WEBVTT 1 00:00:02.240 --> 00:00:04.320 Ato six. I think you about Kara see the talk 2 00:00:04.400 --> 00:00:07.679 station right Tom. 3 00:00:07.679 --> 00:00:09.839 It's always happy to welcome back to this thinking about Garsey. 4 00:00:09.599 --> 00:00:10.400 Mornings you every Monday. 5 00:00:10.400 --> 00:00:13.199 At this time we do Money Monday with Brian James 6 00:00:13.240 --> 00:00:14.279 from all Worth Financial. 7 00:00:14.320 --> 00:00:16.160 Brian, I hope you had a wonderful weekend. Welcome back 8 00:00:16.160 --> 00:00:16.920 to the show. 9 00:00:17.519 --> 00:00:19.960 As always, hope you did too, and thank you for 10 00:00:20.000 --> 00:00:22.120 the time to once again hang out with you on Monday. 11 00:00:22.239 --> 00:00:24.920 Always enjoy it. And of course I've been railing about 12 00:00:24.920 --> 00:00:26.920 this all morning. Moody stripped the US of its top 13 00:00:26.960 --> 00:00:31.359 credit rating, knocked this down a notch, of course, catching 14 00:00:31.440 --> 00:00:33.600 up with the likes of Standard and Poors who did 15 00:00:33.600 --> 00:00:35.880 that back in twenty eleven, INFIT Ratings, which did it 16 00:00:35.920 --> 00:00:39.000 back in August at twenty three. But the markets reacting, 17 00:00:39.039 --> 00:00:42.079 futures are down and of course treasury yields have jumped 18 00:00:42.119 --> 00:00:44.920 because the poorer you're credit rating, the more you have 19 00:00:44.960 --> 00:00:47.479 to pay people to invest in your well. In this 20 00:00:47.520 --> 00:00:52.640 particular case country, I mean, and they spelled it out 21 00:00:52.679 --> 00:00:54.560 in black and white, Moody's pointed it out. It's the 22 00:00:54.600 --> 00:00:57.320 growing burden of the financial and federal government's budget deficit 23 00:00:57.359 --> 00:00:59.719 and the rising cost of debt service on it. 24 00:01:00.159 --> 00:01:03.399 Duh, Yeah, this isn't too big of a shock, or 25 00:01:03.439 --> 00:01:06.120 is it so? So what the credit rating is, of course, 26 00:01:06.239 --> 00:01:08.879 is a way of comparing one country or really anything. 27 00:01:09.239 --> 00:01:13.640 Just about anything has a credit rating, governments, corporations, frankly, 28 00:01:13.719 --> 00:01:14.480 people do too. 29 00:01:14.519 --> 00:01:16.000 That's what those credit bureaus are for. 30 00:01:16.560 --> 00:01:18.799 But the whole point is to compare one entity to 31 00:01:18.840 --> 00:01:20.840 another in terms of how likely are they to pay 32 00:01:20.879 --> 00:01:23.840 their debts. And Moody's is the last of the three 33 00:01:24.159 --> 00:01:28.480 major rating facilities to cut the United States down from 34 00:01:28.480 --> 00:01:32.040 a perfect rating, and that that started in twenty eleven, 35 00:01:32.079 --> 00:01:34.480 so in the aftermath of two thousand and eight. S 36 00:01:34.519 --> 00:01:36.840 and P was the first one to cut us and 37 00:01:36.920 --> 00:01:37.959 kind of say, maybe we're. 38 00:01:37.840 --> 00:01:39.760 Not so good as good as we used to look. 39 00:01:40.159 --> 00:01:41.840 So yeah, and this isn't too big of a shock 40 00:01:41.879 --> 00:01:45.040 because we are putting ourselves, we are proactively deciding to 41 00:01:45.239 --> 00:01:48.040 present ourselves to the as a country, to the rest 42 00:01:48.079 --> 00:01:51.879 of the world in a different manner where that necessarily 43 00:01:51.959 --> 00:01:54.840 has an impact on the economic output of the country. 44 00:01:54.920 --> 00:01:57.439 And what are the what's the outlook of how can 45 00:01:57.480 --> 00:02:00.760 we be going forward, you know as we have in 46 00:02:00.799 --> 00:02:03.040 the past. And so for sure, that's now having an 47 00:02:03.040 --> 00:02:04.840 impact on the market. The futures are down one to 48 00:02:04.879 --> 00:02:06.879 two percent, depending on what you're looking at. This is 49 00:02:06.920 --> 00:02:08.719 but again, this can't be too much of a shock. 50 00:02:08.759 --> 00:02:12.360 We've consciously decided to do things differently. We talk all 51 00:02:12.439 --> 00:02:14.960 the time about how we can't afford ourselves, we're living 52 00:02:15.000 --> 00:02:17.479 beyond our means, and it is starting to surface here 53 00:02:17.560 --> 00:02:20.240 just a little bit in terms of the rest of 54 00:02:20.240 --> 00:02:22.479 the world's perception of the United States as a credit 55 00:02:22.479 --> 00:02:23.360 worth the facility. 