Jim:
This is Jim Duncan with Nest Realty and Sweat The Details. This week, Mike Simonsen with Altos Research joined us for the second time, and we discussed the housing crisis, the state of the market, interest rates, and some data points that may signal the market cool-down. We even touched on housing policy that may address our crisis. There was even one number that shocked us. Hope you enjoy the show.

Jim:
Hi everybody. This is Jim Duncan with Nest Realty and Sweat The Details, here with my partner, Keith Davis. And for the second time around, Mike Simonsen with Altos Research, is joining us today.

Mike:
Hi, guys.

Keith:
I think that we’re going to jump right in today. Mike, we were talking a few minutes ago about when will we know it’s a cooling market? I mean, I think in many of the markets around the country, it’s either smoking hot, disgustingly hot, really crazy. When are we going to know that we are on the downward trend? I mean, it might be too early to ask that question, but I think we’re always good to be prepared.

Mike:
Yeah. I mean, there’s no signs of cooling yet, right? Our crisis, especially our inventory crisis, is only intensifying right now. And it’s funny, you asked me this question a year ago or 10 months ago, I would’ve said that the recession or rising interest rates, either of those would be the trigger for a cooling market or a declining market. It turns out we went through massive recession and recession that the market exploded in the face of that. So that leaves the rising interest rates. What we notice is that over the last decade, interest rates have averaged, 30 year, fixed mortgage rates averaging 4%. In the last decade. And in 20-

Keith:
Wait, wait, wait, wait. Sorry, Mike. It has been a decade that we’ve been at 4%? I mean, obviously we’ve all been in our businesses now longer than we’ve been in the 4% rates. And I mean, Jim, what was the highest you ever saw selling? We’re still young, and your mom saw 18, 20%.

Jim:
Right. I mean, my first loan, 25 years ago, was eight and eighth. I was clicking my heels, and my wife and I were getting a rate of eight and an eighth for some 25 year old kids getting $80,000.

Keith:
Yeah. Well, mine was 7.625, but it was an arm, which I got to tell you, I was amazed. My mom’s like, “Anything below nine, you’re happy.” I’m like, “Okay, I’m happy. This is good.” But we’re a decade of years that we’re at 4% average.

Mike:
At 4% average. So it’s a really good deal, right? The buddy’s really cheap and it’s a really good deal to own at that price. And actually, income on the properties between ADU, Airbnb and single flight, income has been increasing in that time, so your costs are decreasing. It’s been a really good time to hold and own real estate for that time. In 2018, rates went from 3.8% to three and a half percent to four and a half percent, in the first and second quarter, first quarter of 2018.

Keith:
And we felt it.

Mike:
And we felt it. So to four and a half percent, right? It’s just four and a half percent. We felt it. All of a sudden those payments are a lot more expensive. And the difference between four and a half percent and 2.7, where we are now, is nuts. Right? I have a ski house in the mountains at Lake Tahoe, which is expensive compared to much of the world, but cheap compared to San Francisco. I pay less on the mortgage of that house than I did on my rent in my apartment, in San Francisco, 22 years ago. The mortgage on that house is less than the rent from years and years ago.

Keith:
Okay. Okay. Let’s go back 16 years, 2005. The majority of mortgages in the state of California were negative amortizing, right? So just to make those numbers even work, buyers were willing to lose money every month just on the equity of their house. In order to get in.

Mike:
Right. Right. And that’s the big difference between this boom market and that one. The difference is equity. We went into the pandemic at record levels of equity.

Keith:
Right.

Mike:
And then we had a 10% price appreciation here. So we have trillions of dollars of equity gained over the last year. So now we get in a situation where even though there’s mortgage for [inaudible 00:05:27], some people aren’t … Nobody’s going to be going into foreclosure because everybody has massive equity and everybody has an ultra cheap mortgage. So worst case scenario is you sell your house, but in fact, most people don’t want to sell because it’s such a good deal to keep your current mortgage. [crosstalk 00:05:45].

Keith:
And have nowhere to go.

Jim:
That’s the challenge, right? I’ve got a number of sellers I could work with now, that I would be literally making them homeless because going from a 350 house to the next step will be 600, and they’d be doubling their mortgage.

Keith:
There’s a bigger problem than that. The bigger problem is that the people who own the 350 house, who do want to go to 600, are not willing to sell the 350. They’re keeping it for Airbnb and for other rentals.

Jim:
Yes.

