THANKS SO MUCH FOR BEING HERE. >> THANK YOU, MARIA. MARIA: TELL ME ABOUT PULTE CAPITAL, YOU’RE INVESTING IN MIDDLE MARKET BUILDINGS, BUSINESS, YOU’RE NOT AN OFFICER OR EMPLOYEE OF PULTE THE CONSTRUCTION COMPANY BUT YOU’RE INVESTING CAPITAL INTO LIKE SIZE BUSINESSES, IS THAT RIGHT? >> CORRECT. I’M A FORMER DIRECTOR OF PULTE
GROUP WHICH IS THE NUMBER FOUR HOME BUILDER IN THE COUNTRY. I WOULD SAY THAT BASICALLY OUR FAMILY FOUNDED PULTE GROUP IN 1950 AND OVER THE LAST LET’S CALL IT 70 YEARS WE’VE BEEN FOCUSED IN HOUSING PRODUCTS, YOU HOUSING SERVICES AND THAT’S WHERE WE SPENT OUR TIME. THE LAST 10 YEARS OR SO AFTER
THE GREAT RECESSION HAS BEEN A GREAT OPPORTUNITY TO INVEST IN HOUSING AND RIGHT NOW WE’RES JUST A LITTLE BIT CAUTIOUS. THAT’S KIND OF OUR PERSPECTIVE. WE DO HAVE 12 COMPANIES IN OUR PORTFOLIO, MARIA. AND GENERALLY SPEAKING THEY’RE DOING PRETTY. MARIA: WELL, THANK YOU FOR HAD THAT EXPLAINER, BILL.
BECAUSE THIS IS WHY WE REALLY WANT TO GET YOUR EXPERTISE ON THE HOUSING MARKET BECAUSE YOU’RE SEEING ACTIVITY FROM ALL DIFFERENT SIDES. ALL DIFFERENT SIDES. THIS MORNING WE GOT THE HOME BUYING MORTGAGE APPLICATIONS, DOWN 10%, AND SO I P WONDER WHAT THAT TELLS YOU IN TERMS OF THE YEAR AHEAD FOR HOUSING.
DO YOU BELIEVE THAT RIGHT NOW HOUSING IS IN A RECESSION? >> WELL, LAST TIME I SAT WITH YOU I SAID BASICALLY THINGS WOULD SLOW DOWN. YOU SAW PULTE GROUP EARNINGS LAST NIGHT WHICH WERE INCREDIBLE, THEY WERE GREAT. THE EMPLOYEES DID A PHENOMENAL JOB LAST QUARTER. I THINK IT WILL BE TOUGH THE
REST OF THE YEAR. I THINK YOU’LL SEE THAT GOING INTO NEXT YEAR, FRANKLY. MARIA, THESE ORDERS ARE DOWN. PULTE GROUP’S ORDERS FOR EXAMPLE WERE DOWN 40% YEAR OVER YEAR. I MEAN, THAT’S MEANINGFUL, MARIA. YOU CAN CALL IT A RECESSION. YOU CAN CALL IT WHAT YOU WANT. 40% ORDERS BEING DOWN, THAT’S NOT NORMAL.
MARIA: NO, IT’S NOT. WHAT’S BEHIND IT? IS IT ALL ABOUT RATES, BILL? THE NOVEMBER CASE-SHILLER INDEX CAME OUT YESTERDAY, SHOWED HOME PRICES WERE DOWN IN NOVEMBER, DECLINING FOR A FIFTH MONTH IN A IN AROW. YOU ARE SEEING THE PRICE OF A HOME COME DOWN. YOU WOULD THINK THAT WOULD BE AN
ENCOURAGEMENT FOR PEOPLE TO GET IN THE PAR GET. THEY SEE THE STICKER SHOCK OF MORTGAGE RATES AND THEY WALK AWAY. >> IT IS. BUT MARIA, ONE OF THE THINGS, AND YOU SHOULD KNOW THIS, THAT’S REALLY HAPPENING IN THE INDUSTRY WHICH IS WHY A LOT OF THESE BUILDERS, NBR REPORTED LAST
NIGHT, THE THIRD BIGGEST BUILDER, THEY REPORTED A GREAT REPORT AS WELL. WHAT’S HAPPENING IS BUILDERS ARE USING THEIR CASH TO PAY DOWN INTEREST EXPENSE OF CONSUMERS AND SO EFFECTIVELY YOU SHOW THAT THE RATES WERE 6% PLUS, MAYBE 7% IN SOME CASES. THEY’RE ABLE TO GET THESE RATES
DOWN TO LIKE 4% WITH WHAT THE BUILDERS ARE OFFERING IN TERMS OF INCENTIVES SO MARIA, I THINK IT’S BEEN A PRETTY GOOD THING THAT THE BUILDERS HAVE DONE WITH INTEREST RATE BUYDOWNS. MARIA: ARE WE NOW AT A POINT WHERE YOU THINK WE’VE SEEN THE WORST, WE’VE SEEN THE BOTTOM OR
ARE YOU EXPECTING FURTHER UPSET IN THIS MARKET IN ’23. >> I THINK IN ’23 IT’S GOING TO BE SLOW. I THINK WE’RE GOING TO HAVE A TOUGH ROAD TO HO. I THINK COMING INTO NEXT YEAR YOU’LL SEIZE THE DAMAGE COMING ON, THAT’S WHY THE MANAGEMENT
TEAM, PEOPLE IN THIS A AREA — YOU KNOW WHAT HAPPENED WITH PULTE GROUP WHERE ONE EXECUTIVE WAS HARASSING ME. WE NEED TO MAKE SURE MANAGEMENT TEAMS ARE COMPLETELY FOCUSED ON EXECUTING RIGHT NOW BECAUSE MARIA, YOU GET 40% REDUCTION IN ORDERS AND BIG BUILDERS NEED TO STEP UP THEIR GAME.