56 00:02:23.599 --> 00:02:25.960 Well, I suppose the timing couldn't have been better, considering 57 00:02:25.960 --> 00:02:29.360 they're talking about this reconciliation package, which deals with the 58 00:02:29.479 --> 00:02:32.680 debt and spending, and I know there's some moderate Republicans 59 00:02:32.719 --> 00:02:34.800 who are standing in the way of advancing some steeper 60 00:02:34.840 --> 00:02:38.080 cuts because oh, it's my green energy product, you're not 61 00:02:38.199 --> 00:02:40.319 a project. You're not going to cut it in my state, 62 00:02:40.479 --> 00:02:43.000 or oh it's I'm in New Jersey and I wanted 63 00:02:43.120 --> 00:02:46.719 one hundred and twenty four thousand dollars per couple salt 64 00:02:46.800 --> 00:02:50.199 tax because well, the taxes of my state are outrageous. 65 00:02:50.560 --> 00:02:55.439 I mean, we just subsidize the high tax states, high taxation, 66 00:02:55.599 --> 00:02:58.000 and the people that should be paying that by cutting 67 00:02:58.000 --> 00:03:00.000 their federal income tax. I mean, you know, the point 68 00:03:00.199 --> 00:03:03.439 of capping the salt tax at ten thousand dollars, so 69 00:03:03.560 --> 00:03:06.439 we wouldn't be subsidizing those outrageous states. 70 00:03:07.719 --> 00:03:08.159 That's right. 71 00:03:08.639 --> 00:03:12.759 What we're doing is taking active steps to hopefully you 72 00:03:13.000 --> 00:03:15.280 reduce that. But there's no way to do all this 73 00:03:15.360 --> 00:03:18.199 kind of stuff without pain that. That's the one thing 74 00:03:18.479 --> 00:03:20.039 that we have not been able to drag across the 75 00:03:20.039 --> 00:03:22.960 finish line here. Both parties recognize and have for decades 76 00:03:23.240 --> 00:03:25.639 that there is a problem and we are moving in 77 00:03:25.680 --> 00:03:28.520 the wrong direction. However, there has never been an effort 78 00:03:28.680 --> 00:03:31.680 where on one side has successfully reached across the aisle 79 00:03:31.719 --> 00:03:34.439 to actually do something about it. And that's really not 80 00:03:34.520 --> 00:03:36.439 even happening now. We just have a situation in situation 81 00:03:36.479 --> 00:03:39.520 where the Republicans obviously dominate both both parts of Congress, 82 00:03:39.879 --> 00:03:42.800 and that's the closest we're going to get to putting 83 00:03:42.840 --> 00:03:45.080 all this in place to make the fixes, but it's 84 00:03:45.080 --> 00:03:48.439 going to have to survive, Brian the midterm elections. Right So, 85 00:03:48.560 --> 00:03:51.120 right now, Donald Trump effectively has you know, pretty much 86 00:03:51.199 --> 00:03:53.719 cart Blanc to do just about whatever he wants to 87 00:03:53.719 --> 00:03:56.120 do because he's got control of Congress for the most part, 88 00:03:56.400 --> 00:03:58.800 and he's ignoring a lot of the rules and regulations 89 00:03:58.800 --> 00:04:01.560 that were in place anyway. But if a lot of 90 00:04:01.560 --> 00:04:03.919 this stuff doesn't get done before the midterm elections, I 91 00:04:03.919 --> 00:04:05.599 can't think that dependulum is not going to swing back 92 00:04:05.639 --> 00:04:06.319 the other way. 93 00:04:06.919 --> 00:04:09.639 Well back the other way, toward even more reckless spending. 94 00:04:09.759 --> 00:04:11.919 I mean, I mean, I hate to use the phrase 95 00:04:12.000 --> 00:04:15.400 existential threat again, but we're already paying a trillion dollars 96 00:04:15.439 --> 00:04:17.240 a year in debt service and that's only going to 97 00:04:17.279 --> 00:04:21.040 get worse and worse, and that takes away from literally 98 00:04:21.120 --> 00:04:23.319 anything else. That's I don't care what side of the 99 00:04:23.319 --> 00:04:25.279 political spectrum you're on, if you want the government to 100 00:04:25.319 --> 00:04:27.720 pay for something, the more money we have to allocate 101 00:04:27.759 --> 00:04:31.439 the debt service, which is required, you can't just ignore that. 102 00:04:32.040 --> 00:04:35.360 You're not going to have money left over for expanding 103 00:04:35.399 --> 00:04:38.279 this or funding that, whether it's military or one of 104 00:04:38.279 --> 00:04:41.079 the social welfare safety nets, they're all going to be 105 00:04:41.120 --> 00:04:42.399 deprived extra dollars. 