EVICTIONS AS WELL.
ALL OF THIS COMES AS INDUSTRIES
FROM RESTAURANTS AND AIRLINES,
ARE STRUGGLING TO BRING WORKERS
BACK.
WE HAVE ZILLOW SENIOR MANAGING
ECONOMIST, CHRIS LYNN, AND
PATRICK WHALEN, A MEMBER OF THE
GROUP THAT OWNS FIVE
RESTAURANTS.
JAY POWELL ISNT WORRIED ABOUT
INFLATION, HOME PRICES ARE UP,
RENTALS ARE UP AND PEOPLE ARE
STRETCHING TO BUY MORE STUFF.
THE MARKETS ARE FEELING IT.
IS IT SAFE TO SAY WE ARE CLEARLY
IN RECOVERY?
>> I MEAN, WE ARE CLEARING IN
RECOVERY.
THE QUESTION IS WHETHER OR NOT
IT STAYS THAT WAY.
AND BY THE WAY, YOU MENTIONED
THE NASDAQS RECORD CLOSING HIGH
YESTERDAY.
IT JUST HIT ANOTHER RECORD
INTERDAY HIGH SHORTLY AFTER THE
OPENING BELL MOMENTS AGO.
SO THE MARKETS APPEAR TO BE
SIDING WITH FED CHAIR JAY
POWELL.
ONE OF THE KEY MEASURES THAT
COMES IN FOR A LOT OF FOLKS OUT
THERE WATCHING THIS IS INTEREST
RATES.
NOW, GENERALLY SPEAKING, THOSE
INTEREST RATES ARE HIGHER THAN
THEY WERE A YEAR AGO AND IN MANY
CASES SIGNIFICANTLY HIGHER.
NOW, SOME OF THAT WAS TO DO WITH
THE ECONOMIC RECOVERY LIKE YOU
POINTED OUT FROM THE PANDEMIC.
ALSO THOSE EXPECTATIONS FOR
GROWTH OF THE ECONOMY DOWN THE
LINE.
SOME OF IT HAS TO DO WITH SHARP
INCREASES IN PRICES FOR GOODS
AND SERVICES BECAUSE OF THE
PANDEMIC.
A LOT OF EXPERTS ARE LOOKING AT
THINGS LIKE COMMODITY PRICES.
COTTON, LUMBER, THOSE ARE
SIGNIFICANTLY HIGHER.
A LOT HAS TO DO WITH SURGING
DEMAND, BUT A LOT OF IT IS
SUPPLY CHAIN ISSUES,
BOTTLENECKED BECAUSE OF REDUCED
PRODUCTION CAPACITY OR SHIPPING
DELAYS BECAUSE OF THE PANDEMIC.
THOSE ARE ALL FACTORS THE FED
AND ITS LEADERS BELIEVE WILL BE
WORKED OUT IN THE MEDIUM TO
LONGER TERM AND THEN BROUGHT
BACK INTO SOME KIND OF
EQUILIBRIUM.
THATS WHY THEYRE USING THE
WORD TRANSITORY TO DESCRIBE THE
HIGHER PRICES.
BUT A BIG POINT OF DISCUSSION
RIGHT NOW IN ALL FINANCIAL
CIRCLES, IS ABOUT WHAT THE
MODERATION OF PRICES MEAN.
DOES IT MEAN A RESET BACK TO
WHERE WE WERE PRE-PANDEMIC, OR
DOES IT MEAN JUST A COOL-OFF
FROM THE HIGHER LEVELS WEVE
SEEN, AND ALL OF THAT HAS TO
PLAY INTO WHAT THE FED IS GOING
TO DO ABOUT RATES IN THE COMING
WEEKS AND MONTHS.
>> HOUSE PRICES ARE INSANELY
HIGH, BUT SALES ARE DOWN.
IS THAT BECAUSE THINGS HAVE
GOTTEN SO EXPENSIVE AT THIS
POINT, PEOPLE SAY IT JUST
DOESNT MAKE SENSE, I CANT
AFFORD IT?
>> SALES ARE DOWN RELATIVE TO
THE LAST FEW MONTHS WORTH OF
DATA.
IF WE LOOK BACK FURTHER INTO THE
DECADE LEADING INTO COVID-19.
SALES ARE AT A VERY HIGH LEVEL
AND PRICES ARE QUITE STRONG.
WE EXPECT SUSTAINED DEMAND GOING
FORWARD FROM DEMOGRAPHIC
FACTORS, LOW INTEREST RATES, AND
QUITE FRANKLY, WHAT WE CALL A
GREAT RESHUFFLING WHERE
HOUSEHOLDS ARE UNTETHERED FROM
OFFICE LOCATIONS FOR PERHAPS THE
FIRST TIME AND RE-EVALUATING
THEIR HOUSING NEEDS IN LIGHT OF
COVID-19.
