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Real estate entrepreneurs are the best people. On Real Investor Radio, we’ll cover advanced residential real estate investing topics. We’ll discuss how what you have seen in the headlines will affect your real estate investing business. And we’ll go deep on these topics to help you make better decisions and take specific action.
Craig Fuhr (00:14)
Hey, welcome back everyone to real investor radio. I'm Craig Fior joined again by Jack Bevere. Jack. What's going on, sir? How are you today?
Jack BeVier (00:23)
I'm great, sir. Great to see you. I'm in dire need of a haircut, but otherwise in good spirits.
Craig Fuhr (00:28)
getting a little shaggy brother. For those of you not watching on YouTube, you should check it out. That's the longest I've seen in quite some time.
Jack BeVier (00:36)
letting it go man. I grew my hair out when I studied abroad in Argentina 20 years ago and I could bring it down to my chin and I figured on the 20th anniversary of that I was just going to let it go and so no barber until December.
Craig Fuhr (00:52)
we'll get Gab to throw in some clips from 1987. Jack long hair, Argentina. That'll be, that'll be something for the viewers. Huh? Hey, we've got an awesome episode today. We've already talked for a good 10 minutes prior to recording. So I'm really eager to jump in, but you were at IMN last week, Jack in Miami. So give us your quick take on IMN Miami and if there was anything learned at that event.
Jack BeVier (01:01)
There you go.
Yeah. So I am in is an investment, sorry, a conference, a production company, and they put on lots of different conferences around finance and real estate and, and insurance. And so one of the conferences that they started back in 2012 or 13, I think was the single family conference. And now they hold it twice a year, may in Miami and then December in Scottsdale, Arizona. And it ends up being a very well attended single family conference. a lot of the.
higher volume operators, vendors who are working in the industry, all the lenders, all the private lenders that are working the single family space show up. And so we, we started getting a booth down there about a year and a half ago because so many operators really started to show up attendance really kind of boomed a couple of years ago for obvious reasons. And so it's something that, that we, Fred and I go to every IMN SFR and
haven't missed one since the beginning. And it was once again, a pretty well attended event though I'd say noticeably down from Scottsdale in December. So I wondering if that's just a little bit of industry belt tightening that the fewer folks are splurging on the trip to Miami and instead just focusing on their businesses right now. But there's a mix of good content and folks who were on panels because they paid to have a booth.
I was on the financing panel at the beginning because we paid to have a booth. So, you know, I, I, I resemble that comment. but we found it to be a good business generator and hopefully we try to bring some content to those, to those scenarios and, and find some customers who need our services. So the, yeah, like as, as usual for, you know, conferences, the best content was at the bar after two or three, whiskey sours. And so this conference was no exception to that. And,
Craig Fuhr (02:52)
or two.
Any takeaways?
Jack BeVier (03:16)
The usual suspects are really kind of always still there. So it ends up also being kind of like a reunion, an industry reunion of folks that you just check in with, see how things are going. And so I don't think there was anything like frankly groundbreaking from a content point of view, a lot of conversations about belt tightening, a lot of conversations about higher interest rates for longer and how that's affecting people's businesses. Some interesting developments from the tech point of view.
Craig Fuhr (03:32)
Mm -hmm.
Jack BeVier (03:44)
in terms of like applications of, no worries. So some interesting, that's life. It's all good.
Craig Fuhr (03:48)
Don't worry about it.
Toni Moss (03:50)
Sorry.
He's deaf and blind. I don't know what's probably... No, I can't.
Craig Fuhr (03:56)
can't yell at him to stop.