106 00:04:43.560 --> 00:04:45.759 Yeah, that's absolutely right, And this is that's why it's 107 00:04:45.800 --> 00:04:48.040 been so important that we actually get people in the 108 00:04:48.040 --> 00:04:50.480 same room to talk and agree on something. We haven't 109 00:04:50.519 --> 00:04:52.959 been able to do that because the American people have 110 00:04:53.079 --> 00:04:56.800 not been willing to sacrifice what they need to, because 111 00:04:57.680 --> 00:05:00.319 if your congress person is out there trying to say, hey, 112 00:05:00.360 --> 00:05:02.279 we're living beyond our means, we have to stop doing that, 113 00:05:02.319 --> 00:05:04.839 what they're actually saying, if they're serious, is we need 114 00:05:04.839 --> 00:05:07.240 to give up something. And that has not been a 115 00:05:07.279 --> 00:05:10.480 politically tenable stance to take. If you are somebody whose 116 00:05:10.519 --> 00:05:13.079 career and livelihood depends on getting elected again. 117 00:05:13.000 --> 00:05:16.040 Well and there lies the problem. As far as I'm concerned. 118 00:05:16.040 --> 00:05:18.879 You should do what's right, what's fiscally responsible, what is 119 00:05:18.920 --> 00:05:21.600 going to save the country from itself, and not just 120 00:05:21.639 --> 00:05:24.360 to pease people see and get re elected. I could 121 00:05:24.439 --> 00:05:28.160 campaign if I cut back medicaid, well, simply requiring people 122 00:05:28.160 --> 00:05:31.560 that are able bodied without families to engage in some work, 123 00:05:31.639 --> 00:05:34.879 training or work. I mean to the tune of what 124 00:05:35.639 --> 00:05:39.160 twenty hours a week is really a small, small ask. 125 00:05:40.720 --> 00:05:43.480 I just that's not unfair to say. 126 00:05:43.480 --> 00:05:46.079 But that has to extend to the person who might 127 00:05:46.160 --> 00:05:50.480 take advantage of the opportunity to take down an incumbent representative. 128 00:05:50.680 --> 00:05:53.360 Because that person told the country the truth, it leaves 129 00:05:53.399 --> 00:05:55.480 them to being a sitting duck. Hey, this person told 130 00:05:55.519 --> 00:05:58.079 you had to sacrifice something, I'm telling you the opposite 131 00:05:58.120 --> 00:06:01.079 we're going to keep giving you money to resist that urge. 132 00:06:01.079 --> 00:06:03.160 But it's been the American way for several hundred years. 133 00:06:03.279 --> 00:06:05.839 Well, they need to just hold up the Moody's reports. Say, look, 134 00:06:05.839 --> 00:06:09.879 we've already been downgraded. Why because our national debt is 135 00:06:09.920 --> 00:06:11.759 so big it's sucking up all the life out of 136 00:06:11.759 --> 00:06:14.319 the room. This is what we're talking about. So yeah, 137 00:06:14.399 --> 00:06:16.360 you can tell people there don't have to be any cuts, 138 00:06:16.399 --> 00:06:19.079 but it's just gonna get worse, and our borrowing costs 139 00:06:19.079 --> 00:06:21.360 are just gonna get that much greater, and our debt 140 00:06:21.399 --> 00:06:24.120 service is gonna get that much greater. I mean, explain 141 00:06:24.160 --> 00:06:26.959 to my listeners if you can, Brian James, what would 142 00:06:27.000 --> 00:06:30.040 a default look like? How would that play out? If 143 00:06:30.040 --> 00:06:33.800 we couldn't make the debt service on our national debt? 144 00:06:34.240 --> 00:06:37.720 Nobody comes out of a US default looking pretty The 145 00:06:37.920 --> 00:06:40.879 entire world will be impacted because, whether they like us 146 00:06:40.959 --> 00:06:42.800 or not, we are by far, far, far, far far 147 00:06:43.240 --> 00:06:46.040 the largest economy on the face of the earth. American 148 00:06:46.120 --> 00:06:48.519 economy is twenty two to twenty three trillion dollars something 149 00:06:48.560 --> 00:06:51.240 like that. China is somewhere around nineteen twenty trillion, and 150 00:06:51.279 --> 00:06:54.480 it goes rapidly down from there. So, if all of 151 00:06:54.480 --> 00:06:56.759 a sudden, the rest of the planet basically being the 152 00:06:56.920 --> 00:06:59.439 entire universe, lose his face in the faith in the 153 00:06:59.519 --> 00:07:02.120 United States ability to pay its debt, then all of 154 00:07:02.120 --> 00:07:03.800 a sudden, all those countries and the rest of the 155 00:07:03.800 --> 00:07:07.560 world is going to lose a substantial customer base from 156 00:07:07.600 --> 00:07:09.360 which to sell, and that's going to have a domino effect. 