which then, you know, this is a whole circle. And that is a that's the that's the vicious cycle that we're in at the moment. So we've got to have something to break that out. And I. I think that a lot of the things that have happened geopolitically were probably well meaning, you know, we're the U.S. We've got to go save everybody all the time. But what about but what about the people at home and how much saving of everybody else do we need to do before we realize, hey, maybe we should work about. Worry about our own our own domestic situation. And that to me is a bit frustrating.
Speaker 2Well, let's go ahead and move into the next segment, which is from the comments. I've got a few of them here. So first one comes from TikTok. I go back there every once in a while and look at some of the comments. It gets pretty wild over there. So always a good time if you go and look at the comments on our posts on TikTok. This one comes to us from Timu. You can't even afford a one bedroom apartment because why are they all two thousand dollars? And I'm expected to pay car insurance by grocery. Pay my phone bill, Internet bill, electricity and whatever effing else is a bill with that. When I was a kid, these same apartments were five hundred or six hundred bucks. Why are we still just yapping about it and not changing things?
Speaker 1It sounds like a frustrated individual. It does. And I get it.
Speaker 2Another one here from TikTok. This one comes from Ace Kittle. Let's talk about cars, too. In the 50s, a car used to be about 10 percent of the average income annually. It's now 100 percent. Of the average income annually. And then a reply to that one from Mars Makes Music. Our car eats up so much of our monthly expenses like an ungodly amount. Luckily, we only need one. So we've downsized. But most families need two. So we're seeing a little bit of a theme here with a lot of people. And this is pretty typical for TikTok. But this is I mean, this is real life. This is what people are experiencing and they're expressing it here in the comments on some of our videos. And then the last one here comes to us from a post on Instagram. Instagram from. Hornage G 2025. Does marriage not exist in this county? I think maybe country. Living single is very inefficient. Instead of government bending reality to suit broken culture, people should adapt to reality and find best ways to live in it. So I'm thinking what is being said here is that you know, we're talking about the single family homes that are largely built for the nuclear family, you know, historically. And now we have a lot of homes that are a lot different because our culture has changed so much over the years. And I think what's being questioned is are we continuing to build homes for what society used to be like and not necessarily building housing for what it looks like today?
Speaker 1Sure. Yeah. Building a one person house is a bit challenging. So if that single person still has that homeownership dream, what's the product that they're going to buy? And there's not much of that. Exactly. All right,
Speaker 2well, let's go ahead and move on to our second article here. So this is revisiting a conversation we've had we had last time on our industry news where we were talking about manufactured housing. So this feels like an asset class type of housing that is, you know, that the government is getting behind with some of their changes in the in the bill that was just passed back in July. So headline reads the first manufactured home with a single family home. A steel chassis. This comes to us from Housing Wire and the HUD. Since 1974, manufactured homes have been required to have a permanent steel frame underneath them. So this is something again is a little bit of a repeat on the show. We've talked about this. That requirement was eliminated in July. As a part of the Road to Housing Act, CAFCO just unveiled the first HUD code manufactured home built without the permanent steel chassis. Without the frame, the home can sit lower to the ground and look more like a traditional site built home. Removing the chassis could save around $5,000 to $10,000 per home, although some of that is offset by additional structural costs. HUD code manufactured homes can also now be built as duplexes, triplexes, and fourplexes. And one other one here. So also found a post from Secretary Turner, Scott Turner on X. His post reads, homeownership is woven into our nation's story and is central to the American dream. For another 250 years and beyond, American innovation will continue to expand homeownership to meet our needs in every community, every environment, and through every challenge ahead. And so I actually have this clip. It's about minute 20 that I want to play here. And this is of Secretary Turner talking, speaking at the Innovative Housing Showcase.
Speaker 3Our theme for this showcase is Made in America, a principle which President Trump is deeply committed to. And he's shown his commitment repeatedly. Because of the President's policies, we are making sure that the industry is once again manufacturing products within our own borders, fueling an increase of almost 100,000 factory construction jobs since the President's return to the White House. We've also seen 162,000 new jobs created in August, paychecks rise and labor force participation surging to its highest level in almost a year, and more than a million private sector jobs created since January of 2025. That is what the ideal of Made in America looks like. in action. Made in America leads to the flourishing and prosperity of our people. And nowhere do we see it more clearly than in the history of American innovation. Innovation in home ownership has defined America for 250 years and beyond. Owning a home is a key part of the American dream. And American innovation has helped those homes get better and better and better with each passing year.
