Housing analyst Conor Sen launches The Housing Frame on Substack, calls bottom in Florida and Texas markets

Speaker 2: We have Conor Sen from The Housing Frame. He is the founder of a fantastic new sub stack that I just subscribed to yesterday, Conor. Welcome to the show. Thank you so much for taking the time to come chat with us. How are doing?

Speaker 9: Yeah. Thanks for having me.

Speaker 2: Congratulations on the launch. I'd love to hear a little bit about your background, your the the beats and the way you like to cover different topics, what you like digging into, and then we can go into some of your current outlook on the market, housing, all the hot topics that you're planning on covering this year and beyond.

Speaker 9: So I'd say my professional background related to housing is twofold. One is I worked for a big hedge fund in San Francisco

Speaker 2: Mhmm.

Speaker 9: During the crisis. I've I've been out there and got to work on credit derivatives and mortgage derivatives and all that. Yeah. Saw all that happen. Sure. Then moved to Atlanta after the bust and just needed to start over, and eventually got hooked on Twitter. Started writing for Bloomberg in 2016, did that for ten years, wrote about the economy, housing, demographics, cities, things like that. Yeah. And just felt like the housing market to me feels like it's bottoming and I saw the opportunity with Substack and being a chance to be the voice to to come on shows like this and talk about it for the next ten, fifteen, twenty years. Great. And it just felt like a great time to start doing that.

Speaker 1: John is so happy about this because John, you're you would you would we we don't have like a a housing guy.

Speaker 2: Oh, that's true.

Speaker 1: And John John

Speaker 2: Well, we got Sager and Jenny complaining about it.

Speaker 1: Oh, we got Sager complaining about But we don't have we don't have somebody who's been like, you know, we have like we like hanging out with Joe Weisenthal Yeah. Yeah. People like that. We have like our guy in a bunch of different categories, but we don't have like our house guy for Max Abbott. Hopefully this is hopefully this is the start of of many many many appearances.

Speaker 3: Yeah. That was part of

Speaker 9: the thinking too because Bill McBride at Calculated Brisk, the blogger that everyone knows so well, he's retiring next spring. Oh. And so I did look out five, ten years and thought who are the voices for our generation who can do this? And I felt like I could be one.

Speaker 2: So how do you think about your your reporting the shape of like when do you want to go and talk to a bunch of sources on the ground, look at a bunch of economic data, crunch something into something more of a narrative? There's so many different outlets even when you're at Bloomberg opinion versus factual reporting, getting a scoop. There's so many different pieces. What what what have you explored? What have you shied away from? What have you leaned into?

Speaker 9: I think starting out, it's probably gonna be fairly similar to what

Speaker 1: I was doing

Speaker 9: at Bloomberg. Probably reaching out here and there to sort of broaden my base. Yeah. But over time, I think it'll be a function of what do I think is interesting Yeah. And then who are the sources that I can talk to who are, you know, good and help me Yeah. Do what I do better. So I'm pretty good at data and and media and all that. But, yeah, I don't have a lot of friends who are real estate agents or mortgage originators or things like that. So I'm I'm excited about that.

Speaker 1: Yeah. Okay. So first question. Mhmm. You said you feel like the house the housing market is bottoming, but like, a lot of people, if you ask average Americans, that certainly they they wouldn't they wouldn't feel that way.

Speaker 2: You say it's bottoming and yet how

Speaker 1: does work? Prices still feel quite high, but but what you're saying is maybe transaction volume has been subdued over the last couple years Mhmm. Due to to rates and and other factors. But, yeah, we'll break break that down, like talk about like the the why now and and then we'll get into things are going.

Speaker 9: I think the bottoming call is twofold. One is that the hardest hit states over the past few years, places like Florida and Texas, now see inventory dropping and new orders for home builders are are rising. That's kind of your classic bottoming weight cycle recovery.

Speaker 2: Mhmm.

Speaker 9: And then San Francisco is clearly a market that, very similar to 2010, 2011, is leading the country Yeah. In terms of what this expansion looks like. And I'm really excited and interested to see where that broadening out goes over the next six or twelve months.

