Welcome to another episode of the Chicks on the Right podcast where we talk to our friend and sponsor of
the show, Zach Abraham from Bulwark Capital Management. And according to an article in Finance, Yahoo's Finance section, Trump has been pushing this new bill in Congress to make housing more affordable by increasing the amount of it being available, increasing supply, cutting a bunch of bureaucracy, which is always a good thing, lowering costs for manufactured homes, and then cracking down on big giant corporate investors from buying up a whole bunch of them, which we know has been
a huge problem. That is a huge So for an average family hoping to buy a home, right now, what do you think a bill like this, if it passes, would actually change for them?
Well, great question, so I will use I have been preoccupied. My political life has been turned upside down a little bit because I have always been nationally focused, right, it's my job internationally focused. And I've gotten much more involved in state politics because of the insanity that's happening in Washington State, right, which which got me targeted by the government,
which has been fun. But what we have looked at in here and I've talked to I've talked to contractors about this, and don't hold me to it, but it's it's close currently in the state of Washington to build a home. When you look at the cost of building a home, somewhere between one hundred and forty thousand to one hundred and seventy thousand dollars of cost to build that home is purely permitting in loops you've got to jump through business. My gosh, one hundred and forty to
one hundred and seventy thousand dollars per home. So our governor puts out a tweet the other day where he goes, we've got to attack the home affordability crisis and we're going to do this and we're going to do that. And I I just sat back and I went, okay, so here and look, this is just for a guy that studied finance and economics in college, this is really really simple. Okay. There can be all kinds of different ways to do things, so we're gonna have different benefits
and we're gonna have different costs. The one benefit that anybody in economics wouldn't argue that capitalism delivers and that free markets deliver is the lowest cost of production. Okay, And it's just the way that free markets work, meaning the bid goes to or the group that wins is the one typically that is the lowest bidder. Right. And they're able to be the lowest bidder and still make money because they govern themselves, right, they're making sure that
they're controlling costs on their levels. When government steps into anything. And this isn't a political ideological statement, it's not, it's just factual. The minute government steps into a situation, they're making decisions for a whole lot of reasons, a lot of which have nothing to do with the cost of production. And it's why whenever government says we're going to get involved in something and lower the cost, that never happens. Not because and here's where here's where that argument goes
off the rails. Not because they're incompetent, not because they're evil. Some of the mom are, yeah, but it's just government. Meaning when you're running a business and you're building homes, your singular number one focus is build that home as safely and as efficiently and as profitably as possible. Right, And your business and your children and your wife and your mortgage rely on your ability to do that when you're a government bureaucrat trying to fix a home affordability crisis.
Your paycheck isn't the online Your kids aren't you know what I mean? Feeding your family isn't ter rich. Do you think they're going to have the same urgency and the same of course not. That goes with everything.
That's how they feel about everything, basically.
So if you want to lower the cost of anything, just and this is where it gets so frustrating with this mod these modern liberals, is you look at them and go listen. I don't disagree with you, but if you want to do the thing you say you want to do, that isn't the way to do it right, because we'd all universally agree we want to bring down home prices. Listen to them talk that we got to We had another one. I don't know if you guys, Promella primel Giapalas or not. Yes, another treat from the
Pacific Northwest courtesy, Thank you very much. But she gets on there same thing. We've got to stop picking developers over people. That's what she boiled down the lack of affordable housing as we've picked developers over people and I go. You know what developers like to do. They like to
sell things to people. It's kind of how they make money. Right, So the fact that there are no homes to buy and nobody's buying them and there are no transactions, we're going to chalk that up to picking developers over people.
Yeah, well it doesn't even make any offense. But how do you But but how do you feel about like the people, like the big investors that are coming in Because you know, Mack and I a couple of years ago in Texas, even we stayed in Irving. Do you remember when we stayed in Irving and we were at that Airbnb and they were like swaths of houses that in this neighborhood, really nice, upscale neighborhood. They were not
owned by single families. They were owned by these like these guys or investors that came in and just bought like blocks of houses and then they runed them out as Airbnbs. So like, if if the government comes in and says you can't do that anymore, will that help or does it even matter?
Well it does, does that make a dent? Yeah, it's it's hard to it's hard to predict because you know, I hate this sound like the cliche guy, but real estate is so local. It's really going to depend on where you're at. I personally have always thought that I wouldn't have a problem if if, if the law was put together that restricted the ability for corporations to do
that to some degree. The flip side is, though, is that more housing's more housing, right, Like, at the end of the day, the more houses we have, the laws of supply and demand have not been muted. If we have more housing, generally speaking, the cost of housing will go down, right.
Yeah.
So what I would say is I would and I'd have to look into this. This is just me kind of shooting from the hip here. I would sit there and say, I have no problem if corporations own large swaths of retail homes, assuming they built them. Does that make sense? Yeah, but it'll buying up.
I'm just curious too, like, because you hear a lot about these corporations buying up like second homes or homes that people did use for airbnbs. So is there a downside to them not having those, you know what I mean? Like if they just sit on the market forever, nobody wants them. It feels like it would be better for somebody to own it.
But I don't know.
I can't tell like I can't I don't know enough about real estate to know. Is this a great idea to completely eliminate them from being able to own them at all? Or does this actually solve a lot of problems.