Speaker 2So I, I guess the first thing I want to say here is that that was the wind in the background when he was talking. That's not Charles and me breathing into the microphone. It's just so, just so we're clear there because that's what it, that's what it sounded like. It definitely was not. I think I have, let me just check here. Yeah. So this is, I pulled this screenshot from that video that was playing there. And this is one of those homes that was showcased at that event. I don't know if this means we're going to be headed more in this direction. And if this is the path where we can start building some of these, uh, some housing that we're going to be building in the future, will be affordable. I know we've talked about this a lot, but just since this event happened in between our last show and this show, I wanted to bring it up again because it is getting some attention. What do you think about what was said here and what you see here, Charles?
Speaker 1Well, the, the theory here is that we can, we're trying to chase down costs and we know that the manufactured home builders have got this figured out. They can build them cheaper than anybody else, but there's this element of, Hey, it's got to sit up on some wheels. It's got to have a hitch. You can't, you know, you can't get financing. If it doesn't have these elements, if we can just strip that part out, then we can get a house that sits on the ground or close to it. Doesn't look as much like that mobile home stigma. And maybe that makes things a lot easier. Maybe that means that people won't have the NIMBY approach when we're trying to put one of these subdivisions in place when you've got to go, I've got a particular infill property that I can think of fantastic fit for this, but the city will go absolutely nuts to them. This kind of product is a trailer park and they don't want that in their city. So if we can essentially get the low cost of the trailer park without the stigma or the appearance of the trailer park, that's the mesh that we need. Right. And this is a step in that direction. I think we're not quite there yet, but this is absolutely a step in the right direction. There are some more challenges though, because now when you don't have that, when you don't have that steel frame in the front challenge logistically, sometimes you can't, you can't get it into the place you need without a crane. Now you've got to have, you know, the crane costs and the setup. And there's just elements, elements that make it more challenging, but not impossible, right? In construction, we know how to fix things. We know how to solve problems. And these are all problems that can be solved. So I think that it's certainly moving in the right direction. Are there millennials and younger who want to buy these homes? It appears there's at least enough to create demand. Certainly there are a lot of people that don't want to live in one of these houses. It's too small. I don't like the way it looks. It's rickety. Any of these kind of things you can bring up. So it certainly isn't a solution for every house in America, but for 20% or 30%, absolutely. It could be a great low cost solution. So it's cool to see Secretary Turner spending some time on this. It would have been neat to have been there and, you know, shot some footage and kind of gone in some of these. I saw some containers. We got the tiny house here on the trailer. We saw some other modular manufactured. Really interesting that they had a pretty significant mix of different options there.
Speaker 2Well, let's go ahead and shift into our last article here. This one is a hot topic in our industry, and it's been brought up, I feel like, over and over again from guests on the podcast over the last couple of years, and that is the topic of parking minimums. So headline for this reads, cities are deleting parking minimums and it changes what pencils. And this one comes to us from Stateline. From this article, 116 cities have completely eliminated parking minimums since 2017. That included cities like Denver, Minneapolis, Baltimore, Buffalo, Hartford, and San Francisco. 14 states have also passed laws reducing or eliminating parking minimums since 2019. Structured parking can cost around $30,000 to $40,000 per space. For a 200-unit project requiring 1.5 spaces per unit, that's $9 million to $12 million just for parking. Eliminating parking minimums means developers can decide how much the project actually needs. And so I think this one is kind of important to keep on the radar. You see quite a few places this coming up more and more as something that is being eliminated. And I think the thing that gets brought up a lot is like, where will people park? And we've talked about that on here before, right? The developers not going to not put parking in when it's needed to bring business or for tenants and things. It's just, you're not going to overbuild parking when it's not necessary. And I know you have a lot of experience with that. I've been really fascinated with this for the last several years.
