Here are the show notes
Todd Britsch is real estate analyst at PNW regional director for Metrostudy.
Metro Study provides Housing Market Intelligence, Proprietary research/analysis and consulting to industries that seek to minimize risk and grow revenue.
Todd’s mother worked on every master plan in the Seattle area, and Todd became completely engrossed in it.
First real life up to date data provider on the internet.
Sold original company to Metrostudy and now he works for Metrostudy.
What is Metrostudy
Subscription based product that gives you info to Todd and a ton of data that he produces.
If I was running a big city in Seattle I’d be looking for an exit strategy.
The housing inventory has raised from 1.5 to 1.7 months. No a lot, but…
The perception of the average person drives the bumpiness in the real estate market, even though they don’t understand it.
In the last two years…
* Housing prices have gone up by 29%
* To afford that house (with zero debt) your income would have to have gone up by 40%
Thinks interest rates will peak at 5.5% at this time next year.
A 1% increase in interest rates correlates to a 10% decrease in buying power.
* Global economics (national down to the local)
* The Seattle City Council would impact the rest of the Puget Sound
A LOT!!!! Of economic news.
Leading states on West Coast
The things driving this housing cycle are completely different than any other housing cycle.
Today’s real estate boom environment is an inventory issue, with growth management that has not been addressed properly.
“We created this perfect storm ourselves”
China is about to head into a deep depression, and are calling a lot of housing loans due.
What if… worst case scenario
China is now calling loans due for large projects, and if they can’t get enough money they will run down the chain and call the smaller loans due.
…this could create opportunity. It’s not the end of the world at all.
Wage growth will not keep up with housing prices in the PNW.
The sweet spot for 50% of the Seattle buyers are under $550,000, and will go down as interest rates go up.
Some areas of Texas
Stay away from areas that Chinese buyer are buying
Read the full transcript with Todd Britsch of the show below
Joe Bauer: Welcome to the Seattle Investor’s Club podcast where we talk about the nuts and bolts of real estate investing. My name is Joe Bauer and I’m here with my cohost, Julie Clark. Julie, how you doing today?
Julie Clark: I am good in the hood, Joe. Getting ready to go camping today.
Joe Bauer: Yeah, yeah. What hood are you going camping in?
Julie Clark: We are going out to the Coho Campground, which is somewhere out past Aberdeen heading north to I guess it’s a national park. I’m one of three families with a bunch of, like, seven kids and a bunch of adults and all the good, fun stuff that we need to haul along with us. I am looking forward to that. I think you’re rubbing off on me, Joe.
Joe Bauer: I love it, I love it. We’ll both be in national parks this weekend.
Julie Clark: That’s right. So I think all you guys know because we talk about it every week that Joe is off on his road trip, checking out all the national parks he can over this year. Where you at today, Joe?
Joe Bauer: I am right outside of the Badlands National Park in South Dakota.
Julie Clark: South Dakota.
Joe Bauer: If you’ve never been to South Dakota, I never really had a need or want to go to South Dakota beforehand, but there is some really cool stuff here in South Dakota. Big caves or cool geological features. Lots of places to do hikes and trail runs, so I’m a fan.
Julie Clark: Are you guys picking up a souvenir of some sort from each of your adventures?
Joe Bauer: You know, I was out on a run this morning and I saw a rock that looked really cool, and I thought about picking it up and I realized that my van is not very big.
Julie Clark: That’s right.
Joe Bauer: The only souvenirs that we’re really picking up is we buy the sticker that has the national park letters on it.
Julie Clark: Logo, mm-hmm (affirmative).
Joe Bauer: If it’s Badlands National Park would be like BLNP. So we buy one of those that we stick on the box, the trailer hitch box, that we have.
Julie Clark: Nice, that’s cool. I like, I like. Because we’re all on the road and excited to get out in nature this last weekend before school starts for us, let’s jump on into it because we have some great information today that we definitely, all of us real estate investors and builders and realtors, we all need. It’s a great time to check in. It is August 30th right now, 2018. This podcast is a little bit of a delay by a few weeks, so, hopefully, you guys are going to find this podcast very helpful as you kick off into 2019. Joe, who we talking with today?
Joe Bauer: Yeah, this is going to be a really fun one today, guys. We have real estate analyst Todd Britsch who is the Pacific Northwest Regional Director of Metrostudy. Todd, welcome to the show. How are you today?
Todd Britsch: I’m doing great. Thanks for the invite.
Julie Clark: Awesome, awesome. Metrostudy, if you guys don’t know what Metrostudy is, I’m just going to read what it says on your website there, Todd. It says, “Metrostudy provides housing market intelligence, proprietary research and analysis and consulting to industries that seek to minimize risk and grow revenue.” We pretty much figured that sounds like us, guys, so we’re going to talk to Todd. Sounds good? Let’s do it, let us do it. Todd, thanks. You’re in the Seattle area, too, Todd, right?
Todd Britsch: I am, born and raised.
Julie Clark: Born and raised. We usually kick it off with a little bit of background. Joe, I’ll let you kick us off about Todd.
Joe Bauer: Yeah. The first question, Todd, is always just how did you grow up? How did it lead you to where you are today, and any fun things in between that we should know about you?
Todd Britsch: It’s been an interesting journey to get to where I’m at. We lived out in Black Diamond when I was growing up. My mother started out as a cleaning lady in an apartment complex, became a rental manager a year later, started selling condos, started selling houses. Then by the time I was seven, she was starting a sales and marketing company with a gentleman here locally who just retired in the industry not too long ago. So for me growing up, ultimately, I’d sit around the table with my mother critiquing floorplans and looking at subdivision work. To give a history on my mother-
Julie Clark: Love it.
Todd Britsch: With her consulting, she worked on every master plan in the State of Washington, so Snoqualmie Ridge, Issaquah Highlands, Redmond Ridge, Campus Highlands-
Julie Clark: Wow.
Todd Britsch: You name it, she worked on them. A lot of these subdivision, they’re eight to 10 years in the process. When I was 12, we were working on Campus Highlands; when I was 16, 17, Issaquah Highlands was laid across our kitchen table and that’s-
Julie Clark: Wow.
Todd Britsch: I just became completely engrossed in it. Then in 1995, I had worked for her right out of high school gathering some data for consulting work, and as we moved into 1995, one of the employees at the company said, “You know, I have this whole worldwide web thing coming, and I think it would be cool if we captured all this data that we gather and threw it up on the platform.” I would venture to say, I don’t know this to be a fact, but I would venture to say that we were the first real life, up-to-date, data provider on the internet, being that we were up on the web within days of the internet going live.
Julie Clark: Wow. I just got the chills.