Jack BeVier (03:58)
Yeah. so anyway, see us some interesting applications from the tech point of view, that, that are, I guess, becoming a little bit more wide widespread. and the insurance industry seems to be becoming a lot more competitive for the SFR space as well. Obviously something we're going to dig into today, insurance costs, are up a lot over the past year and a half. And so the industry is trying to respond to that. And because, you know,
We're all very cost price sensitive about our insurance rates right now. so yeah, overall, you know, a good conference. Glad I went, I'll be going to Scottsdale as well. and so as a segue, love to introduce our guests today, who I met many years ago because she also, puts on conferences as that relate to housing and mortgage finance, Tony Moss.
is with America catalyst and Craig wants to do a little give the background and then we'll we'll hear from Tony.
Craig Fuhr (05:04)
Yeah, I'm honestly I'm so excited. You told me so much about Tony and obviously we spoke just briefly prior to the podcast and learned a lot, frankly. So Tony Moss is the founder and CEO of America catalyst LLC and euro catalyst BV. She's also the curator and the host of America catalyst events. She is also the director of America cattle.
America Catalyst, Idealab, a nonprofit think tank that generates solutions for long -term sustainability of the housing ecosystem and founder of Digital Ridge, a global property development and community of a future concept. She's frequently amongst the first to identify upcoming trends and articulates their impact. Tony warned of the likelihood of a global economic collapse. I would assume that was back in the
for the Great Recession, correct, Tony? All right, so way ahead of the curve there. Honestly, Tony, so honored to have you on the show. I can't wait to jump into the reasons why and how someone of your background decided to start doing events. But just it's an honor to have you on the show and couldn't be more excited to have you here. So welcome.
Toni Moss (06:01)
in 2002.
Thanks for having me. By the way, I have to say at my last event, I had Jack as a speaker on stage for the first time. He was fantastic. No, I don't do pay to play, but my God, he was fantastic. I wrote to him afterwards and I said, you are my favorite speaker.
Craig Fuhr (06:31)
Did he have to pay for a booth?
I know you did.
I always say that Jack is one of the smartest minds in the business and I've met many and just, but, but it's all, you know, there's a lot of people out there who are, you know, sort of coming at the business now from an analytics background or perhaps a busy, you know, working for a fund or something like that. But Jack is truly a guy who's walked through thousands of houses. He's purchased thousands of properties and not only, you know, built the property business, but also the.
Toni Moss (06:47)
He is.
Craig Fuhr (07:11)
Dominion financial and just couldn't have more respect for the guy. So I'm sure he was a wonderful speaker at your event.
Toni Moss (07:18)
He was fantastic.
Jack BeVier (07:20)
I still haven't learned to take compliments well, but thank you both very much. But Tony, before you, back to you, before you were putting on events, you were in the housing mortgage industry for a long time. Can you tell us a little bit about your background in the industry?
Craig Fuhr (07:29)
This is a podcast about Jack today.
Toni Moss (07:43)
Yeah, I started out in corporate intelligence, actually. And I worked for the world's largest multinational at the time. And we had a servicer that was hemorrhaging money. And so I had to learn the business to figure out why that was. And I became enthralled with the dysfunction of the mortgage industry. And so I ended up...
starting my own due diligence firm. I had a really sharp partner at the time and we performed due diligence on non -performing loans during the SNL crisis. So I always have a forensic approach to the industry in terms of what happens when things go bad and then I work my way back from there. And then in 96, I went to Europe. I ended up
working there for 14 years. And I worked for a division of the Dutch government called Balfonds, which stands for building funds. And this was the company that was created right after World War II to rebuild Holland after all the devastation. And so they were a commercial and residential lender and developer.
So I had to wear a bunch of different hats and it was really interesting because I was there prior to the advent of the launch of the Euro banknote in 2002. So when I traveled on average 250 days a year throughout continental Europe and through the Middle East and doing deal after deal because the Dutch government was relatively benign. So everybody wanted to work with us.
So it was the absolute dream job. And that's how I developed so much of a network in order to be able to produce a conference in the first place. But also, I spoke at so many conferences around the world. And...