157 00:07:09.399 --> 00:07:12.240 So nobody, even those who would prefer that we get 158 00:07:12.319 --> 00:07:16.000 knocked off our pedestal, will not benefit from that disruption 159 00:07:16.120 --> 00:07:16.680 to that level. 160 00:07:16.759 --> 00:07:17.879 Now I'm looking at. 161 00:07:18.000 --> 00:07:19.920 I think these ratings, it's important to understand what the 162 00:07:19.959 --> 00:07:22.600 ratings actually mean because some people might say, well, we're 163 00:07:22.639 --> 00:07:25.040 still since we're the largest economy, that means the ratings 164 00:07:25.040 --> 00:07:27.560 aren't as important because you know, we're just so gosh 165 00:07:27.600 --> 00:07:30.759 darn big. Well, just to give some comparison, there, there 166 00:07:30.800 --> 00:07:34.160 are nine other countries now that have perfect credit ratings. 167 00:07:34.199 --> 00:07:41.040 You still can buy government debt that has perfect credit rating. Germany, Switzerland, Denmark, Sweden, Norway, Netherlands, Australia, Singapore, 168 00:07:41.079 --> 00:07:44.079 and Luxembourg all have better credit ratings in the United 169 00:07:44.120 --> 00:07:47.079 States and subsequently have lower yields if you want to 170 00:07:47.079 --> 00:07:50.120 buy those countries' treasury bonds. You're going to be getting 171 00:07:50.120 --> 00:07:53.079 about two percent on a ten year bond in compared 172 00:07:53.079 --> 00:07:54.600 to the United States, which is currently. 173 00:07:54.360 --> 00:07:55.519 About four and a half percent. 174 00:07:55.920 --> 00:07:59.360 The yield on a bond is directly reflective, Brian of 175 00:07:59.399 --> 00:08:02.759 the country's ability to pay its debts. Are if you 176 00:08:02.800 --> 00:08:05.279 are a dead beat, then you're not getting a credit card. 177 00:08:05.279 --> 00:08:07.920 If you do, you'll be paying thirty percent. The rest 178 00:08:07.920 --> 00:08:09.680 of the world is saying the United States needs to 179 00:08:09.680 --> 00:08:11.600 pay four and a half percent while these other countries 180 00:08:11.639 --> 00:08:13.279 need to pay about two to borrow money. 181 00:08:13.600 --> 00:08:17.319 Well, it is illustrative of the problem. And I don't know. 182 00:08:17.360 --> 00:08:19.600 I guess at some point we may get junk status. 183 00:08:20.079 --> 00:08:22.199 What is junk considered? What nine percent and above or 184 00:08:22.240 --> 00:08:23.240 something along those lines. 185 00:08:23.720 --> 00:08:26.319 Well, the junk status has to do with the credit 186 00:08:26.399 --> 00:08:30.399 rating itself. It's not the yield directly, but that's triple B. 187 00:08:30.920 --> 00:08:34.399 Triple B is the last investment grade generally speaking, and 188 00:08:34.480 --> 00:08:36.679 below that you get labeled as junk, which doesn't mean 189 00:08:36.720 --> 00:08:38.840 you can't pay your debts. It just means you've kind 190 00:08:38.879 --> 00:08:40.879 of moved into a territory where it's a little more 191 00:08:41.000 --> 00:08:43.120 likely that anybody who owe that you owe money to 192 00:08:43.159 --> 00:08:44.919 ought to be paying attention to to make sure that 193 00:08:44.960 --> 00:08:46.720 you are good for it fair enough. 194 00:08:46.720 --> 00:08:48.320 If we're going to find out about starter homes and 195 00:08:48.360 --> 00:08:50.879 Greater Cincinnati, are there any even out there more of 196 00:08:51.000 --> 00:08:55.519 Brian James Wilworth Financial, Hey nineteen if you have fair 197 00:08:55.600 --> 00:08:57.679 CD talk Station Money Monday. 198 00:08:57.759 --> 00:08:59.799 Brian James Allworth financials. 