Todd Britsch: It’s kind of cool. I left the industry for a number of years, went off into grocery, but still swing by my folks’ office and kept bugging them, “You got to hire me. I get this stuff. I understand it and I see the value in it.” They were thoroughly convinced they were going to raise a ton of capital, and then the dot-com crash came and my father never was able to raise the capital, just from basically being out of his skis on that one. They were going to shut the data side of the company down.
Julie Clark: Wow.
Todd Britsch: It was producing $300,000 a year in revenue. I finally convinced them to bring me on board and in a matter of 36 months, I grew them from $300,000 to $2.5 million in revenue.
Joe Bauer: Wow.
Todd Britsch: Then took over the company in 2005 [crosstalk 00:07:05] president-
Julie Clark: Wow. You guys were like the first Zillow.
Todd Britsch: Yeah, I wish I had a little better skill set at that point in regards to growing a business because I think if I had been there prior to say ’97, I might’ve been able to get that capital to do some of the Zillow stuff but … Yeah, it was a fun time growing the company. Then my father passed away four years ago and then it was time to sell the company. We sold off to Metrostudy and I still work for them while doing some other things in the local area, including building and real estate investment and-
Julie Clark: Great.
Todd Britsch: Commercial development and all that stuff.
Julie Clark: It’s addictive. I always find that if you get into the real estate, if you touch it in any way, I mean, it’s just addictive. This is such a passion, it becomes a complete lifestyle. I mean, I feel my kids are experiencing, in a different way, the same thing you experienced is real estate Mom. They know about it, they are engulfed in it, as well. I love it, that’s a great story.
Todd Britsch: My oldest, who is now 24, is a realtor.
Julie Clark: Wow.
Todd Britsch: I have a real estate brokerage, as well, so he works for my real estate brokerage.
Julie Clark: Oh, which brokerage?
Todd Britsch: It’s called Landlink.
Julie Clark: Landlink, okay. Cool [crosstalk 00:08:29] is it more commercial or is it-
Todd Britsch: Land, primarily.
Julie Clark: Oh, I guess that makes sense, doesn’t it, Landlink.
Todd Britsch: We do a lot of subdivision work and we’re all land sales and stuff.
Julie Clark: That is great. You guys are brokers, not just working for your own account, right?
Todd Britsch: Yeah. I’m a broker and then I don’t do a lot of stuff, I do a couple transactions a year. But then I’ve got two or three brokers that do anywhere from five resale jobs a year to $10 million in land deals.
Julie Clark: Nice. I spent, myself, a few years focused 100% on land transactions to institutional types like Lennar and Equity and those things. I was deep into it for years, and I spent the first 16 years of my career working at Goodman Real Estate for John Goodman. Do you know John?
Todd Britsch: Yeah.
Julie Clark: I’ve been around the block, I learned all my chops from him back in the day, or he threw everything on my desk and that’s how I grew up. It’s all very interesting to me how it all connects back around at some point.
Todd Britsch: Yeah.
Julie Clark: Interesting enough, when I was at Goodman, I felt like after I left there, that I know way more now than I did when I was there. I knew how to do what I did, I mean, I was really good at it there, but it was a lane. In some ways I enjoy having this global real estate knowledge, putting it all together. I guess I don’t call myself even a broker, I call myself a transaction facilitator, because I just been around a bit, but good stuff.
Todd Britsch: That comes with getting older, too.
Julie Clark: Hey, you weren’t supposed to say that.
Todd Britsch: No, just me in my personal experience. I thought I was good at 34 doing this and I look back now being 50 and I am a helluva lot better at it today.
Julie Clark: Exactly.
Todd Britsch: That’s the way it’s supposed to be, right?
Julie Clark: That is the way, yeah, and we’re still surviving and we’re still going so that’s good news, right?
Todd Britsch: It is.
Julie Clark: Yeah, so let’s kick into the info and keep rolling here. I could be wrong because I don’t really run necessarily with a bunch of builders, but my transaction coordinator does and works for a few builders’ agents, I guess I’ll say, plus me. I’m hearing a little bit that there’s a lot of renegotiating going on, some of the builders that have a full plate might be selling off some of their stuff and maybe taking a pause, just to assess, not a stop, but maybe just a pause and adjust and a look before pushing hardcore through forward. Is that anything that you’re hearing, maybe, that there’s some regulation that they’re waiting on? I don’t know. Fill us in on what the truth is there, or what you know.
Todd Britsch: Yeah, I think there’s some truth to that and a lot of it’s my fault because I do a very large quarterly briefing for a good chunk of the builders within the Greater Puget Sound area and the Portland Metro region and part-
Julie Clark: Is that at an event, or is that on a newsletter that they subscribe to or what is that? Is that through Metrostudy?
Todd Britsch: Yeah. Metrostudy is basically a subscription-based product where you get online access and then you get access to me. Where I live, all day every day, is neck deep in the housing data, whether it’s resale or new construction, foreclosures, land sales, absorption rates, trending information, it’s all I do all day. A couple quarters ago, we started talking about when the environment that we’re in today was going to happen. More specifically, I started talking about the possibility of it two-and-a-half years ago and why it was going to happen and where we’re at.
Todd Britsch: Essentially what it is right now, and I know there’s a lot of nervous, gut-wrenching feelings out there, especially for a lot of folks that are in your boat that have just gone out and probably in the last three months have got into a bidding war on a couple of homes and then it’s like, okay [crosstalk 00:13:11] my gut doesn’t feel so good right now.
Julie Clark: Right.
Todd Britsch: And there is a correction in the process. There’s a number of things that have occurred to cause this to happen. There’s almost three, four things all hitting at once.
Julie Clark: What are those?
Todd Britsch: Well, first and foremost, the head tax against Amazon and the other large companies in Seattle. Well, what Seattle City Council did was, I don’t want to use the word catastrophic, but very effective in what their goal was to slow down the impact of cost of housing.
Julie Clark: Meaning scare the S out of people?
Todd Britsch: Yeah, pretty much. You look at these large corporations, and the Seattle City Council is still in the mindset of, “We want to give roofs over the heads of all these homeless people. We want to give them a safe place to do their drugs. We want to put food on their table so they don’t go hungry. They’re the perfect [inaudible 00:14:17] on the planet.”
Todd Britsch: They’re going to extract that money one of two ways; it’s either going to come out of the taxpayer, or it’s going to come out of the corporations. So the large corporations now … I can tell you as a business owner, if I were in Seattle and I was running a large corporation like that, I’d be looking for an exit strategy.
Julie Clark: Right.
Todd Britsch: Or I’d be hiring lobbyists to outroot every single one of those Seattle City Council people. The notion that Seattle is not business friendly is absurd because the general populous is all for the business growth in Seattle. It’s just these few city council members that we have now that are trying to fix their problem instead of managing their monies better. That’s one.