I would talk about structured finance. I'd talk about covered bonds. I'd talk about mortgage servicing. I'd talk about real estate development and thought there has got to be a better way to do this and to impart really valuable information. And essentially what you were talking about at IMN, how all the action is in the bar. What I tried to do was take the action in the bar and put it on stage.
Jack BeVier (10:27)
can tell like, just in, in, in the pleasure of having known you for probably over 10 years now, that that experience, I think probably like working in other systems led you to have a very zoomed out look on like, you don't take any of these, the systems that we have for granted. You see that, no, these were all decisions that we made and policy implicate policy decisions that we made that have.
intended and unintended consequences. And so I think that you just like, I've always been so impressed that you're able to like zoom out and see that this is, this isn't just the way the world is. This is like a, a, you know, a choice that we've made and often wrong choice choices that we've made. And you're able to like really like, you know, put your, put your finger on the crux of the issue that is, that is, that you, you know, that, that you think doesn't necessarily make sense.
Toni Moss (10:57)
Yeah.
Jack BeVier (11:24)
And that's an incredibly valuable skill set, right? When, when everybody else is just like going along and taking the world for granted, you've been able to be like, Hey, I think you're doing it wrong here. And, I've always admired your, your ability to do that. So I think it comes across very much in the conferences. So what, when did you start, what, what made you decide to do a conference? What was your first conference?
Toni Moss (11:42)
Huh.
Jack BeVier (11:48)
And what was the idea? What did you think the world was missing that you wanted to, that only you could bring?
Craig Fuhr (11:55)
Yeah, that's great. Yeah, what was your prior to, you know, opening the doors for that first one? What was the vision for for what you wanted to create?
Toni Moss (12:05)
Well, I've always been, everybody always kind of talks about me as an intellectual. And so I've never seen myself as coming specifically from the industry. I didn't necessarily grow up in the industry. And I've been interested in the arc of globalization since my early twenties. And a lot of that came from,
working for the world's largest multinational conglomerate and looking at the power of corporations and how that power exceeds the power of governments around the world. And so when I talk about globalization, I'm not talking about internationalization, I'm talking about a set of forces that are technological, environmental, sociological, economic, and how those
forces have created a world where the greatest change is the pace of change. And so when you're looking at it from that perspective, context is everything, right? Ideas have no power without a context in which to understand them. So when you look at housing finance and housing in general in the context of globalization, housing is so ubiquitous that
the forces of globalization impact every aspect of it, every single aspect. And that's why the Euro catalyst and the American catalyst event have the type of content that they do. We look at the big picture issues and how they're affecting the market.
Jack BeVier (13:47)
So what kind of stuff have you covered over the years in AmeriCatalyst? Like at different points in time, what did you find interesting?
Toni Moss (13:54)
Well, the reason I created an event in the first place was the fact that I would go to these conferences, which just the content was absolutely pathetic. It was boring. And then all the speakers would get together and hang out in the bar afterwards and talk about what we should have been discussing on stage. Right. And it was even more interesting doing this in Europe because everybody's speaking different languages and.
Craig Fuhr (14:06)
Very shallow.
Toni Moss (14:23)
defaulting to English and everybody had such diverse perspectives and over there, the big fight was about on balance sheet versus off balance sheet funding, right? Because they have covered bonds in Europe, which are on balance sheet versus the US, which is securitized. So, but what drove me,
to create an event in the first place is I was concerned that globalization would lead mortgage markets to collapse. That was part one. Part two was that we would never recover when that happened. We would just adapt. The world would change, but there would be no actual recovery. And number three, that when it happened, it would lead to nationalism around the world. So I was pretty spot on.
But I couldn't convince, I had no intention of producing a conference. To tell you the truth, in 2001, I left Baufunze and Stater, the companies that I was working for, and I started Eurocatalyst and I had a, you know, I was a consultant. So I had a consulting gig and yes, I was concerned that mortgage markets were going to collapse. And I thought, okay, I'm going to write the perfect program.
talk about which markets to compare, show how this is gonna happen. And I'm gonna take it to the World Economic Forum and the European Central Bank or US Treasury, International Monetary Fund, because surely they would be concerned about this and wanna produce a conference about it. So I went to all of those entities and spoke at the highest levels and explained, here's what's gonna happen. This is why it's gonna happen.