Speaker 1I've spent a lot of time on it. And it's pretty simple if you think about it. When was the last time you saw a Walmart parking lot full? Black Friday, maybe. Maybe, you know, the day before Thanksgiving or the day before Christmas, everybody's out there getting their groceries to do their thing. But outside of maybe three, four, five days a year, that parking lot is three quarters or two thirds or half utilized. Right. You just think about that over the size of a big Metro. How many of those are there? And what does that equal? We're saying that we need to chase housing costs down or, hey, we need more places to build housing. Instead, we got it covered in asphalt and concrete doing nothing, which is fascinating to me because I think it's just absolute waste. So then there's this whole creative scenario of how do you turn that into a usable space? And so we did some math and in DFW, so big Metro, very sprawled, lots of dead space. big box stores, when you combine all of those and all of those parking minimums, now you might have two or three or four acres extra. That's really, really low utilization or no utilization. Well, that's plenty to build townhouses, to build an apartment complex. You think about it, the people that work in these big box stores or in the restaurants surrounding, they need a spot to live. And in many cases, these stores are located in a city where they couldn't afford to live anyway. And so now you've got that business can't get people there because they got to drive 45 minutes from the place they can afford to the place that they need to work. And it's impractical. What if they can work right there? What if you can build one bedroom efficiencies in the parking lot that they need to work at? So the premise there is really good, but it's a different box than the lender is used to. It's a different box than the city is used to. And so it creates some challenges with getting a deal financed, getting a deal built and getting a deal leased. We don't have a lot of information. Hey, how's this? How's this going to perform? Where do the rents need to be? And so you look at a lender, they're looking at the information. If you put a deal together and you've got your performer, what are you going to use as a comp, right? There's not one. And so this is the challenge. Who wants to be first? Who wants to be able to take that risk? Who can possibly execute it? Somebody with deep enough pockets, they can just do the projects on their own so that now we have comps. And there are a few, there are a few. In Dallas-Fort Worth, there's limited, but in other cities where if you look at a New York or you go to the West Coast where they have an even higher value of that dead space, they've found ways to make it work. So we're seeing that on the coasts and that's starting to work in towards the center of the country where I spend my time. So I think there's a lot of opportunity there. I think it's a fascinating way. And I've noticed in conversations with cities lately, more and more they're saying, and they're kind of using this as a little bit of a badge of honor to say without saying that, hey, we're progressive now. We're thinking outside the box. And they'll say this, they'll say, oh, yes, we've adjusted our parking minimums. And that's what they're saying without saying it is, hey, we're trying to be more progressive. We're trying to be forward-thinking. And that's great, right? There's a lot more things that they could also do besides parking minimums, but that's a start. And it's something that you and I have talked about before that is a bit of a challenge, but we're trying to get big changes, right? Trying to break down these big walls that regulatory costs just drag down our processes. In theory, you could do it the same way that all of these cities are starting to adopt parking minimums. They could other things. And so kind of how that happens is they're all talking to each other and going to their government conferences and the municipal planners, they go to a conference and they have an association and the engineers go to a conference and they have an association. So these things start to get talked about. And you see somebody that has enough balls to put their thing out there and do it just to just, hey, we're going to reduce the parking minimums. They've convinced their city and then another city sees it. And they're like, yeah, that's a pretty good idea. And then another city and then another city. So it starts to change. And then another city starts to change. And then it starts with five and then it goes to 20 and then it goes to 100 and then it goes to 1000 and then it goes to 10,000. And that's how that momentum starts. And we've seen it happen with parking minimums. We've also, we're also seeing it happen in a lot of cities with, with the ability to add ADUs. So it can happen, but you've got to have somebody willing to take that plunge and start that first thing and then talk about it. And then it goes to the next one and the next one, it starts to just spread. So there are ways that we could get, we talk about this all the time. How do we we have use cases, the parking minimum use case and the ADUs, ADU use case are really good ones to point to. So how do we then take the other problems we have and move them in that direction? So that's, that's our challenge for the moment.