Todd Britsch: Let me preface this. I don’t say this as if Amazon is going to pull out of Seattle or ZymoGenetics, or some of these other large companies are going to pull out of Seattle. I don’t think that’s the case. However, if you’re an Amazon employee that was recently hired and you have an option to go to the second headquarters, or you’re management and you’re looking to move those individuals off to second headquarters, they just absolutely put a pause on the home buying.
Julie Clark: Right.
Todd Britsch: They don’t know if they’re going to move off or not. Simultaneously-
Julie Clark: Well, I think also what that did, from my perspective, because I do a lot of residential brokerage right now is it caused buyers to be afraid to pay top dollar or full market price for the homes.
Todd Britsch: Right.
Julie Clark: Because the uncertainty, there’s just uncertainty. Maybe the answer wasn’t, “Oh, this is going to happen,” but it was like, “Ooh, God. You mean they’re talking about doing something like that?” I mean-
Todd Britsch: Yeah.
Julie Clark: You know.
Todd Britsch: Yeah.
Julie Clark: And it just caused people to think that, well, it might be okay for now but, I mean, buyers, which is all this is about buyers’ perceptions, might cause the market values to go down, so I don’t want to pay full top boat. I tell all my flip friends that flip houses and stuff, you might want to start thinking about leaving something for the buyer to finish, or at least a perception that if the market goes down a little bit, alls they have to do is finish that bathroom downstairs and they’ll get some market value back, rather than trying to give them a perfectly finished blinged out house that they’re scared to buy because they don’t have any equity left and they think the market is going to go down.
Todd Britsch: Yeah. The perception here, too, is people think back to a recession of 2008 to 2011, essentially, 2012; that was not a recession. We were so close to tipping upside down it’s unbelievable. Most people are completely unaware. They just think it was a great housing recession. While it was, when you look at all of the fundamentals that created the housing collapse, those fundamentals are not anywhere in existence today.
Julie Clark: Right. I think people know that. My feeling, I’d say, from being on the streets and having conversations, I feel people know that and they’re more scared of other things than that.
Todd Britsch: Yeah, and I think it’s more fear of the unknown.
Julie Clark: Right.
Todd Britsch: I will say this that my only large concern right now is the corporate bond market.
Julie Clark: What does that mean? How do you-
Todd Britsch: When you look at, and I do this as … I’ll phrase this as simply as possible and that’s not for your listeners, that’s for my benefit. I do not have a college education in economics but I just study the crap out of them. Quantitative easing ended in October of 2014, and that’s where the Federal Reserve was essentially buying all of the mortgage-backed securities, because there wasn’t a secondary mortgage market after the crash.
Todd Britsch: Well, that ended four years ago and consequently, Freddie and Fannie have been sitting on a good portion of their mortgages that they’ve been holding, and they hold the vast majority of all mortgages written. You flash forward to about a year ago where the Federal Reserve started liquidating hundreds of billions of dollars of mortgage-backed securities a month onto a secondary mortgage market.
Todd Britsch: Well, now, four years later, you’ve got Freddie and Fannie have now seasoned some of their loans that they need to move off onto a secondary mortgage market and are doing that. At the same time, we have Treasury Bills that are hitting the bond market, upwards of a trillion dollars this year. It’s a very small bond market, if you will. Consequently, when you have that much inventory out hanging in the bond market, then there’s discounts on those bonds and we see rates start to increase on those bonds, which is why now we’re getting dangerously close to an inverted yield curve on a two- to 10-year treasury note, which has been a real source of prediction for a recession. An inverted curve is where you’re getting higher yields on a two-year treasury bond, versus a 30-year or a 10-year bond, and the spread right now is at 0.22%. About a year-and-a-half ago it was about one-and-a-half percent.
Julie Clark: Yipes.
Todd Britsch: Two years ago it was two-and-a-half percent. When that becomes inverted, there is a recession to follow. Now it may be three, six, 12, 15 months away, but it’s predicted almost every recession since 1970.
Julie Clark: Yikes.
Todd Britsch: Now-
Julie Clark: What is a recession going to look like in this next phase of recession that probably is inevitable?
Todd Britsch: Right. This gets into the corporate bond side of things. With the Federal Reserve consistently raising rates, and they’re going to raise them two more times this year, they’ve already scheduled one for 2019, the bond rates continue to rise. So from a corporate standpoint on the corporate bond level, you’re looking at the amount of interest that corporations have to pay to borrow money, is rising fairly quickly. When you do that, that starts to erode profits. When it erodes profits then the stock market takes a hit. Let alone when the bond market just starts to go nuts anyway. If you remember probably 120 days ago when there was a hiccup in the bond market, just by treasury notes jumping up I think a half point, it threw the stock market into chaos for a couple weeks. Well, that’s going to happen, again, I think, as we move into 2019, somewhere in the third quarter of 2019.
Julie Clark: How is that going to trickle down to affecting the builders, and the homebuyers and our crowd? Is it going to … Obviously the rates, whatever happens with interest rates or how does that translate into a direct impact on us?
Todd Britsch: One, it starts to erode consumer confidence, when the stock market takes a little bit of a turn, which it’s going to. You can’t continue this exponential pace of growth that we’ve seen for essentially eight years now, I think is what it is. It just doesn’t happen. Cycles occur within housing, within the economy, the stock market, all of it and it’s typically about that seven- to eight-year cycle. We’re in the longest growth, or longest economic expansion in the history of the U.S. It’s going to break. It’s not going to break bad, this is a soft landing. This is what I like about this recession. They happen, so kind of think 1986, think 2000.
Todd Britsch: Even after the dot-com crash, housing exploded, so recessions don’t always necessarily mean there’s a depression in housing. However, job growth does. In-migration, those two things within a geographical location do definitely impact housing. We are seeing our annualized job growth numbers come down. If I look at the fourth quarter of 2017, our annualized job growth was 60,000 new jobs, first quarter it was 33,000 new jobs, roughly, second quarter it was 22,000 new jobs, year over year. So our job growth is definitely slowing. Unemployment is sitting in the mid-threes to low fours, that’s full employment.
Julie Clark: Why is job growth slowing? Is it technology taking over jobs?
Todd Britsch: No, I don’t think so. We’re a very tech-oriented geographical region with Amazon and Google and Microsoft, obviously, and a slew of other companies that are within the Puget Sound. We’re the new tech mecca of the West Coast. So the growth in technology, obviously, helps the Pacific Northwest. What’s happening now is, and this occurred a year ago, Amazon was pretty close to fulfilling all of the jobs that they had in the Pacific Northwest.
Todd Britsch: Now it’s my understanding, don’t quote me on these numbers, that they were about to add another 20,000 jobs and then the head tax came through and they decided not to fill up that tower in Seattle, I think it was the Rainier Tower. They did lease some space in Bellevue, but they may not bring those 20,000 jobs here in the Pacific Northwest. They may reserve those for the second headquarters. I just don’t know. They’re very close to the vest with all of that information.