199 00:09:00.120 --> 00:09:02.559 Hey real quick here, since you talk about credit rating 200 00:09:02.600 --> 00:09:05.000 and the Moody's downgrading a United States credit rating. I 201 00:09:05.039 --> 00:09:06.600 just checked my credit score the other day. I get 202 00:09:06.639 --> 00:09:09.120 a notice from LifeLock saying, hey, your credit score is changed, 203 00:09:09.159 --> 00:09:11.120 or I check it out. You know, I still have 204 00:09:11.159 --> 00:09:13.240 excellent credit, and at one point I actually had a 205 00:09:13.240 --> 00:09:15.639 perfect credit store. It didn't last very long, so it 206 00:09:15.720 --> 00:09:18.519 dropped two points. And the reason is because I have 207 00:09:18.720 --> 00:09:22.559 excellent in every single category except one. They say I 208 00:09:22.600 --> 00:09:27.559 don't have enough accounts that I should have more available credit. 209 00:09:27.639 --> 00:09:30.200 I'm thinking, how bast awkward is that? That doesn't make 210 00:09:30.200 --> 00:09:33.519 any sense to me. I'm dutifully and timefully paying off 211 00:09:33.559 --> 00:09:36.639 what credit cards I have. I don't need any additional credit. 212 00:09:36.639 --> 00:09:37.799 Why in the hell would I want to go out 213 00:09:37.799 --> 00:09:39.879 and get more. It doesn't make any sense. 214 00:09:40.600 --> 00:09:42.200 Yeah, it is kind of counterintuitive. 215 00:09:42.240 --> 00:09:44.480 What they're basically saying is that you're such a good 216 00:09:44.480 --> 00:09:48.120 credit risk that we think you should have more. I 217 00:09:48.120 --> 00:09:49.960 think there's a little bit of an ulterior motive in 218 00:09:50.000 --> 00:09:53.200 there to help you encourage you to do that. 219 00:09:53.360 --> 00:09:56.919 I've noticed that the biggest spikes I've. 220 00:09:56.759 --> 00:09:59.399 Gotten in my credit score is when you know, if 221 00:09:59.399 --> 00:10:01.080 we do something the house or whatever, and there's some 222 00:10:01.159 --> 00:10:03.320 kind of promotional zero percent rate. Sure, I'll take that. 223 00:10:03.320 --> 00:10:05.039 I don't really care about the credit, don't really need that. 224 00:10:05.159 --> 00:10:07.279 But all of a sudden, a month later, my credit 225 00:10:07.320 --> 00:10:09.720 score spikes because I have an extra line in place, 226 00:10:09.799 --> 00:10:11.799 off of which I'm not paying anybody any interest. 227 00:10:11.840 --> 00:10:13.000 It just gave me a better price. 228 00:10:13.360 --> 00:10:15.080 But yes, they do want you to have more if 229 00:10:15.120 --> 00:10:16.480 you take it, if you want to take advantage of 230 00:10:16.480 --> 00:10:17.919 those things, it will give you a higher score. 231 00:10:18.039 --> 00:10:18.399 All right. 232 00:10:18.639 --> 00:10:20.720 I'm not interested in it because I'm still fine. It 233 00:10:20.879 --> 00:10:23.200 just drives me crazy when I read that, I'm like, 234 00:10:23.279 --> 00:10:25.679 damn it, why would I want to go out and get, 235 00:10:25.720 --> 00:10:29.799 you know, a more opportunity to borrow that I wouldn't use. 236 00:10:30.120 --> 00:10:32.279 To your point, I wouldn't need it. I don't need it, 237 00:10:32.320 --> 00:10:35.639 I wouldn't use it. So anyhow, moving back to your 238 00:10:35.679 --> 00:10:38.039 topics that you provided. Sorry for the curve ball there, Brian. 239 00:10:38.039 --> 00:10:42.080 I just found that very frustrating. Starter homes are there 240 00:10:42.120 --> 00:10:45.159 any around Cincinnati. I saw the article from Randy Tucker 241 00:10:45.200 --> 00:10:48.200 and from the Enquirer, and apparently they're in very short supply, 242 00:10:49.440 --> 00:10:49.799 very much. 243 00:10:49.799 --> 00:10:49.879 So. 244 00:10:50.000 --> 00:10:51.840 Yeah, so if you look around there, there's still plenty 245 00:10:51.879 --> 00:10:53.960 of building going on. Right, we've been talking about this 246 00:10:54.039 --> 00:10:56.519 housing crash that's supposed to be coming for years now. 247 00:10:56.519 --> 00:10:58.399 Maybe maybe we've given up on talking about it. We 248 00:10:58.399 --> 00:11:01.240 found a new shiny object, but that simply hasn't happened. 