You've got European investors investing in US subprime securities. If you look at the trajectory of where this is going, it's all going to implode because mortgage markets vary in form, but not function around the world. And of course they thought I was out of my freaking mind. I mean, seriously, I was laughed out of so many offices. And at the time my partner was the editor of Japan times in Tokyo.
And Japan is the largest investor base for European covered bonds and Jenny Mae securities. So the Japan Times backed me to do an event on my own. And so in 2002, I launched the event and the theme of it was will European mortgage markets survive globalization? What I was really asking the question is will Europe survive?
Right? Because there is no European mortgage market. There's a series of 18 to 22 markets, all very distinct and unique. So that's how I ended up doing an event in the first place. And by the way, Jack, you'll appreciate this. My timekeeping was so bad that we did the first event in Madrid. We finished our sessions at 10 o 'clock at night.
Craig Fuhr (17:46)
This is like a Tony Robbins event or something like that to walk through fire at the end.
Jack BeVier (17:46)
Yeah.
Toni Moss (17:48)
my God. Yeah. And I thought I have failed miserably. And at 10 o 'clock, I told everybody, okay, let's eat dinner. And nobody wanted to leave the room. They all wanted to stay and talk to each other and meet each other because no one, you know, I succeeded in bringing all of the right people together in one place at one time for the first time.
Craig Fuhr (17:58)
Yeah, it's dinner time there.
That's awesome.
Toni Moss (18:16)
So, you know, German banks had never met UK banks who had never met the Spanish banks and the Portuguese. And anyway, so that was, it was really, really fascinating. And there was a lot of anti -American sentiment, a lot. 2002.
Craig Fuhr (18:35)
What year was this? Wow. You were you were definitely ahead of the curve in terms of thought thought leadership. One of the most interesting things that Jack has told me about your events is, you know, I am an or you know, pick an event, they're all open door. If you if you have the money for a ticket or you buy a booth, you can come. Your events are invite only, you really get the best people in the room. The
Toni Moss (18:42)
Yeah.
Craig Fuhr (19:02)
the best thought leaders, you know, folks that are actually out there doing the business and you close the doors and it's a real, it's a real conversation with not only the panelists on the stage, but also the, the members of the audience who I'm sure have a lot of knowledge to bring as well. And so I find that's just highly unique and I'm assuming that that's a sort of a, you know, a platform that has worked.
over the years for you haven't deviated from that, correct?
Toni Moss (19:33)
No, no, I haven't. I'm just not interested in doing an event for any and everybody, at least not in that form. There's another event that I'm going to be doing that's like a South by Southwest for housing. And that'll be open to everybody. But as far as the kind of think tank process of a Euro catalyst, Ameri catalyst, it'll stay invitation only.
Jack BeVier (20:04)
Yeah. And I've always really enjoyed that because you get this, you get this dynamic in the room where usually when you go to a conference, there's like, you know, there's the five panelists and the moderator, the moderator is lobbing a bunch of softballs at the panelists and the panelists are pounding their chest and talk, you know, kind of talking down a little bit to the audience and educating everyone in the room as to how they're so great and how they do it so well. And you listen to that shit for 45 minutes and you know, you don't, you haven't learned a whole lot at the end of it. Whereas the American catalyst events are.
frankly, like just it's the six experts on whatever particular subject. It's a controversial subject. It's not, it's not even a softball subject that we're talking about. Like she, you know, Tony does an excellent job of intentionally choosing stuff that there is going to drive debate. She puts people on multiple sides from multiple perspectives on the panel. Then she closes the doors so that they can all say what they actually think and not worry about it. Getting live tweeted out or like, you know, showing up on YouTube.