Speaker 2: How important is actual development in homebuilding? We've talked to startups, very early stage, thinking about three d printing or manufactured housing, and there's some technology there. But I always discount those projects as maybe that will have an impact in ten years, twenty years. I'm really excited and optimistic about it, but realistically, I don't think it's going to be moving home prices in the next few years. But how important is the shape and structure of the actual home building market to house prices in America?

Speaker 9: It matters a lot down here. I'm in Atlanta. It matters a lot in Texas and Florida and Arizona and places like that. Mhmm. Historically, has not mattered a lot in San Francisco. Yeah. I remember talking to somebody at Bloomberg Beta about eight or ten years ago who said that the best way for ordinary people to bet on VC is San Francisco real estate.

Speaker 2: That's right.

Speaker 7: And I

Speaker 9: think we're seeing that this year. So I'm I'm hopeful that they can build more homes out there, but it's been a long tough slog. I mean, I I left in part because of housing, and here we are sixteen years later.

Speaker 2: What about government regulation? Obviously, it feels like the story of housing in America is very much the mortgage interest tax deductions, all the incentives to get the American dream is directly tied to homeownership. And so the government has done a lot for that. But then there's also permitting reform, the abundance Democrats, the abundance wing are pushing for more building. And I'm just wondering if you think that there's anything that could happen on the policy side that would actually move house prices in the in the short, medium, or long term.

Speaker 9: So I did speak with a a policy expert on housing about I said, what are what are your thoughts on road to housing and what matters for this? And there are some short term things like manufactured housing should get easier to build. Mhmm. But he said the really important thing is we've identified a bipartisan coalition will vote for housing bills. Oh. So this was our first crack at the apple, and but we now know where the votes are, so going forward, we can take another crack at it in two years, and just keep chipping away, try to try stuff, see what moves the needle, and just hope that slowly but surely over time we could build more housing.

Speaker 2: Do you have any idea of, like, the shape of that legislation might actually look like? Because it's just saying, like, we need to build more. A lot of you'll get a lot of thumbs up, but what are we actually changing? Are we are we making the time to permitting more? Are we hiring more people to review permits? Are we changing the requirements for fireproofing or something like it's very it gets nitty gritty really fast.

Speaker 9: So one thing that might be that resonate with your audience is that right now the financing piece is really hard. And what happened was similar to VC and private equity, a lot of people invested money in 2021, 2022. Interest rates were low. In in real estate, we'd say cap rates were lower, valuations were high. Sure. And they got blown out pretty bad over the next few years. And the equity got wiped out. Maybe people are still sitting on loans. So as we see the apartment marting apartment market starting to turn, time to build apartments again, there's no equity to go around. And you can't get a deal done unless there are equity investors ready to go. Mhmm. Because they all got wiped out last time, they're gun shy, and then nowadays maybe you'd rather fund a data center than an apartment building. Yeah. So I think finding ways to finance new developments and maybe the public sector can have some role here, whether it's subsidizing or tax incentives, things like that, that's something that we should look into.

Speaker 2: Interesting. Interesting. What role do you think other buyers in the market that aren't specifically someone going to either buy a house that they'll live in or buy maybe an apartment building to rent out are having on the are having an effect on the housing market overall? You hear a lot of sort of hand wringing around like private equity buying a bunch of homes. Is that actually distorting the market? I was running the numbers and it felt like a couple percentage points of homes are owned by private equity. It didn't seem like it was the biggest factor, but how have you grappled with that story?

Speaker 9: It was really a much bigger story fifteen years ago. And certainly here in Atlanta, the private equity investors bought up a lot of distressed homes. And I know that looking back, it doesn't look so good, but at the time that was when there really weren't a lot of qualified buyers, people had bad credit scores, unemployment was really high, banks were failing, and so investors came in and stabilized the market. And I know it's not popular now, but at the time it made sense. Yeah. And and so I would say today it's that we have a really k shaped housing market where if you have a lot of stock wealth, it doesn't really matter where mortgage rates are, you can still buy a home. And in fact, I was looking at data in Nashville. Year to date, home sales in Nashville for homes over $2,000,000 are up 32%. For homes under a $500,000, basically flat. So the corner of you need a mortgage, you have just a job, that market's still pretty stagnant, but the high end is really booming.