Todd Britsch: But the tech sector in the Northwest has essentially leveled off in regards to its hiring, and that was where the vast majority of our growth has come from in the last five years. We’ve added, since 2010, 933,000 new drivers to the State of Washington, about 67% of those come into the Puget Sound. That’s why it’s a little bit harder to get around these days.
Julie Clark: A little?
Todd Britsch: And that in-migration has slowed. Last year it was an average of roughly 11,000 people, this year, just the gross in-migration. The gross in-migration this year is averaging at about 7500 to 8000 people per month, so the in-migration number is slowing meaning we’re not attracting as many new people into the state.
Todd Britsch: Now that said, that’s not necessarily a bad thing, either. There’s still a pent up demand. When I do the math of the number of people that migrate into the state, 1.78 income earners per household, 60% homeownership and you do all that math, calculated off the number of homes that have been built over the last couple of years, and the shadow inventory and everything else, it creates a number for roughly 35,000 owner-occupied homes still in demand.
Todd Britsch: Now that gets into the next scenario, which is urban growth boundaries and growth management where we don’t have any buildable lands left in King and Snohomish County so we’re not adding new inventories into the marketplace, alls we’re doing is extracting inventory. From a supply and demand, economics 101, at the end of the day, there’s really no room for a housing market collapse here, per se.
Julie Clark: Right.
Todd Britsch: We did-
Julie Clark: But, again, it comes back to, like you said, consumer confidence, right? And even though, it’s almost to me like the buyer perceptions drive, seem to be driving my world a little bit, right?
Todd Britsch: Mm-hmm (affirmative).
Julie Clark: It’s, on one side, or it also, on the sellers side, I actually think it’s good news for real estate agents, I think. I’m even feeling it in my own business. People are like, “Welp, think we hit the peak. I’m going to sell now before things go down any more.” Right? Or they were holding out or something and now, “Oop, I better get going.” Rates are rising, prices are falling and I think we’re going to see the listings pick up, but we’re going to see them pick up at a somewhat adjusted price because then on the flip side you have buyer perceptions, and I could be wrong. I’m just talking of feeling it because I’m in the mix of it everyday. Where they have the money, they want to buy, they don’t want to compete and they will pay full price if it’s the right price and it’s not aggressive.
Julie Clark: But the moment they think they have to compete, they’ll sit on the sidelines, they don’t want to do that. For builders, again, it’s, I think, a price adjustment because there’s no room for improvement. Whatever they’re getting, it’s 100% done. There’s no improvements, they’re paying full price, all the equity is out of the thing starting out, so they’re backing down, they’re scaling back on the prices a little bit. This is my read, I could be wrong.
Todd Britsch: Yeah, we’re not going to see a huge price deduction from new construction. The reason is, is because when you look at the lot supply. You go back to the Great Recession, the lot supply back then was essentially, of recorded lots, was somewhere around a six-year supply of ready to build, vacant lots. Today we’re sitting at anywhere … Like Snohomish County only has a 12-month supply, King County has an 18-month supply, Pierce County a 20-month supply. That’s a normal level. From number of homes under construction, there are 2000 new construction houses that are under construction currently. You go back to 2007 and there were close to 7000 homes under construction.
Julie Clark: Yep.
Todd Britsch: Night and day. It was interesting and I read this article through CNBC and I think I saw one in the “Seattle Times.” It was, “Inventories Up 41%.” I’m looking at numbers and I’m like who the hell said that? Because I got these numbers plastered all over my computer. What they were referring to, which they were completely vague in the article, was months of supply. Months of supply rose by 41%; here it is, it’s an alarming number. It went from 1.2 month supply, to 1.7 month supply.
Julie Clark: Yeah, exactly.
Todd Britsch: I’m sorry, but holy crap. Can we quit the hyperbole?
Julie Clark: Right, but that’s what the average person who’s not a builder, that’s just a buyer or a seller out there, they hear that, right?
Todd Britsch: Yeah.
Julie Clark: And that’s it, right? It’s not a big change. There might be a little bouncing around a little bit, but there is no dire emergency necessarily going on here. But even if that’s the fact, it’s the perception of the average person that doesn’t follow this and just hears the news that drives some of this bumpiness.
Todd Britsch: Right.
Julie Clark: Then what happens, in my opinion is, then you get these brokers that are part-time brokers or whatever they are and that are not necessarily 100% in touch, or are busy but I don’t know, and they panic. They want to stay in the good graces of the sellers, so they actually perpetuate the problem, is what I think I’m seeing. Because they get worried, so they talk the sellers into these lower prices so they can look good and get that home sold for the price that it was listed at or maybe even 10 grand over or something, and that the brokers perpetuate sort of a price drop on their own by not controlling the conversations and calming everybody down.
Todd Britsch: Yeah, it’s-
Julie Clark: I feel like I’m seeing … I think from the standpoint of people who flip houses and stuff like that is we’re not, like you said, we don’t have a bunch of necessarily bad news coming our way. But for people that flip houses, the margins are not very wide, so even a 20 grand hit or adjustment or, needs to be recognized as paying attention. Again, like you say for the builders, maybe the outlook is not a huge hit there or whatever, but-
Todd Britsch: Well, here’s kind of a little stat that most people are just unaware of. You see interest rates rise and, okay, well the payment on that house has gone up $300, $400 and people can afford that. Here’s what happens though. Let’s go back to say the second quarter of 2016, interest rates were at 3.41%. The average closing price for a house was $450,000. Now, assuming the same criteria for the next two years of data, then I’m going to explain here, let’s make the same assumption that everybody has no debt and they put zero down on that house, just for the sake here. The payment on that $450,000 house was about 2500 bucks, the income required for that was roughly 97,000.
Todd Britsch: Now you flash forward to the second quarter 2017, the median close price for new construction was $491,000. Interest rates instead of 3.41% were 3.93%, that creates a payment of about $2800 a month. The income required on that from $97,000 to $110,000. Now second quarter 2018, that median close price averaged for the Puget Sound, went up to $581,000 from $490,000, payment went to $3394. So my income now to qualify for that house with zero debt is $135,000.
Julie Clark: Right.
Todd Britsch: So our home prices in the last two years have gone up on average 29%, but my income had to increase by over 40% to keep up.
Julie Clark: Problem, yeah.
Todd Britsch: Yeah, so we’ve eliminated a ton of those buyers. Now if we look at where the vast majority of where those buyers were in ’16, ’17, and the first part of ’18, they were all coming in, in the state, in-migration. It wasn’t that Burger King manager all of a sudden got a 100% increase in pay. It was all of this in-migration and these tech jobs that were coming in, now those have slowed down. They slow down, in-migration slows down, the housing market slows down. That’s all that’s happening.
Julie Clark: Yep.