Keith:
Because the money is too cheap. And they’re saying, “I will never be able to buy rental property again, so I’m just going to hold this thing forever.”

Mike:
I’m just going to hold it. That’s happened. We went from, a decade ago, 10 million single family homes as rentals to 18 million now. So each year we’ve had fewer and fewer homes for sale, existing homes for sale, because it’s such a good deal to keep the old one.

Keith:
So Mike, wait, how many years did you just say we went from 10 to 18?

Mike:
The 2010, 2011 timeframe.

Keith:
Okay. So we’re talking roughly a million homes a year are being removed from the actual rooftops of ownable homes.

Mike:
Of what you can buy, that’s right. The active inventory. The possible active inventory is falling and now everybody has ultra cheap mortgages. So those don’t happen. You get to hold onto that house forever because you’re paying-

Keith:
Right.

Mike:
… two and a half percent.

Jim:
Let me push on this. So with all this inventory being pulled out of the market on an annual basis, what signals are you going to look for that will say, we’re at that turning point where this broad market is turning to be cooler. I mean, is the only trigger going to be a massive black Swan recession or interest rates? What should we be looking for that?

Mike:
Well, rising interest rates will be the first thing that I will first look at it. For example, when it goes above three, do we see anything? And see anything for me will be a few things. One is, we track the percentage of homes on the market that take a price cut. So you could think a 35% rule of thumb, a third of homes lists, they’re overpriced. Sometimes that’s strategic. Sometimes it’s accidental. Whatever. A 35% rule of thumb. And when the market’s hot, it’s fewer that that have to take it because somebody rolled the dice and didn’t have to take a price cut.

Mike:
So right now it’s only 20% of homes are taking a price cut. Normal is 35%, but only 20. So then when it starts cooling, what happens is all of a sudden, you list and it’s 30 days later, and somebody goes, “Oops.” So you see it in the price reductions. They start taking up. So one of the early places you see the demand weakening is in price reductions. Another place you see it is, what we’ll do is we track the cohort of newly listed properties every week. The properties that came to market this week.

Keith:
Yes.

Mike:
And this is terrific because when you guys get, you have a listing, you’re going to bring it to market. You know the multiple offers down the street and the ones that went faster than expected, or you know the opposite. Like, oh, we got a listing. That one hasn’t moved yet. So the economics is the wisdom of the crowds where the realtor’s in aggregate and the sellers are the crowd. And in aggregate, they know exactly where to price.

Mike:
So the price of the new listing cohort ticks. It takes down for a few weeks, and then now it’s the full active market. And then the transactions that start happening are happening down here. So we’ll see, that’s the other leading indicator that I’ll keep my eye on, is that price of the new listings when demand backs off, that we’ll see it in aggregate. You’ll feel it when you price a home, and we’ll see it in aggregate because we watch everyone price homes.

Jim:
Are there any markets around the country right now that you could put your finger on and say, “These are three or four markets that we’re watching, that are either poised?” I mean, we can identify the super hot markets by looking at the news, but other ones we can say these are the latent indicators that y’all track, that this is the next one to see that surge of interest.

Mike:
On the growth side, on the upside.

Jim:
Right. And I’ll preface that one time with … I mean, I’m looking to see what, if any, impact COVID movement has been. You read a lot about COVID movement, that is driven by the pandemic and some are ancillary. So what are you looking at on that, from a market specific perspective?

Mike:
The markets that have accelerated most aggressively this year are the ones we call the zoom towns. And we also call it the co-primary home where it’s like, I’m not selling my house in San Francisco, but turns out I’m living in Lake Tahoe much of the year. So you get places like Tahoe and Cape Cod in Massachusetts, and you get Bend, Oregon, and Palm Springs. So you get these places where people are like, “I’m going to just go live my second home.” Those have been the most aggressive in terms of home price.

Mike:
More rural areas in general are tighter inventory all year. And part of the narrative was, everybody’s leaving the big cities and going out to the country. That might’ve been true for about three months, but even in San Francisco right now, it’s multiple offers. It’s tight inventory.

Keith:
But is that, Mike, because people in San Francisco just are holding onto their San Francisco homes, as well as buying the Tahoe? I mean-

Mike:
Same thing, right? It’s-

Keith:
But it’s not just that there are more buyers in San Francisco right now than there were. It’s that even the people who have moved out as a, we’ll call them the semi primary residence, they’re holding onto it because they anticipate coming back to it, or they know that it’s a good buy. They know it’s a good hold, so they’re not getting rid of it.