Speaker 2: And so are the is the bottom of that k switching into renting in that case?

Speaker 9: They are. And renting is still basically a better deal in most places, but I do think an issue is that in the apartment market, we're starting to see vacancy rates come down. Mhmm. And typically when vacancies come down, rents go up next. Yeah. And so you might be in a situation where, yes, it's cheaper to rent than buy, but if you think that your rent's now gonna go up a lot over the next two or three years, you might factor that in and say, I'm willing to overpay for a house because my rent's gonna go up 20% in two years. I So think that's more of a twenty twenty twenty twenty seven story. Mhmm. But that's something I'm thinking about for next year.

Speaker 2: Mhmm.

Speaker 1: How much are you gonna be tracking demographic, like, basically demographic trends and how that impacts housing? The boomers have a lot of quite a lot of homes and they'll be turning them over eventually. But Yeah. Is that

Speaker 7: a story

Speaker 1: a that like a twenty thirties story?

Speaker 9: I think so. For for me right now, the demographic story is that we see both in New York and San Francisco that rents are really high, but rents have come down a lot in those states that built over the past few years. So as the the San Francisco Austin gap gets really wide, maybe an anthropic employee won't move to Austin, but maybe somebody who, you know, couldn't buy the house they wanted to buy because they got outbid by an AI person, maybe they start to look to leave. And so maybe then you can get the migration flywheel cranking again in the South.

Speaker 2: Interesting. How big of a deal are foreign buyers in the American housing market? There's a lot of again, you see these pieces that are similar to the private equity buying houses of, oh, there's someone that made a ton of money internationally, and they just want a safe place to park their capital. And so why not buy an empty luxury apartment in Los Angeles or Miami or New York? Is that is that just a just a small fraction of what's going on in the real estate market, or is it actually enough to move the overall picture?

Speaker 9: That was actually a sneaky source of weakness in the North Dallas suburbs last year because h one b visas were apparently a fairly meaningful part of the the sort of ex urban Dallas new home market, and then financing got I don't know the details of that very well, but just with the policy changes with the administration. And so that seems to kind of come in waves where you get these moments where China's buying up a lot of housing, and then they go away for a while and then they come back. I don't think it's a big factor right now, but it's certainly something to watch going forward.

Speaker 2: Yeah. Last question for me. I'm I'm interested in how you're thinking about your audience for the housing frame. Is is the do do you think that there's a goal to reach hedge funds and traders who will be reading your analysis and actually building an investment thesis on top of it? Or or, like, what is the and then does that lead into, like, a consulting business? I'm just sort of interested in where the where the overall company goes as you expand.

Speaker 9: Yeah. It's interesting because coming from Bloomberg, we didn't get a lot of demographics or or data about our our audience and writing. And so I think to start, just gonna be looking at the sub stack metrics and seeing who's coming in, what's getting their interest, kind of thinking about that, reaching out to people one on one, because especially early on I can do that. Cool. And then it's sort of again, are not one to one comps, but I look at what Bill McBride built with calculated risk over twenty years and thinking I could try to have some of that audience over time, or try to earn their trust. And then this is like, you know, pie in the sky, but what Dylan Patel did with semi analysis, and he was just a guy who got started and then his sector got hot. And so I do think hot housing eventually will get hot again. And hopefully, can be a place that people come to when that happens.

Speaker 2: Yeah. Yeah. I I I can totally see the semi analysis type, the tokenomics model, understanding how data centers build building out. I haven't seen that data contextualized for the housing market and I I can imagine so many consumers and obviously business people being fascinated by anything else?

Speaker 1: Not for now but

Speaker 2: Congratulations on the launch. I'm back. Please subscribe. Where can you up? Give us the URL so everyone can go subscribe.

Speaker 9: It's it's connorsend.substack.com or just the housing frame. I'm sure you can find it. So thanks lot guys.