Toni Moss (20:44)
Thank you.
Jack BeVier (21:04)
And then she gives the audience access to the app that lets them ask hardball questions to the panelists. And the moderator is then just like zinging them, you know, keep stirring the pot and keeping the conversation lively. And you end up getting, you know, what people really, the smartest people who are experts in that subject really think about something. And you really get much more to the meat of the meat of the issue.
and have like a real conversation and, but, but with, you know, with all the best minds and, that dynamic, and then she also makes it just tremendously fun with, snarky music introductions and, and that's just always, that's always really, you know, really fun as well. So,
Craig Fuhr (21:49)
Did jacket walk up music for the last one that he was a panel on or.
Toni Moss (21:53)
Yes.
Craig Fuhr (21:55)
Spice Girls.
Toni Moss (21:59)
Blurry face.
Jack BeVier (22:01)
Yeah, that's right.
Craig Fuhr (22:02)
I'm lost after 2000. I have no idea who blurry faces, but okay. So.
Toni Moss (22:08)
Wait a minute. Wish we could turn back time to good old days. Yeah.
Jack BeVier (22:10)
Yep. Yeah. So it was good. It was about, it was about, we were the, we were the panel that I was on was like the, the last panel of the conference. and it was kind of like, all right, so now what, like, here's some folks who were, she had a bunch of just a phenomenal group of, of people who I've Tony, I've kept up, I've caught up with a, with a bunch of them afterwards. So that's been like, they're wonderful. Yeah, they're wonderful.
Craig Fuhr (22:11)
that's a good one.
Very good. I'm in.
Toni Moss (22:37)
great. Now, the session that you were on was called All That We Inherit. And it was interesting at the end of the event to hear from the younger generation that are inheriting the lack of action from the older generation and how they feel about it and what kind of industry they want to create in the future. That was a great one.
Jack BeVier (23:02)
So yeah, actually, you know what? I'm getting ahead of myself a little bit. So let's talk about the most recent conference that I was just that I, that I was able to attend, how the fortune fortune to attend, called going to extremes. So, you know, given your background and, you know, kind of, you're, you're always looking forward and from a 300 ,000 foot view of like where the world's going, what are the real problems that no one's talking about? You've always focused on those kinds of issues. What do you think?
What was the inspiration for this event going to extremes and just tell everybody like what the set of topics were that you wanted to cover here?
Toni Moss (23:39)
Well, back in 2020, which was my last event prior to this one, the theme of that event was entropy, surviving the new abnormal. And 78 % of all loans today were originated between 2020 and 2022. So the market was going strong in 2020. It was before COVID hit.
In fact, COVID hit three days after that event. So all of the speakers, for the most part, were pretty upset with me for theming that event entropy, that things are falling apart. And my response was, just wait for it. Yeah, just wait for it, because we're at a stage of advanced entropy. And so I haven't done an event for four years and...
Craig Fuhr (24:12)
I will.
Jack BeVier (24:24)
At the time, yeah. Right, right, right.
Toni Moss (24:39)
Part of that really was because I didn't have anything to say. And if I have nothing to say, there's no reason to do a conference. I mean, I don't want to do it just for the sake of bringing everybody together unless there's, you know, I have inspiration behind it. And the other reason is that my partner passed away in 2021. So I was.
nervous and scared that I wasn't able to do an event on my own without her. So anyway, a few really instrumental people in the industry, Stan Mittelman, Dave Stevens, Ted Tozer, kept contacting me and saying, Tony, you've got to get back out there. You've got to bring the band back together. What's...
inspiring you lately and I said well my biggest concern for the housing industry overall both single -family rental and the mortgage industry is climate change and the impact of climate change on the housing market and in particular the insurance crisis which is only going to get worse as we move toward an uninsurable future. So they said do it. So
I came up with the title, Going to Extremes, and called it the Extreme Climate Housing and Finance Leadership Summit. And all of the topics of that event looked at the insurance crisis and how climate change is going to impact the industry. So we started with a session called The Canary, and that was the insurance crisis.