Todd Britsch: It’s not a collapse of the market, but for your folks that are flippers, you have to be a lot more cognizant of everything. Your labor costs, your material costs, all of that is going to play a role.
Julie Clark: Right. And they’re not hand in hand. And real estate taxes shooting up through the-
Todd Britsch: Oh, yeah.
Julie Clark: Oh, my God. I think we haven’t felt the effect of the increase in the market hasn’t been fully thrown into the real estate taxes yet, so I don’t know. Are we going to get nailed on real estate taxes as things kind of even out a little bit for a minute here? Right? [crosstalk 00:35:00] It’s kind of a combination of a bunch of stuff that just makes you a little bit uncomfortable, right?
Todd Britsch: Right. So, I-
Julie Clark: Just that little bit of uncomfortableness makes people misinterpret the deep nature of the information. Then they, like I said, then they start to make decisions based on not being fully, fully informed and things happen.
Todd Britsch: Yeah. So I called for peak pricing in the fourth quarter of ’17 and there’s always this run up afterwards of pricing and, consequently, on average, home prices have probably gone up another 5%, 6% in that timeframe, whether it’s resale and/or new construction and that’s kind of where pricing is going to come back down. So then you’ve got this buyer mentality-
Julie Clark: What do you mean pricings were to come back down? I agree with you, so you mean it’s going to come back down to that 5% or 6%?
Todd Britsch: Yeah, pricing is going to drop [crosstalk 00:36:02]
Julie Clark: That’s what I think, too. I’m glad to hear you say that because that’s what I feel. Just, like I said, alls I’m doing is touchy-feely stuff of being involved in everything day-to-day, so good stuff, right.
Todd Britsch: Yep, so here’s what the buyers need to understand for you folks-
Julie Clark: Let me-
Todd Britsch: That are [crosstalk 00:36:19]
Julie Clark: But does that go for new construction, as well, or just resales?
Todd Britsch: New construction is going to be … It’ll lag a little bit further down the road. Only reason there is that we still have a severe labor shortage and we’re not feeling the effects of the lumber futures yet. When Trump put in the tariffs on the Canadian lumber futures of, I think it was 10%, when he put in that lumber futures, may be as high as 20% when he got done doing it, but lumber futures went from $320 a linear thousand feet, to $640 in a 12-month span. I may be bad at math but a 10% tariff does not constitute 100% increase in future lumbers, but that’s what occurred. Lumber futures are back, they’re on their way back down. The last time I looked, which was a few weeks ago, they were sitting at $420.
Julie Clark: What’s driving them back down?
Todd Britsch: Prices reach a peak like that and then we get this flood of lumber that hits the market. It’s like any other commodity and it’s starting to work its way back down, and then you also start to hear nationally about a softening in the housing market. Well, the softening in the housing market is simply due to interest rates. There are still so many buyers out there that are looking for houses, that now simply just can’t afford them because of what’s happened with interest rates. I think interest rates are going to jump up to 5.5% by the time we’re done with the third quarter of next year. I [crosstalk 00:37:50]
Julie Clark: Wasn’t there an article recently in the “Seattle Times” that said that feds easing rates and that they might even … I thought I saw something about that flashing around, I didn’t-
Todd Britsch: Yeah, they did tick downward, just these last couple of days or weeks or so. I haven’t looked within the last seven days, but I did hear that they had ticked downward. I think in the grand scheme of things, though, I think they’re going to peak at close to 5.5%.
Julie Clark: A year from now?
Todd Britsch: A year from now, yeah.
Julie Clark: That sucks.
Todd Britsch: You have to create that secondary mortgage market. If you look at Freddie and Fannie’s balance sheet, they’re completely out of whack in regards to their working capital, in regards to their debt structure. So they have to fix that balance sheet. We have to-
Julie Clark: Well, there goes into my next kind of note here to myself is I heard somewhere that a 1% change in interest rates equates to a 10% reduction in buying power.
Todd Britsch: Yeah, and that’s if prices are stable.
Julie Clark: If pricing is stable, right. Well, so, I mean, if prices are going to come down 6%, then that actually helps buying power, right?
Todd Britsch: That will help buying power and the other thing to keep in mind, too, is that the fed rate is correlated but not necessarily related to what happens to mortgage rates. We saw the fed rate go up in 2005, but interest rates stay flat and drop down in ’06 and ’07. They’re not tied to one another in a marriage, if you will.
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Julie Clark: What are the top three indicators? Be jobs, right?
Todd Britsch: Jobs, absolutely.
Julie Clark: What else?
Todd Britsch: In-migration.
Julie Clark: In-migration.
Todd Britsch: Without people moving here you definitely cannot … You’re going to lessen your demand for housing. Then for me, it’s more of global economics. I start looking at the global economics, down to the national, and then into the local. From the local standpoint, I will say this, that whatever the Seattle City Council does could potentially impact the rest of the Puget Sound, simply because that’s where our job growth is. You have companies like Amazon that want their employees to live close to work, and then you’ve got the select few that are just anti-growth and anti-jobs and that’s Sawant and a number of other folks on the city council like her.
Julie Clark: How did that happen? Jeez.
Todd Britsch: Well, you got too many people up there that don’t necessarily want to work. No lie, this was a news report that was televised in Portland probably three years ago. They interviewed a couple that had moved up here from Alabama or Arkansas, but they moved up to Portland because they loved the vibe, the kind of the hip artsy-fartsy feel of Portland. Portland is just a really cool city.
Julie Clark: Yep.
Todd Britsch: However, with the way housing prices were going two years ago, this news reporter interviewed them and these people were heartbroken because she was a community organizer, he was a part-time musician and worked part-time and oh, my God, now they both had to get jobs to afford rent and put food on the table. I’m sorry.
Julie Clark: Yeah, oh, boohoo.
Todd Britsch: But there are so many people like that and, I’m sorry, they conjugate around Capitol Hill and there’s a lot of people up there that don’t behave this way, but there’s a big consortium of people up there that don’t feel like they should have to work to put a roof over their head, it should just be provided for them.
Julie Clark: Well, we’ll be watching everything closely. I think we need to talk more about that at the club, Joe, and the city council issues and hot topic. But, yeah, Joe, you can be in charge of that one. I’ll-
Joe Bauer: You got it.
Julie Clark: But, okay. Hey, Todd, what do you read? What publications, what do you read daily or monthly that might be of interest to us, that we might be able to read, aside from subscribing to maybe Metrostudy?
Todd Britsch: To be honest, I read the Times, I read CNBC, Fox Business. I watch MSNBC, CNN, I watch Fox. I am-
Julie Clark: What about, what’s our local paper, “The Daily Journal of Commerce”?
Todd Britsch: I read that.
Julie Clark: Yep.
Todd Britsch: I don’t-
Julie Clark: If you had to pick your top two, what are your top two that you’ve, or they all give such varied information, you got to collect it all and then sift it, and see what falls out, is somewhat accurate?