MARIA: WHEN YOU SAY WHAT A HAR, YOU WANT TO EXPLAIN THAT. >> WE TALKED ABOUT THE TWITTER BOT HARASSMENT CAMPAIGN THAT A GENTLEMAN WHO WAS AN INCOMING CO INCOMINGCOO WAS PUTTING AGAINSTR FAMILY. I WAS THE VICTIM OF THIS HARASSMENT. I DIDN’T GET INTERVIEWED. AND I THINK THAT THERE’S
POTENTIAL VIOLATION OF CRIMINAL STATUTES. WE HOPE THEY DO THE RIGHT THING. THEY HIRED LAWYERS AND WHATNOT. BUT AGAIN, THE EMPLOYEES OF PULTE GROUP, THE EMPLOYEES OF PULTE HOMES HAVE DONE A PHENOMENAL JOB. THIS IS MAYBE ONE OR TWO OR THREE EXECUTIVES THAT WE HAVE TO MAKE SURE AREN’T DOING THIS KIND OF SHENANIGANS.
MARIA: I’LL LEAVE THAT TO SOMEBODY ELSE TO DECIDE AND TO INVESTIGATE. WE WANTED YOUR EXPERTISE ON THE CONSTRUCTION MARKET AND HOUSING TODAY. YOU SAID IT’S GOING TO BE A TOUGH YEAR IN THAT REGARD. WHEN WOULD YOU EXPECT THINGS TO START TURNING? IS IT ALL ABOUT WHEN THE FED STARTS CUTTING RATES AGAIN?
>> WELL, I’LL SAY THIS. THAT GOING INTO NEXT YEAR FOR EXAMPLE, YOU’RE STARTING TO SEE LENAR, DR HORTON, THEY ARE MOVING INVENTORY. I WAS IN A LENAR SUBDECISION AND THEY’RE SELLING THESE THINGS LIKE HOT CAKES ESPECIALLY IN MOVE IN READY SUBDECISIONS. YOU’RE GOING TO SEE THESE GUYS PASS SOME OF THESE SAVINGS,
WHETHER IT’S LUMBER, ET CETERA, THROUGH TO THE CONSUMER AND THAT’S GOING TO JUICE I THINK SALES AT LEAST IN THE COMING MONTHS. AS I SAID, WHEN THE ORDERS ARE DOWN, YOU’RE GOING TO SLOW DOWN. MARIA: LOOK, BILL, WE WERE WATCHING LUMBER PRICES SOAR JUST A YEAR AGO, RIGHT, AND THAT A
WAS A MAJOR PROBLEM FOR PEOPLE IN TERMS OF AFFORDING A HOME. WE’RE OFF OF THOSE HIGHS, FOR SURE. >> WE ARE. AND I THINK THAT ONE OF THE THINGS, AND THE PULTE GROUP CEO CALLED IT YESTERDAY, LABOR STICKINESS. THAT’S GOING TO CONTINUE. IT MAY CONTINUE. THAT’S WHERE YOU NEED TO GET
CREATIVE AS A BUILDER RIGHT NOW, YOU NEED TO SAY HOW CAN WE PASS ON SAVINGS TO THE CONSUMER. THOSE BUILDERS TAKE ARE HE FOCUSED ON THAT WILL TAKE MARKET SHARE RIGHT NOW. MARIA: GREA
