Laptop Warriors Changed The U.S Housing Market

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During their latest episode of the VALUE: After Hours Podcast, Weniger, Taylor, and Carlisle discuss Laptop Warriors Changed The U.S Housing Market. Here’s an excerpt from the episode:

Jeff: I don’t know. I think what happens is we think about it like home price, because we go to the other cycle and it’s home prices. The thing about that cycle was, your motivation for buying a residential property may have been very different back then. Remember there was a lot of don’t miss the train. The train is the– [crosstalk]

Tobias: Ah, that’s always the story.

Jake: Yeah.

Tobias: It’s always the story.

Jake: It was real though.

Tobias: You’d be locked up forever.

Jeff: Yeah. I moved away from Florida in the middle of it. But when that got started, there were a lot of– I know it doesn’t make any sense to do it, but there were a lot of people doing things like buying a condo and then not even renting it out and just doing it just for the condo price appreciation. This is down in Dade, Broward, Palm Beach County, and so forth. Well, that belies any possible reason for being long real estate as an investment. But people were doing it, because it was very much that mentality, whereas this was like, “I want to get more space. I got to work from home.” I’ve noticed that dynamic in my own home. When I came over to WisdomTree, it was February of 17th.

So, I oftentimes say, like, COVID 17, it’s like, I was working from home. When COVID came around, well, I’ve been doing this for three years, nothing’s new for me. What ends up happening is– and maybe this is something that supports it. I think back to, when Jessica and I were newlyweds, what do you do? You moved to Chicago. You got your job. So, you have a job. Your wife is still in school, right? That is a one-bedroom apartment. There’s no questions about it, that’s a one-bedroom apartment.

Jake: [chuckles]

Jeff: Then if there’s a baby that comes, that’s going to be either the same one-bedroom apartment or if you got any money, maybe you get a two-bedroom apartment. You start to say, “What if you’re both laptop warriors?” You almost have to pony up for the extra square footage. So, is this situation where the one-bedroom people are propping up the two-bedroom prices, and the two-bedroom people are propping up the three-bedroom prices? Because I’m working from home, and I have to think that I need a lot more square footage to keep my sanity than I would– [crosstalk]

Tobias: You got the four kids there too.

Jeff: [laughs] That’s the other thing. Well, okay, take it from that perspective. You’re working from home, and those kids come rolling in like a freight train at maybe 03:10 PM or 03:15 PM.

Tobias: Workday’s done.

Jake: Yeah, exactly right.

Tobias: Workday is over.

Jeff: [crosstalk] maintain that professionalism, you need to be more distant from them in the dwelling with greater soundproofing. And then the smaller the dwelling, the more difficult that is. So, is it that these exorbitantly–? Just take the proverbial exorbitantly priced detached home in LA. Wait, where are you, guys?

Tobias: I’m in LA. JT is in Sacramento.

Jeff: Okay. So, LA and Sacramento, two housing markets that I certainly don’t know compared to you, guys. But by everybody’s standard, ridiculously priced. So, is it a question of the pricing goes up or the pricing goes down or is it more of a question of, “Well, you bought this thing. You refined at three. You better like it whether you like it or not, because you can’t do anything if it’s a seven handle. You can’t do anything if you’re mortgaged.” We’re all stuck in place. To the extent that the one person can swing leaving a 3% to go into a 7%, and they list that four-bedroom home that you desire, because you’re in the three-bedroom home, you and everybody else need it, because you’re laptop warriors. It goes one of theories. Not that we’re all laptop warriors, but it’s– [crosstalk]

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