So US Treasury Secretary Janet Yellen and Fed Chief J Powell are slated to and they may have already just looking for some headlines. Uh, there's they were expected to talk about the hot US housing market today and the risks that could pose to the financial system. Uh. And what's interesting is the Treasury Secretary actually this week already saying she's worried about housing affordability, but doesn't see the same dangers in the housing market as we saw back
in the two thousands. So let's get into it, um when it comes to the housing market. Someone who we caught caught up with last uh, and I think we talked with in April of hear really how they were dealing with the pandemic is Cheryl Palmer. She's chairman and see you at Taylor Morrison Home Corporations, a national home builder and developer. They're based in Scottsdale, Arizona, and she's joining us from Scottsdale, Arizona. Cheryl, So nice to have you here with us. How are you well, I'm really
not really really good, Carol. Thank you so much for having me today. Right, it's great to have you here because you were such a good check with us in terms of what was going in the housing market, Janet Yellen saying she doesn't seem, you know, like it's similar to the Miltown that we saw going into, you know, two thousand nine. How do you see the housing market right now? Yeah, I think, um, it's clearly a very
different time than two thousand nine, Carol. And where I'd really spend some energy is understanding really the overall lack of supply that we have in the country today. You know, depending on what numbers you want to subscribe to, we're somewhere, you know, over five million, six million kind of rooftop rooftops short in this country today, and we can discuss those for rent or for sale housing. I'm just saying
total shelter. And for the last many years, as I'm sure you know, the governor on kind of building has been the labor environment and our inability to kind of meet demand and rely the household formations, and so yeah, we absolutely have seen prices. We've seen some real movement in prices these last twelve months, which I think is what Jane has been referring to um, and that's absolutely correct. But at the same time, we've had a great deal
of support with interest rates. And when you look at affordability today over twelve months ago, the average consumer buying a three or four hundred thousand dollar house van, it's been less today than they did a year ago on their monthly mortgage because by quite as much health. Because of the interest rates, you know, arguably, you might not buy as much house today as you could buy a year ago um. And that's why I think the concern has really been on that first time buyer where maybe
you don't have as many lovers to pull. You know, it's not about you know, can I reduce my square footage or maybe you know, I'll take a smaller lot um. But today, when we look at the overall affordability, given the fact that we're still looking at interest rates you know, really below three UM, it's it's providing a great deal of opportunity for the consumer. All right, So help me
understand something. I'm taking a look at your share price and it's really come under some pressure, uh and down a lot from we had to high back in April. Why is that? Why do you think that is? Is it because you guys can't build fast enough, can't find the materials or what is it now fair question? UM? So,
a couple of things. One, I think the industry's seen, you know, has been under some pressure over the last few weeks, and I think that points to just some of the concerns not just with housing but just in general on inflation. And you know, is this environment we're in, is this kind of the new normal or is this more transitory? Um? And at the same time, we've seen housing prices move now on average over the last year
something around twenty percent. I mean, that's that's significant. Once again, as I as I shared, you've got we are so undersupplied.
But I think the market is trying to digest what is this you know, rapid price movement mean for the industry and most importantly, what does it mean for that first time buyer that maybe it's stretching into homeownership, you know, and it's probably worth an honorable mentioned, Carol, I think, Um, I don't think we talked about it last time you when I were on the zone, but you know, about two years ago we entered into the build to rent space.