249 00:11:01.279 --> 00:11:04.320 But no, there's not many starter type homes being built 250 00:11:04.320 --> 00:11:06.039 in Cincinnati, you know, the kind of homes one or 251 00:11:06.080 --> 00:11:08.840 two maybe three bedrooms with the most but obviously to 252 00:11:08.919 --> 00:11:11.639 allow a young family to kind of get started, really 253 00:11:11.679 --> 00:11:13.919 struggling for buyers to find a home for under three 254 00:11:14.000 --> 00:11:17.720 hundred thousand that doesn't require major work, or isn't a 255 00:11:17.720 --> 00:11:21.320 neighborhood that's not quite ideal. The demand is there. Of course, 256 00:11:21.360 --> 00:11:23.519 there are people in the situation. We probably all know 257 00:11:23.600 --> 00:11:25.080 young people who would prefer to get out of their 258 00:11:25.120 --> 00:11:28.120 apartments and their condos and get into something different. But 259 00:11:28.159 --> 00:11:30.399 the supply is not there, and the reason is it's 260 00:11:30.440 --> 00:11:35.080 just not as attractive for builders. Builders are prefer larger 261 00:11:35.360 --> 00:11:38.480 homes because there's more profit margin, that's more scalable. If 262 00:11:38.480 --> 00:11:41.159 you think about fixed costs like permitting and compliance and 263 00:11:41.200 --> 00:11:42.799 all the stuff that they have to do that has 264 00:11:42.840 --> 00:11:45.159 nothing to do with putting two by fours together, Those 265 00:11:45.200 --> 00:11:47.799 fixed costs are the same no matter the size of 266 00:11:47.840 --> 00:11:50.440 the ultimate home, and their preference, of course, is to 267 00:11:50.440 --> 00:11:52.600 make as much money as they possibly can, so they're 268 00:11:52.600 --> 00:11:53.799 focusing on the larger homes. 269 00:11:53.799 --> 00:11:57.240 Still in this area, well, it's always puzzled me because 270 00:11:57.399 --> 00:12:00.200 unless I've got the whole concept wrong, it seems me 271 00:12:00.279 --> 00:12:05.679 the trend is for people to pursue a smaller home. Now, 272 00:12:05.679 --> 00:12:07.600 that doesn't mean you have to sacrifice on quality. You 273 00:12:07.600 --> 00:12:11.080 could really build a superior quality with all the amenities 274 00:12:11.159 --> 00:12:13.399 much smaller home. You don't have to build some mega 275 00:12:13.399 --> 00:12:17.799 mansion or mini mansion. And when you do, you've got 276 00:12:17.919 --> 00:12:21.480 so much additional you know, like heating and air conditioning expense, 277 00:12:21.519 --> 00:12:23.960 you got to furnish the rooms. It just it seems 278 00:12:24.000 --> 00:12:26.240 to be stupid to have that much space, most notably 279 00:12:26.279 --> 00:12:28.360 if you don't have a really big family, and with 280 00:12:28.440 --> 00:12:31.759 an aging population, the demand for smaller homes is probably 281 00:12:31.960 --> 00:12:34.480 increased because you don't want as much place to have 282 00:12:34.519 --> 00:12:36.759 to clean, Maybe you don't want to go up and downstairs, 283 00:12:36.759 --> 00:12:38.919 and you're looking for ranchumps. That just sounds to me 284 00:12:38.960 --> 00:12:41.679 like an ideal opportunity for a smart developer to build 285 00:12:41.759 --> 00:12:45.200 small er homes compared to what they've been building, but 286 00:12:45.320 --> 00:12:47.840 make them at higher quality to increase that profit margin. 287 00:12:49.159 --> 00:12:51.919 Yeah, but I think the higher quality part if you're 288 00:12:51.919 --> 00:12:54.679 if you're increasing the profit margin, you're increasing the price. 289 00:12:54.720 --> 00:12:56.879 And that's one of the non starters for a young 290 00:12:56.879 --> 00:12:59.679 family getting started at And we we have a. 291 00:12:59.720 --> 00:13:01.759 Dress that too with patio homes. 292 00:13:01.799 --> 00:13:04.320 Patio homes are popping up everywhere, but a starter family 293 00:13:04.360 --> 00:13:06.000 is not going to want that because they need somewhere 294 00:13:06.039 --> 00:13:08.000 to let the kids run around and storage of all 295 00:13:08.000 --> 00:13:10.360 the old baby stuff and all that other thing. And 296 00:13:10.480 --> 00:13:13.200 those neighborhoods tend to be fifty five and older anyway. 