Todd Britsch: Yeah. What’s interesting is, depending upon who you’re reading, many have a tendency to omit certain portions of reality to their articles. It’s important, at least for me, to have it coming in from multiple sources. I can’t say that I have one particular favorite, I just read a lot. [crosstalk 00:44:27] When I get home and I’m sitting in my chair, my wife’s looking at me like, “what are you playing?” I’m like, “I’m not playing anything.” I’m constantly reading economic news-
Julie Clark: Any good books or any good things that you … Magazines or subscriptions that you subscribe to. These are all, I see “The Seattle Times” and “Daily Journal of Commerce.” Are there anything else?
Todd Britsch: I behave more like a millennial in that aspect where I’m constantly on the web just scouring different articles. The source could be in New York, it could be in Minnesota, it could be here in Seattle, it’s all across the board. I’ll just punch in … Take the bond market for example, which is where my number one concern is. You type in inverted yield curve, and so everyday I get multiple feeds now on inverted yield curves. The problem that I found when I was just focusing on the “Seattle Times” or just focusing on CNBC or Fox Business is that’s the only feeds I would get. I’ve had to become more astute to widen my net in capturing that information.
Julie Clark: I hear ya. Another question for you. We were talking about Portland and … My daughter just dropped something. That’s what you get for doing podcasts at home. What parts of the country lead versus lag the others? Does it happen in California first and we lag behind and Portland lags behind us? Or does it happen, do things tank in Florida first and then is there any insight there? Because a lot of people in our Seattle Investors Club and a lot of the investors around the country that we network with, I guess I would say, are very hot right now on investing outside of their own market, right?
Todd Britsch: Yeah.
Julie Clark: What can you tell us about … I mean, us, Joe and I, specifically, we are also invested in Las Vegas, which is doing nicely.
Todd Britsch: Yes, Las Vegas surpassed Seattle just recently.
Julie Clark: I saw that, hey, hey.
Joe Bauer: One market.
Todd Britsch: Yeah.
Julie Clark: Virtual high five, Joe, yeah, good picker there.
Joe Bauer: Yeah.
Julie Clark: But, yeah, in general, though, are there kind of schools of thought of which regions lead as far as indicators go?
Todd Britsch: Typically, it’s California first, which then trickles up into Washington, which then trickles down into Oregon. The idea that Florida or-
Julie Clark: Does the East, okay, go ahead. I was going to say does the East Coast lead the West Coast?
Todd Britsch: It’s been different on every cycle, I will say. Historically, it’s been California first. But what’s been driving this housing cycle is completely different than any other housing cycle. We are building less homes today than we were say in 1998-1999, and 1998-1999 was not necessarily a housing boom. But you correspond what occurred after that with the dot-com crash and then into 9/11, and then following up through the 2000s where we had the mortgage meltdown, today’s environment is not a housing boom. Today’s environment is an inventory issue.
Todd Britsch: Part of it is created by the fact we went through this massive downturn and wiped out the vast majority of our builder developers and it’s taken them years to work their way back into the fold. The other part of it is that we’ve got growth management that has not been addressed properly. The Puget Sound Regional Council expects the vast majority of our future growth to be vertical. They have not expanded the urban growth boundary, and they’re expecting the vast majority of our future growth to be within cities of Covington, Renton, and Burien and all these mixed-use complexes. Well, you can’t build mixed-use complexes because you’ve got the condo defect litigation issue that carries on for about 12 years after construction, so nobody’s building condos. It’s not because there’s no demand, it’s that the cost to build them outweighs any value of buying one.
Julie Clark: Right.
Todd Britsch: We created this perfect storm ourself.
Julie Clark: Yep. We did that. But it’s all not bad news, right?
Todd Britsch: No. To get back to your previous question because I know I diverted there for a second, in this particular cycle, what is happening right now outside of the couple events that we talked with is the Chinese market, as well. The Chinese buyers have essentially dried up. The Bank of China is starting to call loans-
Julie Clark: Yes.
Todd Britsch: Across the country-
Julie Clark: I work for a Chinese brokerage firm.
Todd Britsch: There you go.
Julie Clark: Yeah.
Todd Britsch: From a corporate standpoint, some of the largest developers in Canada and the U.S. are getting their loans called by the Bank of China, because China’s going to start to head into a deep recession. They’re GDP growth is … GDP to debt ratio is off the charts. It makes the U.S. look like a child compared to what they’re going through, let along their demographics. Because they had the one-child law for so many years they have not replaced the aging population so they don’t have enough revenues to pay for the aging population. Their economy is on a razor’s edge. I spoke with another economist earlier this year at the Master Builders Association. He believes that China may be requiring repatriation of assets and money at some point. He was talking about this in, I want to say, it was February-
Julie Clark: But what kind of projects are we talking about? We’re not talking about people who own single-family homes, we’re talking about big institutional-type investments and stuff, right?
Todd Britsch: Right. Right now it’s big institutional, it’s large projects. I don’t know the exact dollar amount, but the one investor that I am good friends with that I spoke with the other day, he was looking at a multi-billion dollar portfolio that the bank called the loan on the builder. Chinese bank, Chinese builder, so he’s out scrambling for other monies right now.
Julie Clark: Mm-hmm (affirmative).
Todd Britsch: That’s all I can say. I know more details on it, I just can’t speak about it. Now from a logistical standpoint, it would be a nightmare for China to work its way down to the $1.5 million homeowner and have them repatriate those assets. I’m not saying it’s impossible, because they’re a Communist country and they’re going to do what they do irregardless. There’s nothing that the populous can do to stop the government if-
Julie Clark: What does that mean, though, because they’re coming here with cash?
Todd Britsch: Right. They’re coming here with cash to get their cash out of the country. So if-
Julie Clark: But they’re not borrowing. The people buying $2 million, $1.5 million homes on Newport Shores are not borrowing Chinese bank money. I mean, I guess they might be borrowing it from East West Bank locally here, but majority of them are putting a five-year loan on for 50% of the value of the house and in five years paying it out. And the only reason they put that on is because they’re trying to get the other half of the money out to pay it off.
Todd Britsch: Right. When the other individual I was speaking with, the economist that brought this up, my initial thought was there’s no way on God’s green earth that’s ever going to happen. If they get down to the individual homeowner, that’s pulled anywhere from $1 million to $10 million out of the country to invest in a single-family residence, or an apartment building or whatever.
Todd Britsch: Now, I’ll just go to worst case scenario here as a what if. Okay. With the Bank of China, which is a government-run banking institution is now calling their large loans before the construction is completed, they’re calling that loan due because they need the capital. If they can’t get enough of that capital, there is the possibility that they start working their way down through those individual investors that-
Julie Clark: I got you.
Todd Britsch: That came into the country.