Homeownership isn't for anyone, and we announced a strategic partnership with UM Christopher Todd Communities which really allows us to kind of address that missing middle. And so we're excited about one are our least are leasing projects that we're building, our build to rent Christopher Todd communities and what that does to meet the demand of folks at ount or don't want to buy today as well as what it does for um just the overall business as people look
for a step into homeownership. Well, what's the demand for the bill to rent? Is that outpacing the traditional uh individuals who are coming up to buy our bill to buy? You know, it's such a small piece of the overall pipes to day took Okay, I mean across the country we have something like sixteen just over I think sixteen million homes of the inventory are not individually owned, so
you would say those are there available for rent. And when we look at what we're building on an annual basis, you know, it's generally been about five percent of starts and so that's been around fifty thou but once again go back to that, you know, we're five to six million rooftop short fifty thousand, and we have a long way to go. And the reason we remain you know, relatively optimistic and not that there won't be some bumps
on the road. Is you know, the governor for building is just how many homes we can build in our current environment with regulatory demands, with labor to actually meet the need of what's out there today. Hey Cheryl, um, what's interesting is I'm looking at your website. What's the most lucrative building that you guys do? Is it individual homes? Is that those communities? Is it's you know, where along the spectrum of the world that you work in do you find it to be the most beneficial to the
bottom line. Um. I don't think I would point to one product type. I think it's really culmination of you know, we're a community building builder where we built communities. Obviously in our communities we build homes. UM. As I look across the consumer groups, one of the areas that's really done well for the organization is what I would call
our lifestyle communities. And those are gem really targeted who you know, you could call it active adults or plus um where it's that kind of stage in life where my kids have left and you know, it's kind of about me now. And those can be welf course communities, as can be water communities as could be country clubs. So we we we provide that lifestyle living at really any an all price point. But it's really much right
for the individual. UM. But when we look at that particular consumer group, generally they're at a place in life where they know what they want, they have the resources to pay for it, and it's just a it's a tremendous, tremendous part of our overall portfolio. Well, and I do wonder, you know, it's interesting we watch what's going on in terms of climate change. You know, the Pacific Northwest right seeing extreme temperatures. Um are there, Florida. You're in Florida
big time. You know, do you factor that in? Do you think about that in terms of location? I'm assuming of course you do. But I mean, is it starting to maybe shape some of bigger, broader strategy in terms of future longer term developments. Well? Absolutely, I mean when we if you look at our portfolio and you listed the markets, um that we build in across the country, and generally you'll see a theme of larger you know, larger macro um markets that you know, the employment bases there, UM,
affordability is there. It's really there's not one thing that drives a good market. Um. You know, it's just like our strategy on core locations. You know the basic rules of home ownership and being close to services and close to good schools and transportation, all of that climate, all of that comes into play as we think about what is the consumer want and where they're going to raise
their family or where they individually want to live. So UM, I'm very pleased with our portfolio across the country right now and the fact that we build really for that first time buyer. UM is about a third of our business that kind of first time move up and then, like I said, our active adult business, our lifestyle community. So we really are able to meet the demand market by market based on what the consumer wants to need right and spread out, you know, your your exposure right
to those different markets. Hey, talk to us about the leading in of digital increasingly. Uh, you've got a new digital to be built reservation system. How does this work? Can can you basically now just go online pick your house, design your house, have it built, almost do everything digitally.
That's exactly right, Carol. Um. You know when we spoke eighteen months ago be pre covid, I would tell you that it absolutely helped advance the industry because everyone beyond demand system was very, very different, and certainly I would tell you that our industry was probably the last to subscribe to kind of new technology, and the way that we've been doing it in the home building world hadn't
really advanced over the decades. But it's really about giving the consumer eve simplicity when they're shopping and allowing them to in to engage with the brand in a way that makes sense for them. So Taylor Morrison, I believe it's been very progressive and leading the pack in this elevated virtual shopping experience. We have a online scheduling tool. We have self guided tours where we'll send you a four digit code and you can go walk through a home on your own time, on your own You can
you know, online home reservations. That's what we introduced. I think that was last summer, where and you could go into an inventory home. I think that's just perfect for me to go back home and put it in your shopping cart and then we would send you a contract. So amazing, and then in the last it's it's truly who would have thought, you know, two years ago you could buy a house online, and now we're selling hundreds and hundreds of homes entirely virtually with no physical contact.
It's it's remarkable. Well and just go ahead, No, I just got about fifteen seconds. Our most recent tool, which is the most exciting them all, is being able to match somebody. They can go pick their lot, pick their floor plants and do all that virtually as well. Yeah, and like with cameras and things, you can really get a good, good picture of everything. Cheryl, thank you so much,
great good check on housing. She's chairman CEO Taylor Morrison Home Corporation, joining us on the phone from Scottsdale.