WE EXPECT DEMAND TO BE STRONG
FOR THE FORESEEABLE FUTURE.
>> CHRIS, WE DONT HAVE ENOUGH
SUPPLY.
THE SUPPLY OF HOMES FOR SALE IS
AT RECORD LOWS.
THE FACT THAT THE FREEZE ON
FORECLOSURES IS GOING TO EXPIRE,
SO THOSE HOMES COULD BECOME
AVAILABLE, THE RENTAL FREEZE IS
GOING TO EXPIRE, SO THOSE
LANDLORDS CAN GET TENANTS OUT,
AND WITH LUMBER PRICES DOWN, YOU
COULD SEE BUILDING SPIKE AGAIN.
COULD THERE BE INCREASED SUPPLY
IN THE NEXT FEW MONTHS THAT
COULD IMPACT WHERE THINGS TRADE?
>> WERE STARTING TO SEE AN
INCREASE IN INVENTORY IN OUR
DATA, WHERE FROM APRIL TO MAY
THERE WERE MORE HOMES COMING
ONTO THE MARKET.
AS THE VACCINE HAS CONTINUED TO
BE DISTRIBUTED, SELLERS ARE
HAVING MORE CONFIDENCE TO RETURN
TO THE MARKET AND THATS
UNDOUBTEDLY GOOD NEWS FOR
INVENTORY.
BUILDERS ARE BUILDING, NEW
CONSTRUCTION IS UP, AND THERES
MULTIPLE SOURCES OF NEW
INVENTORY THAT WILL RELIEVE SOME
OF THIS PRESSURE ON UPWARD PRICE
GROWTH.
>> CHRIS, DO WE NEED MORE
PROTECTIONS, THOUGH?
WERE HEARING ABOUT MORE AND
MORE BUYERS WHO ARE SKIPPING
THINGS LIKE HOME INSPECTIONS,
WHICH ARE ESSENTIAL FOR PEOPLE
TO BUY A GOOD, SAFE HOUSE.
DO WE NEED TO HAVE PROTECTIONS
PUT IN PLACE TO THIS KIND OF
RECKLESS BEHAVIOR DOESNT
CONTINUE?
>> I THINK THESE BUYER CHOICES
ARE INDIVIDUAL HOUSEHOLD LEVEL
CHOICES.
SURE, BUYERS WANT TO BE
COMPETITIVE IN THEIR MARKET AND
THEY WANT TO GET THE HOUSE THEY
NEED, BUT ITS ALSO THEIR CHOICE
AND THEIR PRIORITY FOR WHAT
THEIR HOUSING NEEDS ACTUALLY
ARE.
THE MOST IMPORTANT THING FOR
BUYERS IS THAT THEY IDENTIFY A
HOME THAT MEETS THEIR NEEDS AND
THEIR BUDGET, AND I THINK THATS
THE PRIORITY.
>> YEAH, WELL, IF YOU HAVE NO
IDEA WHAT THE COSTS ARE INSIDE
THEIR HOUSE, SAY IF THE WATER
DOESNT WORK, THE FURNACE
DOESNT WORK, IT SUDDENLY GETS A
LOT MORE EXPENSIVE.
DOM, IF WE ARE FIRMLY IN
RECOVERY AND THERES AN AMPLE
AMOUNT OF AVAILABLE JOBS, WHY IS
THE BIDEN ADMINISTRATION
CONSIDERING CONTINUING THIS
RENTAL FREEZE?
>> I MEAN, ITS PROBABLY ABOUT
THE DISLOCATIONS IN THE MARKET
RIGHT NOW.
THERE ARE CERTAIN PEOPLE OUT
THERE THAT WOULD BE ADVERSELY
AFFECTED IF THEY WERE TO BE
KICKED OUT OF THEIR HOME, IF
THEY WERE TO LOSE THE ROOF OVER
THEIR HEAD.
THE PERSPECTIVE NOW FROM THE
BIDEN ADMINISTRATION IS YOU WANT
TO AT LEAST PROTECT THOSE
PEOPLE.
BY THE WAY, THOSE PEOPLE WHO ARE
WORKING RIGHT NOW, WHO ARE ABLE
TO PAY THEIR RENT AND CAN DO SO,
ARE LIKELY NOT FEELING THE KINDS
OF IMPACT THAT OTHER PEOPLE WHO
ARE LESS FORTUNATE ARE.