Julie Clark: Right.
Todd Britsch: Now this gets into opportunity.
Julie Clark: Or what they do is whoever’s got the project, what else do they personally own and they go down their chain-
Todd Britsch: Yes. Now think of it, in a Communist country, those that have that kind of money in China, the billions of dollars, they’re going to bribe a few people to keep their billions and then they’re going to start coming after the small fish, potentially. My brain, sorry, goes down worst case scenario. Now, worst case scenario is they do come after those individuals that have the $1.5 million to $4 million, $5 million homes. They’re going to make them sell those and repatriate that money. All of a sudden, inside the Puget Sound, we’ve got all these high-end homes, which in Seattle and on the east side, I think, equates out to about 15% to 20% of our overall market. All that inventory hits the market within a 24-month span. Now we’re going to start to see huge depreciation in that high end, especially with where interest rates are and where those buyers have come from, primarily China.
Julie Clark: I think they’ll be an indicator before all that happens meaning that, I mean, I think people are still coming and buying in other markets, as well, because we have offices in other markets. But definitely I feel like it’s maybe it’s slowed down, but I would say all that, anybody coming over here, would dry up first, out of fear of that happening.
Todd Britsch: Oh, yeah. No, this is … There are so many what ifs that need to occur for it to get to that point. Again, it’s not a catastrophic thing. What that does is that starts to create opportunity. In this kind of recession that we’re going to go into potentially, it’s an opportunity. It’s not necessarily, I wouldn’t call it the end of the world at all.
Julie Clark: I agree. I think that for our world and for the people that we talk to, all this change is really good for us because the way it was going was very difficult. I think some sort of adjustment or whatever it is we want to label it, is actually a good thing. Even for smart investors and savvy investors and probably builders, even bad news can be a good thing. I hate to say it. If you’re smart and you stay on top of things and you are prepared to pivot and take advantage of what could happen, right?
Todd Britsch: Yeah. I would much rather have a soft landing than a hard landing three years from now.
Julie Clark: Right. Well, we’re getting long here so I’m going to wrap up with just a couple more things here because I have two girls here that are anxiously awaiting to get on the camping trail. I want to say, I feel like my big concern for some reason is that wage growth isn’t matching up with everything else going on. What do you forecast or what do you think about that? I mean real estate taxes are going up, and I still don’t even understand the tax implications of the federal tax law changes and whether it’s going to be good or bad for me. I’m feeling like it’s not, like I’m caught in this middle spot.
Julie Clark: But more so I worry about is things feel like they’re turning big box again. It feels like Amazon is going to buy Redfin and Amazon continues to grow and these … For a while everything’s been taken over, buying up. Chinese buying this and that and maybe that’s changing, but what about wage growth? What’s your comment about that? Is it going to happen? Is it not? It feels like you have to do higher volume at a lower price, not just in real estate but in everything.
Todd Britsch: Yeah, it’s going to be hard to say. I mean, the wage growth is not going to keep up with housing here in the Puget Sound, it’s just not because the Puget Sound Regional Council has limited the amount of inventory on the market, period. It’s a supply and demand issue. You got demand for two homes but, I’m sorry, there’s one house out there on the marketplace. It’s just the way it is. Now, [crosstalk 00:58:01] what’ll end up happening is-
Julie Clark: Out here then?
Todd Britsch: Sales will end up declining because we’ll have fewer buyers who are going to be able to qualify, which then will give this perception of less demand, which is absurd but that’s just the way it is. You can’t [crosstalk 00:58:14]
Julie Clark: Or will it translate into maybe the condo market picking up?
Todd Britsch: The problem with the condo market is that condo defect litigation.
Julie Clark: I don’t mean new construction, I mean buyers, buyers. I already feel it kind of started happening where the buyer, because they can’t afford the single-family home, they’re now buying more condos.
Todd Britsch: Yeah, but that’s the same issue. There’s an inventory issue there.
Julie Clark: Okay, right, fair enough, right, yep.
Todd Britsch: There’s no inventory [crosstalk 00:58:43]
Julie Clark: Which they’re trying to confuse, with all this upzones, like Crown Hill having the upzone, right? You got single-family home now that’s going to be eight row houses, that’s part of their solution idea, right?
Todd Britsch: Yeah, but then those row houses are going to be at, what, a thousand dollars a square foot?
Julie Clark: Right.
Todd Britsch: Who can afford that? Amazon. Oh, wait, they’re not hiring anymore. There’s just caution. You just have to be very cautious in regards to the buying. I run a report for myself every month and it shows the percentage of buyers that are in that $2 million-plus or that $1.5 million to $1.75 million and I rank it all the way down to $250,000. The reality is, is that 50% of our buyers, still, are under that $550,000 mark.
Julie Clark: So their sweet spot is under $550,000 still?
Todd Britsch: Yeah, and that number will drop down if interest rates continue to rise.
Julie Clark: Right. But that’s just good info, you know?
Todd Britsch: Yeah.
Julie Clark: That’s just good info.
Todd Britsch: For your folks when they’re going out and they’re doing their comps, just to be safe, prices are not going to, I don’t think they’re going to drop 10%, but give yourself a 10% leeway on that. If you can’t make it work then just be careful.
Julie Clark: Yeah, right [crosstalk 01:00:04] exactly. That’s what I think, too. You should have some leeway that even if things come down 5% or 6%, that you’re still okay, you’re not making as much money but you can get out of it still. You’re going to be okay.
Todd Britsch: Yeah.
Julie Clark: Right?
Todd Britsch: Yeah, you got to have [crosstalk 01:00:22]
Julie Clark: I have noticed, though, the further north, for example, you go Snohomish County far up, North Shoreline area is taking quite a, to me it seems like, a noticeable drop in single-family prices. Because I think people are like, “Oh, wait.” I was feeling like I was being forced to go up to Shoreline and push further and further north, but now that things are adjusting, maybe they can come back in, but then that’s a temporary pause, I think, right? Let me go back and look closer in. “Oop, it only adjusted by 5%, eh, I still can’t afford it.” So then it’s just like a timing thing, then they’re going to go back.
Todd Britsch: Yeah.
Julie Clark: Out there.
Todd Britsch: Here’s part of the issue when you go up into Shoreline or anywhere along that 99/I-5 corridor where the transit centers are going. In those geographical areas that had those upzonings, we had home prices go up by 200%, 300% in some cases. The inexperienced realtor is looking at a house-
Julie Clark: Right.
Todd Britsch: That’s just a block away and, “Oh, that one sold for $600,000. This one’s worth $600,000.” No-
Julie Clark: Right.
Todd Britsch: This one’s only worth $350,000 with the zoning, but they don’t get that, nor do some inexperienced buyers that come in and pay those exuberant prices for those homes and, consequently, you can get hurt in those areas if you’re not careful.