Mike:
Yes.

Keith:
So the inventory constraint is still on the supply side. It’s not just crazy high demand.

Mike:
Right. That’s right. That’s for sure. That’s exactly what happens, right? Let’s say you had your old home in San Francisco or in New York, and you got a four and a half percent interest rate. Now you refinanced at 2.7 and you buy a second one. Right? It’s like, why am I selling the first one?

Keith:
Right. But does that, though, draw a question of three years from now that when people are back to working in their offices in San Francisco, they’re not spending Monday through Friday in Tahoe, that they’re now questioning whether the Tahoe pad was worth it? And is this looking to future problems with that secondary home market, or is it unlikely to actually waiver? Because money’s cheap enough that people are never going to have to sell it,

Mike:
That could be right. It could be that they go … I don’t know the scenario, but it’s like, there’s a lot of people who moved out of San Francisco and bought in Tahoe, and they have not had to shovel snow all winter. This is their first winter doing that. And they may go, “No, I don’t like this. It turns out I don’t like this. I like it be 70 degrees and sunny every day, like San Francisco.”

Mike:
So that could change, and there could be some back off of that. But at the same time, it’s not like they got in over their heads because mortgages are so cheap that they’re likely to have an affordable payment. So it could be also that it turns out that, because rates are so low right now and everybody in the country has a cheap mortgage, that we really are keeping the lid on inventory for a long, long time.

Keith:
Okay. So builders love to hear this, builders love to think about the potential for increased housing starts. Problem is we have a labor shortage of tradesmen. We have a massive shortage of supplies because we really haven’t been harvesting lumber the way we need to. There’s a limited supply, right? And picking too young causes problems. So there is going to be a cap on what we can do in new supply. What is it that sparks a seller surge? When do we get people wanting to either go from two homes to one, and therefore freeing up potentially a million homes a year over a decade? Or do we let up with sellers who are just moving to different markets and [crosstalk 00:15:31]?

Mike:
One point of potential optimism is that the boomers are now in their seventies. I like to say the boomers ruined everything, everywhere we look. Right? One of the assumptions, the previous assumptions would be that we sell our houses every, whatever it was, four years or seven years, and now we hold onto it for 10 years. And boomers literally have never sold. Right? They didn’t downside. But maybe, as the boomers go from 70 to 80, now we start seeing some of them say, “Let’s loosen up some of that inventory we’ve been sitting on.”

Mike:
We have the Gen X in the middle, right? The small generation Gen X in the middle. But the demand right behind that is millennials, which is even bigger than the boomers.

Keith:
Right.

Mike:
So it could be that there is boomer inventory that becomes available in the next three, five years, the next part of the decade where they’re getting old.

Jim:
Yeah. But there’s nothing there to plan on, that we can have a huge swath inventory is going to be coming to the market in the next five years.

Mike:
No. And really as interest rates climb, and then stay elevated, now you get people who don’t have as good a mortgage, and then they go to move. Then they have to sell the first one. So over time, the inventory loosens up a little bit.

Jim:
Right. Do you think there could be [crosstalk 00:17:21]?

Mike:
The next one you buy is like, “Well, my God. I have one at two and a half, but the next one, if it’s six, now I have to sell to be able to afford the new one.” So those kinds of things go on.

Jim:
Right. Do you think there could be a rush when rates start to, I think I know the answer to this because we saw it two years ago, when rates start to go up to four, four and a half or five? Could there be a rush of buyers to there? I mean, could they balance out with the ones who are priced out immediately? If they’re looking at $650,000 at three and a quarter, and it goes to four and a quarter, a lot of people aren’t going to be able to afford that.

Mike:
Yeah. So does that maybe make a group of buyers looking to get in right before it ends, kind of thing?

Keith:
Look, I think we’ve always said that people don’t buy a $650,000 house. They buy a $3,200 mortgage, right? The purchase price isn’t the important factor until you go to sell it, right? The purchase price only matters as to what your ongoing monthly expense is. So I’ve always held that as interest rates go up, you start seeing at least downward pressure on the price because people are still viewing that as that $3,200 a month house. Now it doesn’t always hold dollar. It’s not a straight line question, but we certainly see the price appreciations happening that way.

Keith:
We’ve looked at with 20% down, we certainly track what the monthly payment is every month for the average home in our market. And it’s getting cheaper. I mean, even with price appreciations, it’s getting cheaper. I’m not sure that going to four pushes that many folk out. It certainly puts a mental block on, wow, we missed the bottom of the market.