Speaker 2Well, I've got one more here that I snuck in. So this was a last minute addition. It doesn't even have its own nice title slide or anything like that. But I came across a video from the California governor debate. So this happened on September 30th. And so you have the Democrat, Javier, hopefully I said that right. And the Republican Steve Hilton. And so this clip right here that I'm going to play is specifically about the topic of housing and how they plan to address it in the state of California. And I think it's interesting because I feel like it fits very closely with how Republicans and Democrats generally look at housing and how they want to solve it. So I'm going to play this video here quick. This comes from CNN, by the way. And then Charles and I will discuss to wrap up this episode,
Speaker 4a couple of simple things that we can do to restore that California dream of home ownership. Number one, the quickest way to reduce the cost of housing is for the government to stop making it more expensive. A recent survey found that the average new home in California is subject to $200,000 in government fees and regulations. I'm announcing tonight that I will cap that at $50,000. That is $150,000 off the price of a new home. Secondly, we need to stop forcing apartment buildings into suburban areas and having all those battles between NIMBYs and YIMBYs when we've got so much space that we could be building in in California. And then the final part is to build, as we used to do in this state, the magnificent California dream, 10 new cities. That's my plan, with counties bidding to host the construction of the new communities that were built in California. We need to stop forcing the construction of the new communities that will help young people follow their dreams here in California, instead of having to move to another state. Secretary Becerra, do you pledge to close the housing gap? What's your response? What's your goal? We will close the
Speaker 5housing
Speaker 4gap.
Speaker 5I've said already that we have to at least double the rate of building of homes. How much can we do? It just depends. How much red tape can we cut? How fast can we try to expand down payment assistance programs? How fast can we make sure Wall Street isn't outbidding the teacher or the firefighter for a home in California? We have to make sure we don't let Wall Street investors buy homes over those people who are working hard in California. And the final thing I'll do is what I did when I was AG. I will enforce the law that requires local governments to build.
Speaker 2Well, I think a couple things that stood out to me. So number one, it, you know, the Republican candidate here, you know, is saying more of, you know, cut the red tape, get rid of it. A Democrat candidate was more focusing on assistance with like down payment assistance. And I think that's a good thing. I think that's a good thing. I think and also, you know, pointing the finger at big corporations for coming in and buying up all the inventory. I feel like that's a pretty big thing you see in the comments on these on videos like this is you have people in there. It's a pretty high percentage of comments are about they really believe that the percentage of homes, single family homes that are owned by, you know, these big corporations is really high instead of the whatever it is, 1% or the really low percentage of stock that is actually owned. They, you know, they're really high percentage of stock that is they really think it's like they own half the homes or they own 80% of the homes. You see that all over the place. And so I think when you hear things like that from a someone in the government, it goes to feed that into, you know, the actual citizens and everything. And it keeps that alive with everybody. So anyway, I, nothing was really surprising with me here. Um, for any politician, when they say things, it doesn't really mean they're going to even do anything about this. It's it's election season, right? They're trying to get elected. So they're going to say the things they need to say. They're going to say the things they need to say. They're going to say the things they need to say to make their base show up and vote for them. But when you hear this, anything surprise you or what are your, your thoughts?
Speaker 1Well, it's two, two different methodologies of delivering a solution. And this tends to be a left side and right side of the aisle methodology difference. And we see this with all kinds of different things. And one will want to put money, throw money at the problem. One will want to help the free market, do what it does to create that solution. So two different ways of solving it in this case, probably neither one's going to be happy because it's not their choice just because they have the idea. It doesn't mean they can get it through the state legislature and get it passed anyway. And, and is there money even to fund it? California is not in a very good position financially. And so I don't know that there's money to even do all of these initiatives. So kind of funny for them to just, you know, just sling this is they're slinging free dollars in some cases. And I don't know that the free dollars exist. So that's an interesting, interesting whole discussion in itself.
Speaker 2Well, I'm interested for those of you we have a large number of people who listen in from the state of California to the show. So interested in you guys feedback and what you think, where do you think this election is going to go? I mean, we're only what we're less than, you know, when this airs, we're less than a or about a month away from the actual election. So we're getting pretty close. I'll be interested to see what you guys think. But with that said, that is all for today. Charles, any final thoughts before we wrap up?
Speaker 1These are some really good topics that I've spent time on. So I really enjoyed this one, the whole parking minimum thing, I think is great. I love seeing that change. That's just happened over the last couple of years. And we've seen pretty significant change across most major forward thinking metros in the US on this subject. So we talk a lot about cities not changing about the process not changing. But this is one that actually has happened. And we've seen it over the last two years. So that part's pretty cool.
Speaker 2All right, guys, that is all for this episode. If you're not already subscribed, please click that button. We'd love to have you back for the next one. And next or tomorrow, we actually have a conversation with Nick Erickson with the Housing Affordability Institute, where we're going to dig into all things housing related to the upcoming midterm. So you want to tune in for that. So with that said, we'll talk to you all back here tomorrow. Take care. We'll see you next time.
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