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Bloomberg Radio New York

06:14 min | 11 months ago

"fannie mae redfin" Discussed on Bloomberg Radio New York

"You very much with the Bloomberg business flash out of San Francisco. Now, as we've been focused on today, more high well, high is an understatement. More massive inflation prints with the PPI coming out at 11.3. Yesterday we had the CPI out at 9.1. Let's talk with someone who can maybe offer you a solution in terms of the right hedge. David auerbach joins us right now managing director from armada ETF advisers and the cool thing is David with you and my co anchor pretty good. I can say, it's great to have you all here. Yeah. Definitely is. David got his BA at Texas. Did he? And his MBA at SMU. Well, the only reason he's telling me that is because for your information, David and for our entire audience, is my brother actually went to SMU. I grew up near SME. I'm a Dallas Dallas gal. I spent a few years hitting the bars around SMU. That's the same thing as getting my favorite places highland park, one of my favorite places to hang out. Let's get back to, well, actually it's really a real estate and partly residential story that you have for us, David, right? Because you think this is a great way to hedge against inflation. Absolutely. And thanks so much for having me. Really appreciate it and love the Dallas ties that's so cool. We take a very unique approach at armada. When we launched the home appreciation U.S. 3D TF in March, we had this view that we're building our fund on two fund principles. Number one, where people relocating across the country and then which of the residential REIT segments are benefiting from that relocation. From where we sit, we know that real estate is personal. If there's one thing that the three of us all have in common is that we're very fortunate enough to go to sleep with a roof over our head. Whether we lived in an apartment, we rent a house where we live is home. And that home is the most important investment decision that you make every single day. And as you mentioned about inflation, well, we know that interest rates are going up 75 basis points lock it in for sure, most likely a hundred at this rate, but what that means is that cost of that mortgage now gets more expensive. You have to come more to the table with the down payment. And so that's going to affect many first time home buyers and those that are probably in the market right now trying to buy that house. And for so many people, it's just been impossible, right? I mean, not only were they priced out of the market when mortgage rates were cheap. Now they have no chance of getting in. I know a lot of people just anecdotally who can't buy a house and I know people who can't sell a house because the buyers just can't afford it now, is that going to change? You know, I would say in the back half of the year, we would see some moderation, but frankly, I also think part of the place into that whole number one rule of real estate location location location. If you go talk to folks that are in Nashville or Charlotte or in Austin, they may have a different perspective right now, my neighbor across the street sold his house within a week here in Dallas and almost got full offer on his property. And so I think there are pockets that you're still seeing massive, massive strength, but the bigger problem here is that we all know there is a massive supply demand in balance in the housing markets. There's just not enough housing inventory to satisfy the amount of demand that's out there. David, is that going to change? I want to bring up another Texan that we're going to have on a little bit later on the show. Danielle dimartino booth. Whom you may know, she advised the fed and wrote a book called fed up. She advised the Dallas fed. She has said it's possible that we have a glut next year of housing and cars because so many people are trying to fill this void. What do you think about that possibility? You know, I don't know about that glutton necessarily. Again, the part of the problem is that air quitting is that affordable housing product that starter house doesn't exist anymore for those first time home buyers. But instead, you're seeing this plethora of single-family rental platforms from like invitation homes, American homes for rent. There is a tricon. There's a lot of single-family rental properties that are out there. One other point, employment growth is driving household formation. We know that the employment market is still strong with a three handle on the unemployment rate as a result, again, with inflation going up, gas prices are up and if you're an apartment landlord, you're still knocking on your tenants door on the first of the month saying, where's my rent? Many of these apartment companies as an example are reporting double digit year over year NOI growth rental growth, strong quarterly sequential growth. We're going into the summer prime leasing season for these apartment guys that are 97, 98, 99% occupied. And so again, it plays back into that thesis of where you live is that most important investment decision that you make for yourself for your family and for your kids. David, we got about a minute here. This is a trend that's not going away anytime soon. Do you foresee any sort of pop of the housing bubble anytime in our near future? If there is going to be, I think, a lot that's going to be dictated on future increases of the interest rates. We know obviously this next one is there going to be more down the road this year because that will play into the home price appreciation and the moderation of the housing market going forward. But again, with us focused on house, our ETF here, we're just trying to take it on a quarter by quarter basis, taking the news that's coming at us from the government Fannie Mae Redfin, Zillow, Bloomberg, all the sources that are kind of telling us where the housing market is headed. And right now, I will tell you from where we sit, we really don't see that letting up until maybe like I said back half of this year maybe into next year. All right, David, thanks so much for joining us, great having you all on this morning. David auerbach managing director at armada ETF advisers talking to us about possible inflation hedges. He would suggest one, which is their home appreciation, U.S. REIT, the ticker is house. Spelled in German, HA U.S. and you can