Mike:
Right.

Keith:
But we all know that a surge in stock market doesn’t stop people from buying the stock. Right? It excites people.

Mike:
That’s true.

Jim:
I’m not going down that road today. It’s just way too …

Keith:
It’s been a crazy GameStop kind of week. Right?

Jim:
But did you know the Build-A-Bear is a public company? I had no idea.

Keith:
Really?

Jim:
Yeah. That’s in the whole GameStop thing right now. Build-A-Bear is the one that apparently has been targeted. Anyway-

Mike:
[inaudible 00:19:38]. But it’s funny though, that’s actually something I’ve been thinking about. We have massive appreciation in all our financial markets, and a lot of crazy speculation.

Keith:
Yes.

Mike:
And in the real estate market, you can see it. We already talked about price decreases, price cuts, but you could actually measure price increases too. So it’s going to be the percentage of homes that were recently on the market, and now they’re back on the market at a higher price. It’s [inaudible 00:20:14], it’s like the best of things. Nationally, we’re at the highest I’ve ever seen it. We’re at 6.6% of the homes on the active market right now were on the market 90 days ago, at a lower price. You could see it in the-

Keith:
[inaudible ].

Mike:
Say that again.

Keith:
This is where I wish we were doing audio shows. The facial expressions that Jim and I are both looking at this. 6.6% of all homes on the market were on the market 90 days ago for less money?

Mike:
For less money. That’s right. The active market. What’s interesting is, you can look at places like Atlanta and Dallas, and that’s actually pretty commonly around 10%. There’s an active investor flip, there’s all those kinds of things going on. Maybe the eye buyers too, that came in and did their thing. But nationally, it’s normally about two, 3%. You can see that. Normally, right? There’s activity. Sometimes that’s, by the way, not just a flip, but it’s a marketing strategy. It was lower before the holiday, and now it’s January. We’re bringing it back on a little higher price. So it actually rises every year in January.

Keith:
Yeah. Well, I will tell you, the other thing that we’re seeing is for sale by owners that are testing the market. And when they get an offer, they refuse it, even if it’s full price. And then go on the open market at a higher price. Right? They’re finding out, okay, what’s the bottom number? Okay. We think the house is worth five. Let’s just put it out there quietly. See if we get five. If we do, we’ll put it on the market for 540. This is not a one-time deal. This happens. This, we’re seeing in lots of markets and lots of sellers.

Mike:
Yeah. For sure. Yeah, exactly. There’s a number of ways that measuring that number doesn’t know why it was lower, not higher. But a lot of it are things like investors or flips, or fix and flips.

Keith:
No, it’s happening at every price point. This is happening. There’s a house I can think of in one of our markets, specifically in talking with the listing agent, that would be in the top 2% of all homes sold price wise. And they got a full price offer quietly from under a pocket listing, and then said, “You know what? This is crazy. Why would we not put it on the market and see what it’s worth?” This is literally a top 2% of all homes sold in the MLS, and they let up with seven offers on it. That is crazy. I mean, we have never seen that kind of buying frenzy at a super luxury, high-end price point in any markets.

Keith:
I mean, maybe you saw it. But I mean, you think about it in San Francisco, if it’s $3 million, sure. You get seven offers all the time. That’s not shocking. But if I told you, you were getting seven offers on a $30 million property outside San Francisco, that would seem weird. Right? That’s what we’re talking about. And I think it speaks to the demand that is out there, people, and the value that people are placing on their own money right now, right? The stock market is high. The equities are high. People are willing to trade from one commodity into a different asset class. And real estate is picking it up because people can leverage it for free.

Jim:
Mike, where do we from here? The next 15, 18 months and five years?

Mike:
Five-year is interesting because the millennial demand, this is not just … I mean, yes, money is cheap and that helps. But millennials are the biggest population cohort ever, and they’re all of a sudden in their peak earning and home buying roles. So that’s demand for five, 10 years. They’re also famously later to that demand than other generations. So like that implies that that bullish period, demand period is extended. So demographically, that;s really … Household formation wise, that’s really bullish for the next five years.

Mike:
In the 12 to 18 months, all of the leading indicators right now are bullish for pricing, transaction volume. Everything is pointed in the, going to be a big, crazy year time. What I don’t have visibility into is if we get a spike of interest rates, then-

Keith:
What’s a spike in your mind right now? I mean, seriously, we’re 2.6, two, five or 2.5 on 30 year.