Look, that's a great question, Okay, So let me answer it this way. At the end of the day, when we're talking about making things less expensive, the number one word that should pop up in our head is efficient. Right. The more efficient something is, the cheaper it will be. What I do know, generally speaking, is looking at laws that prohibits this person from buying it, prohibits this person from buying it, all that kind of stuff. Those things
can work on the margin. If we are serious about lowering the cost of real estate in this country, the number one thing we will do is drastically cut using technology that we have times it takes to get permits, drastically cut the cost. And like I've always said, you were, well, if we cut those regulations. No, those regulations are dumb. All they do is slow things down and make them
more expensive. Cut the regulations, increase the penalties. Right, Well, we're the cost to do business, increase the penalty if you do it wrong or if you you know, if you're cut into a cut, you know cut and for people that have not dealt with government like this and and seen how ridiculous it is and the money waste, and you know, the different subject. But I'll give you a class. Another example. Good friend of ours works for
the state and and was telling us this story. And they're not like a they're not a super political person, so this was not a political critique coming from them. It was just a competent secretique. In the state of Washington,
we bought this uh data center. We were not data center program, a software system to manage our data, okay, And we bought it and we started the implementation process and you do the initial purchase and then you got to pay subscription fees, right like you know, licensing fees what they call it. You're gonna have four hundred users, so we're gonna give you four hundred logins. Each user is gonna cost you this much month. Okay. We purchased
that software twelve years ago. It still is not implemented, and we've been paying the licensing fees for twelve.
Oh my gosh right, it's ridiculous.
And so then they then these people are telling you that we're going to pass laws that they write, I'm going to lower the cost of housing. Right, So people won't like this answer. But if we look at the cost of housing, you can look at the cost of housing right now, and I can. I will tell you that, I bet you the national average if the government just stayed well enough alone, the national average would be somewhere
lower by about twenty five to thirty percent. Because part of of what part of what his kept housing price is high is the stock market. Meaning we decided after two thousand and eight, two thousand and nine that regardless of the cost, regardless of how much debt it piled onto us, we weren't going to tolerate recessions anymore. And when the economy slows down, we're going to give people money. And we're well, now you have. Isn't it weird? Nobody
sits there and asks this question. You started doing all those games fifteen years ago, and here we are with the most unaffordable housing situation in history of the rest Is there any correlation there? I would think, so right, and so like, And this is what I've talked about if you're sixty five years old and ninety percent of your retirement savings is in an account that is rising
with the SMP five hundred, this has been great for you. Okay, If you're twenty eight to thirty years old and you want to buy a house, it's been it's been atrocious. You've got a record amount of student loans on your now a student loans right, student debts, and on top of it, you're looking at record and affordability and housing prices.
Both of those things could not have existed without, in my opinion, the reckless and short sighted monetary policy we've had since two thousand and eight two thousand and nine, artificially low interest rates that were suppressed pushing home prices up. And we were saying it for years. Right, if you keep doing this, eventually you're going to get the inflation
that you say you want, and here it. Yeah. And the problem with inflation is it can be stubborn to get started, but once it started, it's like a grease fire. You can't put it out. And we're seeing it right now. If we go a year, if we went twelve months ago and said, hey, where do you guys, think inflation measured by PPI, so price producers index, what do you where do you think that would be? Nobody would have predicted six percent. We just printed six percent last week.
And if you want to know what that means, like PPI leads into CPI. So right where you first see inflation is what the producers, the people that are actually making the good you see it first they start paying that higher cost, so their costs start rising, and then it get passes through to the consumers. So you're seeing another ripper here at inflation. I think you're going to see a lot more. But all of these things, the chickens are coming home to roost. Right. We've been living
on a credit card for the last fifteen years. I get and we're paying. And the only way to really effectively combat that cost increase is you just have to get government out of the way.
And these are the You always give us the hard truths, and I appreciate and also dislike you very much for it.
You know what's funny, I feel similarly. I feel similarly.
I waited, like every time we talk, I'm just like.
Man, I missed the eighties. It's the thing I missed the eighties right now is what I do it. Man, It's it's a you know, I think we all know it, but it's a really tough time, right Like, it's a tough time politically, you know again looking at Washington State, we're kind of ground zero for that right now. And it's it's a tough time because there's such a there's such a cacophony of right noise and you know, social
media and all this kind of stuff. And I think it's really helps where you get back down to basics and you go, Okay, what are the basics here? Right? How do we really make costco down? Get government out of the way. Yeah, I mean I know that.
It's I know we don't like to hear it, but we need to hear it, and people need to hear it because they need to know how to plan better for their own financial portfolios. And this is why we always point them in your direction, because you're the expert. So how can people hear you on your own show, get into your webinars and maybe get a second opinion about their own retirement from you?
Yeah? No, yes, I appreciate that. Another great hand off there. That's always she is, man, She's like an NFL quarterback, you know audish in handing off always a point guard if you will, right, yeah, yeah, So we do a daily show where we try to in thirty to forty minutes, summarize everything important to happen that day in economics, finance, and global politics. It's called Know Your Risk Podcast. You
can just search that on YouTube. And then we got our our Energy the Impact of Energy webinar coming up. I believe it is this Thursday. Makes this Thursday? Is this Thursday? Yeah, three thirty and that's free of charge. Just go to Borgercapitalmanagement dot com and we explain to you a the impacts that energy you're going to have on you, especially over the next year and in your portfolio. And then we summarize what we do, how we do it.
You know, we're active managers, very different than most firms, and so by the time you know forty five minute to fifty minute presentation, you'll know who we are, how we do it, and what we do. And if you want to talk to us, great, none if it costs you any money, We're not going to call you on Saturdays. Right, We're looking for partners. But yeah, so you go to our website Borercapital Management dot Com. Dialogue box will pop up. You can sign up for the free webinar coming up
this Thursday. Thank you, Zach. All right, thank you ladies. Some advisory services offered through Track financialc and SEC Registered Investment Advisor. The opinions expressed in this programmer for general informational purposes only, and are not intended to provide specific advice or recommendations for any individual or on any specific security. Any references to performance of security so are thought to be materially accurate, and actual performance may differ investments involved
risk and are not guaranteed. Past performance doesn't guarantee future results. Track twenty four three zero eight