Julie Clark: Right, well-
Todd Britsch: Let alone, those geographical areas were pre-platted back in the ’50s and ’60s and before you do anything to what seems to be a one acre, large lot, developmentable piece, you have to be very careful because that could’ve been platted and you’ll have to get the entire neighborhood to okay whatever you do [crosstalk 01:02:06]
Julie Clark: I ran into that on one of my own deals, yeah. I ran into that on the restrictions and stuff like that, right?
Todd Britsch: Yeah.
Julie Clark: Very good point for all you guys listening is that all those neighborhoods in Shoreline, for example, or wherever you’re at, you need to check and make sure that there’s not some sort of stuff that runs with the land from long ago that restricts or needs approval by everybody in the subdivision. People get spanked on that sort of thing if they’re not paying attention, right?
Todd Britsch: Yeah, for sure.
Julie Clark: Well, let’s wrap it up with something a little bit lighter. Well, first of all, can we do a quick summary, because we talked about a lot of stuff here. In general, we’re saying, hey, guys, don’t panic, right?
Todd Britsch: Right.
Julie Clark: Things are not going to crash and burn we don’t think, right?
Todd Britsch: Yeah.
Julie Clark: Unless what if, what if happens and China blows up. But in general, right now, interest rates do you think are going to continue to click up over the next year and maybe hit out at 5.5%, which will erode some buying power, which will take some buyers out of the market because the wages aren’t following? However, in general, buyers are still out there, price adjustments might be 5% or 6%. Be careful about your buying. Pay attention. Be a little bit conservative but don’t panic. Is that where we’re at?
Todd Britsch: Yeah, don’t panic. The resale side of things, sales are down 3%, that’s nothing. Homes for sale jumped by 20%. New listings jumped by 12% for, I think these numbers are June numbers but, I haven’t looked at July’s yet and August aren’t out. In the months of supply, if you hear numbers like the 41%, check those numbers and look to where they’re really coming from and don’t pay attention to too many of the articles because it’s [crosstalk 01:04:17]
Julie Clark: Right.
Todd Britsch: The reality is that right now as far as new construction goes, we have the lowest levels in the U.S. On the resale side of things, we have the lowest levels in the U.S. Out of all the major markets we track at Metrostudy, our inventory levels are at the bottom and we still have in-migration.
Julie Clark: There we go. Not so bad. Are there any other markets that you like outside of Seattle?
Todd Britsch: I do like, well, Las Vegas. There’s still portions of Texas that I like. Florida is doing really well. I’d stay away from California. Any part of the country right now that really is fed by a lot of Chinese buyers that, I’m just [crosstalk 01:05:06] very standoffish in those geographies right now.
Julie Clark: That would be Houston, lots in Houston, I can tell you.
Todd Britsch: Yeah.
Julie Clark: Because we have a Houston office.
Todd Britsch: It’s concerning, and it’s just because of the government. You just don’t know how they’re going react.
Julie Clark: Okay. Well, let me ask you a fun question now, aside from all this real estate analysis. What do you do for fun outside of work?
Todd Britsch: Well, being that I have four other companies and a 50-hour job, I golf whenever I can, and I fish whenever I can.
Julie Clark: There you go.
Todd Britsch: Spend time with my wife and kids.
Julie Clark: Golf, fish, family. Sounds good to me. Sounds so good to me that I’m ready to wrap up and go spend some time with my own family here, and my sidekick, Buddy. Everybody knows who Buddy is. Buddy’s our dog.
Todd Britsch: Buddy’s my dog.
Julie Clark: Buddy’s your dog? What kind of dog?
Todd Britsch: Well, it’s my wife’s dog. It’s a Shih Tzu/Bichon Frise.
Julie Clark: Oh, cute.
Todd Britsch: My dog, his name is Zeus. He’s a Labrador and, oh, really, I’m going to forget.
Julie Clark: Labradoodle?
Todd Britsch: Oh, Lord, no.
Julie Clark: What do you mean, that’s what I got? That’s our little boy over here [crosstalk 01:06:24]
Todd Britsch: No, mine’s a Lab Border Collie.
Julie Clark: There you go, well, that’s a little tougher. Buddy is pretty much the biggest wimp yet the cutest dog on the planet. We love you, Buddy. Buddy’s going camping with us.
Todd Britsch: Well, you figure Zeus would be a tough dog and he’s afraid of our cat.
Julie Clark: That’s right, Joe. Pretty soon you’re going to have to get a little sidekick to hang out with you guys, you and Emily in the van there. Someday, maybe, you never know, could happen.
Joe Bauer: Well, as long as they would … Well, once we get through the national parks we will definitely do that because they don’t let them in the national parks.
Julie Clark: Oh, really? Interesting. You hear that, Buddy? No national parks for you, boy.
Todd Britsch: Well, I will offer this up for you guys. I do probably 40 to 50 speaking engagements per year. If you guys ever get your people together in a room and you want me to come in and do one of these briefings in economic forecast that I do for my clients and the Master Builders Association and so on, I’d be more than happy to come in and do that.
Julie Clark: Awesome. Joe’s going to hook you up because we get our people in a room once a month down in Renton at the Renton Technical College.
Todd Britsch: There you go.
Julie Clark: We get a good crowd and you will be popular. We book a few months out, so I’ll let Joe and you hook up on that and we’ll get you in. That would be fantastic, that would be fantastic.
Joe Bauer: Yeah, absolutely, absolutely. Todd, is there anything you’d like to promote while you’re on the show here?
Todd Britsch: No, I’m good, guys. I appreciate it though.
Julie Clark: But the subscribers to Metrostudy, is that usually companies or individuals?
Todd Britsch: Companies. Because the average subscription across the board is about $12,000 a year, so it’s builders, lenders, appraisers, private equity groups, the bigger guys.
Julie Clark: Got it. Okay, all right. Well, we look forward to seeing you down the road at Seattle Investors Club. Joe, where can everybody find the information about today’s podcast.
Joe Bauer: Yeah, guys. Make sure you check out the shownotes at seattleinvestorsclub.com/47, that’s seattleinvestorsclub.com/47. We’ll have all the shownotes there, as well as, if you like this show at all, please, please give us a review on iTunes. You can get there quickly by going to seattleinvestorsclub.com/itunes. For every five star review that we get, it totally helps us out to get our voices out to more people. Thank you if you’ve done that.
Julie Clark: Thanks, guys. We appreciate it. And thanks, Todd, once again. I am going to sign off and I hope you guys all enjoy or by the time you hear this, I hope you’ve all enjoyed your holiday weekend here. Over and out. Safe travels if you guys are going anywhere and as always to you, Joe, wear your seatbelt. I’ll talk to you guys soon. Thanks, Todd.
Joe Bauer: Thanks, bye.
Todd Britsch: Thanks much, bye.
Julie Clark: Bye.