Mike:
We go to three and a half that will materially change people’s payments. And if we go to four and a half, like we did in 2018, we already saw that. So that was now above the 10 year average.

Keith:
Okay. So you’re thinking more than 100 basis points in terms of, when you say a spike, we’re talking a full percentage point.

Mike:
Yeah. I mean, that’s my gut. Do we see it at 3%? Do we, all of a sudden, get used to making two and a half percent? And three is not a lot big? I don’t know. I don’t know how to see that yet. But four and a half will be over the longterm average, will be higher than the longterm average.

Jim:
Sure. One of the last questions I’ll ask is going to be, I mean, one of my number one reads on a daily and weekly basis is calculated risk. It’s recommended reading for all realtors, I think. But for my consumers and clients, I tell them to poke in there once in a while to get some layman’s evaluation of what the markets are doing. How long have you been pushing your information to him? Because I noticed a little while ago, just said, “Hey, Mike’s got his stuff out there a little bit.” [crosstalk 00:26:57].

Mike:
Well, we launched Altos Research in 2006, and I think Bill McBride probably launched calculated risk around that time, as blogging was really taking off. He just started posting economic data. So we’ve been in contact, a little bit here and there via Twitter and social media during that time. It’s really been the last year when we’ve done some new things at Altos, where we’ve turned out national data, and we do these weekly videos, doing that kind of work that it’s been a new push for us, externally. So just recently, Bill reached out to me and said, asked me about, “Hey, can I publish the weekly numbers on inventory?” Happy to have him do that because as you say, he’s a clear headed voice on all things economics data.

Jim:
I’ll put a link to his blog as well, but your weekly videos, I found really informative because they’re short. They’re concise. They’re really informed. Really good data, but it also allows me to prod my own local analysis that’s going to be … Again, I tell my clients, look at their micro markets, which that four bedroom, two and a half bath, and this small narrow band of a market.

Mike:
That’s right.

Jim:
Your analysis helps me say, “Oh, I need to look at it through this angle as well.” So again, I find it very useful to look at every Monday, I think.

Mike:
Yeah, thanks.

Keith:
So Mike, we’re going onto the longer side of this, but I love conversations with you. I’m going to make this go out in three or four minutes, if we can. What’s up with Altos? Where are you guys? What is your next step? Are you guys working on anything fun, different? What do we need to look out for your speedometer?

Mike:
We’ve had a heck of a year. It’s been quite a year to be in the market data business, and it turns out that every realtor needs to be able to inform their clients. And not every realtor is Jim, who does that level of work on the data. So we do that for folks, so reaching people. It’s been a great year for us. We’re doing a lot of new or some cool new product development things. Some of the national, regional data, some advanced analytics work that will be coming out really soon.

Mike:
One of the interesting things is realtors reach, you want to be in touch with your friends, clients, prospects, past clients. And one of the most compelling ways that we’ve done that over the last 15 years or more, is with listing alerts. A new listing comes out, here’s a new listing, here’s a listing in your price range. But I’ve been asking my clients, ‘What do you do when there are no listings and there are no listings of your price?” Al of a sudden, there are no listing alerts.

Keith:
Right.

Mike:
But there is market data and the market data is always fresh, and it’s always compelling. So we’ve had, helping a lot of folks. That’s what we do, is help you reach out with the market data so your clients stay informed, and every time you talk to them, there’s really interesting stuff in their inbox. It’s one of those things where the market’s been insane and we were lucky enough to have some of the pieces right in place, to be able to help a lot of people through it.

Keith:
That’s awesome. Well, let me close. You’ve had the question posed to you in the past, the last time you were on here, and we always ask it of all of our guests. But what’s the one detail you are sweating these days with? And you can point to Altos, you can point to inventory, you can point to market data, whatever, or you can point to your Tahoe house and talk about what’s going on up there, but what’s the one detail that’s keeping you up at night and you’re sweating?

Mike:
Well, we’re in a crisis of low inventory. It was surprising and fascinating to watch throughout the last 10 months. Now I’m in a situation where I’m worried about what happens if this year never escape it, right? We’re at 60% fewer homes than we need on the market. How does that impact things longterm? How does that impact our businesses? It’s nice that homes are moving fast, but we’re in a real crisis and I’m not sure that our policy makers understand that. The crisis that the policy makers are facing are, how do we keep people in their homes? How do we keep people from going into foreclosure or having to move out?