297 00:13:13.279 --> 00:13:15.799 So we just haven't filled that gap here in this area. 298 00:13:15.840 --> 00:13:19.960 Other cities have the cities with real real estate spikes 299 00:13:20.000 --> 00:13:23.559 that are really truly issues, such as Austin, Denver, Portland 300 00:13:23.600 --> 00:13:26.399 to Minneapolis. These are places that have changed how they 301 00:13:26.440 --> 00:13:29.960 do zoning laws. So for example, Minneapolis in twenty nineteen 302 00:13:30.039 --> 00:13:32.840 started to allow duplexus and triplexus city wide to at 303 00:13:32.960 --> 00:13:34.960 least let off some of that some of that demand. 304 00:13:35.279 --> 00:13:37.240 Those kind of steps have not been taken around here 305 00:13:37.320 --> 00:13:41.279 yet because it's still arguably affordable for a you know, 306 00:13:41.279 --> 00:13:43.440 somebody who's looking for a quote unquote starter home to 307 00:13:43.440 --> 00:13:45.360 get into that three hundred, three hundred and fifty thousand. 308 00:13:45.360 --> 00:13:47.080 But we're getting to the point where it's just not 309 00:13:47.120 --> 00:13:49.679 going to be feasible for somebody to take that step. 310 00:13:49.639 --> 00:13:52.480 Unless you're willing to buy one that needs maybe quite 311 00:13:52.519 --> 00:13:53.519 a bit of work. 312 00:13:54.399 --> 00:13:57.639 Correct or in a neighborhood that is hopefully going to 313 00:13:57.679 --> 00:13:58.519 turn around in the. 314 00:13:58.440 --> 00:13:59.720 Next decade or so. 315 00:14:00.039 --> 00:14:01.639 But yeah, you have to kind of you're taking a 316 00:14:01.720 --> 00:14:04.120 risk there if you really need that house with more bedrooms, 317 00:14:04.279 --> 00:14:07.080 you are looking to again pick up something that's gonna 318 00:14:07.080 --> 00:14:09.080 need a lot of work, or in a neighborhood that 319 00:14:09.080 --> 00:14:10.639 you may not want to be raising your kids in. 320 00:14:11.200 --> 00:14:13.799 Understand tough challenges out there in the world these days. 321 00:14:14.200 --> 00:14:17.080 Is there do you see anything that might turn this around? 322 00:14:19.879 --> 00:14:22.679 Honestly, we've been talking about this for years, haven't we 323 00:14:22.799 --> 00:14:23.879 been talking about this? 324 00:14:24.159 --> 00:14:24.360 Ever? 325 00:14:24.360 --> 00:14:26.639 Since two thousand and eight? Really, you know, I would 326 00:14:26.639 --> 00:14:28.200 have thought it would have happened by now. When is 327 00:14:28.240 --> 00:14:30.320 the bubble gonna pop where people just say, you know what, 328 00:14:30.519 --> 00:14:31.440 I just can't do it. 329 00:14:31.480 --> 00:14:33.240 I can't buy these houses. 330 00:14:33.399 --> 00:14:36.080 I'm talking to my clients who are retiring and some 331 00:14:36.159 --> 00:14:38.320 of them are still buying three and four bedroom houses, 332 00:14:38.320 --> 00:14:40.320 and I scratch my head, Brian, why are we doing this? 333 00:14:40.600 --> 00:14:43.120 It's almost like it's become ingrained that I just have 334 00:14:43.159 --> 00:14:44.639 to live in a house that's just all there is 335 00:14:44.679 --> 00:14:46.720 out there. So I'm gonna have a couple empty rooms 336 00:14:46.759 --> 00:14:46.919 just the. 337 00:14:46.879 --> 00:14:48.200 Way it is fair enough. 338 00:14:48.200 --> 00:14:52.159 Brian James will continue one more of that topic, right, 339 00:14:52.480 --> 00:14:55.159 you know, I admit, and you know I'm embarrassed to 340 00:14:55.200 --> 00:14:56.960 admit it, but I've said it so many times. Regular 341 00:14:56.960 --> 00:14:59.960 listeners know that I do watch shows like Wheel, Fortune, 342 00:15:00.159 --> 00:15:02.360 d wind Down before I go to bed at eight, Brian, 343 00:15:03.039 --> 00:15:05.200 and it always blows my mind to see the cost 344 00:15:05.279 --> 00:15:07.480 of some of these vacation trips that they put together. 345 00:15:07.519 --> 00:15:10.320 I'm like, Lord almighty, how does any kind of regular, 346 00:15:10.879 --> 00:15:14.240 average American family spend that kind of money to go 347 00:15:14.360 --> 00:15:17.600 someplace like that? And I was never a big guy 348 00:15:17.600 --> 00:15:20.200 when it came to travel, certainly not global travel. I've 349 00:15:20.240 --> 00:15:22.919 always enjoyed spending time here in the United States of America, 350 00:15:22.960 --> 00:15:26.720 where there see seems to be an endless supply of destinations. 