THIS IS REALLY ABOUT TRYING TO
FIGURE OUT HOW TO BALANCE ALL OF
THESE THINGS, AND BY THE WAY,
ITS GOING TO BE A DIFFICULT
SITUATION IF YOU HAVE THIS
DYNAMIC CONTINUE TO PLAY OUT.
BECAUSE YOU MENTIONED THOSE
HOUSING PRICES BEFORE.
THERES ALSO A VERY, VERY BIG
DEBATE AND DISCUSSION RIGHT NOW
ON WALL STREET AND MAIN STREET,
STEPHANIE, ABOUT WHY THERE IS
SUCH PRICE INFLATION FOR HOME
PRICES, AND, BY THE WAY, MANY
PEOPLE ON WALL STREET ARE
WATCHING WALL STREET ITSELF
ENTERING THAT MARKET, BUYING UP
CONSTRUCTION, BUYING UP
SINGLE-FAMILY HOMES.
THERE ARE A LOT OF DEALS OUT
THERE THAT ARE CAUSING
CONTROVERSIAL ASPECTS ABOUT THE
HOUSING PRICE DISCUSSION RIGHT
NOW.
MUCH OF THAT IS GOING TO PLAY
INTO THE NARRATIVE THE BIDEN
ADMINISTRATION IS GOING TO LOOK
AT IN TRYING TO PROTECT THE
PEOPLE WHO ARE MOST VULNERABLE
TO GETTING KICKED OUT OF THEIR
HOMES. >> WHEN SUDDENLY YOUVE GOT
>> WHEN SUDDENLY YOUVE GOT
PRIVATE EQUITY FIRMS BUYING UP
REAL ESTATE IN MASS, THAT
DOESNT SEEM LIKE THE WAY YOU
WANT TO SEE A COUNTRY WORKING.
WEVE BEEN HEARING SO MUCH ABOUT
WORKER SHORTAGES AND
SPECIFICALLY IN RESTAURANTS.
WHEN YOU RAISED WAGES TO 15
BUCKS AN HOUR, YOUR RESTAURANTS
WERE FLOODED WITH APPLICATIONS.
IS THAT THE SOLUTION, RAISE
WAGES?
>> ITS PART OF THE SOLUTION,
SURE, PROVIDING AN ENVIRONMENT
WHERE YOUR STAFF CAN MAKE A
LIVEABLE PAGE, IS THE LEAST THAT
EMPLOYERS SHOULD DO AND THE MORE
YOU ARE ABLE TO PAY THEM, THE
HIGHER THE PRODUCTIVITY THAT
YOURE GOING TO GET OUT OF YOUR
EMPLOYEES BECOMES, AND THUS YOUR
PRODUCT IS BETTER.
>> SO ARE YOU STILL FACING A
WORKER SHORTAGE NOW THAT YOURE
AT $15 AN HOUR, YOURE GOOD TO
GO?
>> WERE AT $15 AN HOUR AND WE
OFFER A FEATURE CALLED TIP THE
KITCHEN, WHICH IS AN INITIATIVE
WE STARTED THAT IS A SHARED
PROGRAM BETWEEN OUR GUESTS AND
BETWEEN THE OWNERSHIP, WHERE A
GUEST CAN LEAVE A GRATUITY FOR
THE KITCHEN AND THE RESTAURANT
MATCHES IT.
IN THE LAST TWO MONTHS, TODAY IS
THE TWO-MONTH MARKER, THE
KITCHENS HAVE EARNED AN
ADDITIONAL $198,000 IN EARNINGS,
THATS BETWEEN FOUR KITCHENS IN
CHARLOTTE AND CHARLESTON.
>> WOW.
IS THIS GOING TO BE A TEMPORARY
NEW THING OR ARE YOU GOING TO
KEEP IT FOR GOOD?
PEOPLE GOING TO RESTAURANTS
RIGHT NOW DONT MIND GIVING GOOD
TIPS, THEYRE HAPPY TO PAY
HIGHER PRICES BECAUSE WERE SO
HAPPY TO BE IN RESTAURANTS
AGAIN.
IS THIS NEW TIP THE KITCHEN
SOMETHING YOU PLAN TO KEEP FOR
GOOD?
>> WERE GOING TO KEEP IT FOR
GOOD, AND I WOULD ENCOURAGE ALL
RESTAURANTS OWNERS TO CONSIDER
IT, BECAUSE ITS THE ALTERNATIVE
TO RAISING PRICES.
WE HAVE NOT RAISED PRICES ONE
PENNY COMING BACK FROM COVID,
AND YET OUR TEAM IS ABLE TO EARN
AN AVERAGE OF $60 PER TEAM
MEMBER PER SHIFT MORE, AND WE
WERE ABLE TO DO THAT BY ASKING
OUR GUESTS TO PARTNER WITH US TO