Mike:
All the policy has been about helping people stay in their homes. So even if there are two and a half million people who haven’t paid their mortgage in a year, then we have another crisis that we;re in, which is, boy, we could use two and a half million homes.

Keith:
Okay. Let’s talk about public policy that can shift that. Right? And again, I’m not suggesting that what I’m going to say is popular or is practical, but changing real estate tax rates based on whether a property is primary or secondary or investment, immediately changes the math of who should own it.

Mike:
Absolutely.

Keith:
And it does start providing liquidity to the asset, right?

Mike:
Yes.

Keith:
I think there are tools in the toolbox. I don’t know that anybody has the stomach to try them, because I think this crisis, and I agree with you entirely, this is a crisis. Talk to any of our buyers who are looking for a primary residence, it is a crisis. The question that you would have to ask any policy maker is, do you think this crisis will continue until your election? Because that is the only question that needs to be answered for a policymaker to determine whether they care or not. If this is going to end before the midterms, we don’t have to worry about it. This isn’t our problem. I think that’s my concern with your crisis question.

Mike:
Yeah. For sure. The tax policy’s a really fascinating thing. California has had inventory crisis for 40 years because California locked its real estate taxes down 40 years ago. So the average tax rate on a property in San Francisco is 0.6%, is your property tax rate. Because if you bought your house 40 years ago, you’re still paying, even though you bought a million dollar house then, and it’s worth 17 million, now you’re still paying on a million dollar valuation.

Keith:
Right. Right.

Mike:
So you’d never sell it for the same reason, the mortgage we’ve been talking about. Right? So you never sell. It’s also why a place Texas with high real estate taxes has a much more fluid market, way more listings available per person than there is in California. Nobody wants to raise property taxes. Nobody wants to push granny out, and those are legitimate fears. But the downside is that people never sell.

Jim:
Okay. This is going to be-

Keith:
You do realize that our last question, the Sweat The Detail question, it came three minutes ago, Jim?

Jim:
You started this.

Keith:
Yeah, no. I started it three minutes before that. I said I was going to push this out a little bit more, but go ahea, Jim.

Jim:
So with this, you start talking policy and tax rates, we have to go a minute or two longer. Could you see the areas like Texas that have more listings than they have buyers right now, could you see them making a push to California buyers or other buyers to become their own zoom towns? They’re going to draw people out. As people are able to work remotely, with much more frequency and regularity, can you see these areas that are going to be welcoming arms to these people, to say, “Look, I know it’s awful there, but we’ve got homes for sale?”

Mike:
Yeah, for sure. That happens a lot, right? That’s a big narrative of people moving to Texas from California. So that definitely happens a lot. It’s probably healthy, right? It’s probably healthy for supply and demand reasons. Even Texas is crazy type now. It’s not like Texas has too many. You can track inventory per capita. The number of homes available per population size. And you might see in a 30,000 population home, in normal times, 30,000 population town in the Bay area versus Texas, outside of Dallas, same demographic, in normal times, there might be 1,000 homes for sale or 500 homes for sale in Dallas. And there’s 40 homes for sale in the Bay area. It’s California. So that’s the normal difference in inventory per capita. And right now, even Texas is way low and California ones are essentially at zero.

Keith:
All right, Mike, I’m going to have to draw it off on that one.

Jim:
I think we end on the crisis.

Mike:
That’s right.

Keith:
Look, anytime you want to come back on, we’d love to have you, and we’d love to continue the conversation of seeing where this market goes, keep hearing thoughts. It is going to be fascinating to watch as the next year or two plays out. New administration in the White House. New Congress. Same problems. We’ve got two years until the next election, before anybody has to deal with it. So it is going to be an interesting period to watch, to see how quickly anybody wants to take on these challenges, because they, like you said, are crises. But there are policy changes that can impact it if people are willing to be strong enough to do it.

Mike:
I don’t think that most of the policymakers recognize that crisis that we’re in. They are fighting a different crisis.

Keith:
Yes.

Mike:
And I don’t know how that changes or how we get out of that. But …

Jim:
And on that, Mike, thank you very much.

Mike:
Thank you. As always, guys, love talking with you.

Keith:
Yeah, it’s fantastic. Thanks for coming on.

Jim:
Mike Simonsen, Altos Research. Thanks so much for your time. Appreciate it.

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