351 00:15:26.759 --> 00:15:30.759 But I understand that the big summer vacation plans of 352 00:15:30.799 --> 00:15:32.200 being put on ice this summer. 353 00:15:33.360 --> 00:15:36.279 Yeah, that's right. So when I'm doing financial plans for clients, 354 00:15:36.639 --> 00:15:40.039 what we always budget for vacation, and used to be 355 00:15:40.159 --> 00:15:42.840 that we would throw in if somebody didn't talk about travel, 356 00:15:42.879 --> 00:15:45.200 like it wasn't a retirement goal, I'd throw in three 357 00:15:45.240 --> 00:15:47.440 thousand bucks because everybody would go down to Myrtle Beach 358 00:15:47.480 --> 00:15:49.039 or Hilton Had, you know, once or twice, and three 359 00:15:49.080 --> 00:15:52.519 thousand bucks would cover. That minimum has now become five 360 00:15:52.600 --> 00:15:54.879 thousand for my folks who don't bring up travel, for 361 00:15:54.960 --> 00:15:56.960 the ones who say, yes, we've always wanted to travel, 362 00:15:57.000 --> 00:15:58.799 we can't wait to do it now, we're putting in 363 00:15:58.840 --> 00:16:01.320 ten to twelve thousand at absolute minimum. For the ones 364 00:16:01.320 --> 00:16:03.679 who want to hit it hard, we're budgeting twenty thousand 365 00:16:03.759 --> 00:16:06.559 dollars per year, and so there's stories in here about 366 00:16:06.759 --> 00:16:08.720 of course, if you're going to budget out a trip 367 00:16:08.759 --> 00:16:10.919 to Europe, that's going to be in the twenty thousand 368 00:16:10.960 --> 00:16:11.759 dollars range. 369 00:16:11.840 --> 00:16:12.080 To go. 370 00:16:12.120 --> 00:16:14.200 Make it worth your while. Nobody goes for a long weekend. 371 00:16:14.200 --> 00:16:15.879 You're going to make it at least ten days. 372 00:16:15.759 --> 00:16:18.480 Or so twenty thousand dollars. 373 00:16:18.799 --> 00:16:21.799 Now, we budgeted one for the James family. We didn't 374 00:16:21.879 --> 00:16:23.960 end up going because it was twenty twenty and you 375 00:16:24.240 --> 00:16:25.159 can remember what happened. 376 00:16:25.200 --> 00:16:27.120 Then. We were very close to swiping the credit card. 377 00:16:27.200 --> 00:16:29.639 But it was going to bet about thirteen thousand at 378 00:16:29.639 --> 00:16:32.200 that point to get all five of us through Scandinavia, 379 00:16:32.600 --> 00:16:34.679 and that was through cost Co, which is about as 380 00:16:34.720 --> 00:16:37.679 reasonable as you can possibly get. But yeah, So we're 381 00:16:37.720 --> 00:16:40.279 hearing stories about forty one percent of people this year 382 00:16:40.679 --> 00:16:43.519 or planning trips of three nights or fewer, meaning you know, 383 00:16:43.559 --> 00:16:47.000 we're taking long weekends. That that's up from thirty seven percent. 384 00:16:47.039 --> 00:16:49.559 So we've seen a ten percent increase year over year 385 00:16:49.600 --> 00:16:50.919 in the people who are saying we're not going to 386 00:16:50.960 --> 00:16:52.799 take as big of a vacation as we've as we've 387 00:16:52.799 --> 00:16:56.799 done in the past. Americans who are planning vacations period 388 00:16:57.039 --> 00:16:58.720 dropped below forty percent this year. 389 00:16:59.000 --> 00:17:01.320 That's still lower than twenty twenty four. 390 00:17:01.879 --> 00:17:04.319 In about twelve percent of travelers say they've changed their 391 00:17:04.359 --> 00:17:06.880 plans because of the tariffs, which have spooked him enough 392 00:17:06.920 --> 00:17:08.599 to say, the heck with it, We'll just we'll stay 393 00:17:08.599 --> 00:17:09.240 in this summer. 394 00:17:09.279 --> 00:17:11.759 Well, I saw this one guy that's quoted in the article. 395 00:17:11.759 --> 00:17:14.039 He said the tariffs sort of got everybody around the 396 00:17:14.039 --> 00:17:17.559 world mad at us. He was worried about being treated 397 00:17:17.599 --> 00:17:22.799 poorly if he showed up at his original destination because 398 00:17:22.799 --> 00:17:25.200 the locals would frown upon US tourists. 399 00:17:25.319 --> 00:17:27.160 Is that really a thing? 400 00:17:28.359 --> 00:17:30.680 Yeah, I think some of that stuff is overblown, as 401 00:17:30.720 --> 00:17:32.400