Then we went into the next session, which was called the coal mine, which was all about risk transfer and what happens when you remove one of the primary mechanisms of risk transfer in the industry, the whole thing falls apart. Then the next session was originally shit just got real, but I had to change it to it just got real. Yeah, some people didn't want to sit on that session.
Craig Fuhr (26:53)
Why?
Jack BeVier (26:59)
You
Toni Moss (27:00)
Anyway, I know. And then you can't manage what you can't measure. Anyway, so the entire event, I was telling a story and each session was a chapter in that story that ended with all that we inherit. And I think that's the way that you do a great event is you write a story.
Craig Fuhr (27:00)
Jack would have keynoted that.
Jack BeVier (27:02)
Heheheheh
Toni Moss (27:30)
And each session is a chapter and you're going somewhere. There's movement. You're headed somewhere.
Jack BeVier (27:36)
When did you come up with that topic? Because I feel like the insurance increases just hit the consciousness of real estate investors, at least.
Toni Moss (27:47)
Good question. I'll tell you when. You were there in 2020. So yes, I did a session called Fatal Abstraction.
Jack BeVier (27:51)
Really?
You did, you did, my gosh. I forgot about that.
Toni Moss (27:58)
And I had Katherine Hayhoe and Diana Olick, right? And we had one of the lead actuaries from the largest insurer in the world on stage. And in the prior sessions in the speaker prep, I kept asking her, when are insurance companies going to start pulling out due to losses?
Jack BeVier (28:03)
You did, yeah.
You did.
Toni Moss (28:29)
Yeah. And she told me, I can't answer that question. And I said, well, listen, I have to ask it. I have to ask you the question so you can deflect on stage. And I was co -hosting that session with Katherine Hayhoe. So who's the world's leading climatologist. So I told Katherine in advance when I asked her this question, she's going to tell me that she can't answer.
Jack BeVier (28:48)
She's a climate scientist. Yeah, she's very impressive.
Toni Moss (28:58)
So we're going to have to change the topic. Let's go to Diana Olick. We rehearsed all this. We were ready to pivot. And on stage, I asked her point blank, when will insurance companies start pulling out of high risk markets due to losses? And she said, in the next nine months. And we didn't know what to do. And I looked at the audience and I said, did you hear that? And then we moved on.
So I knew it was going to happen. It was inevitable.
Jack BeVier (29:33)
And I remember we, you came to RAR to the mastermind that we did and talked a little bit about that. And the whole room is just looking at you like you're crazy. Cause it's not on the consciousness of anybody. No one's thinking about that. No one's heard any rumblings about that. And I remember, I remember thinking also just like, you know, cause my little opportunistic brain, I was like, Hey, yeah, there's going to be a lot of losers in.
Toni Moss (29:42)
Yeah.
Jack BeVier (29:58)
climate change, but there are also going to be some winners too. So like where are the climate resilient areas that we should be investing now before the market starts to think about this issue and price this risk appropriately. And that's been an idea that I've like that I latched onto at that conference that I haven't, that I've been thinking about for the past four years now, but hadn't really seen anything on it until you announced that you were doing this.
Toni Moss (30:06)
Yeah.
Jack BeVier (30:27)
this event again. And, and I feel like you brought it, you brought a tremendous group of people together at this event, like everyone high end, like, like so many execs from insurance, from, you know, owners of very large mortgage companies, so many government officials. Yeah. Like the decision makers, like the directors of those organizations were, were at this event.
Toni Moss (30:48)
Fanny, Freddie, FHSA.
Jack BeVier (30:57)
And so anyway, I don't want to get too far ahead. But, you know, so what do you think? You know, what do you think? Explain the problem as you see it, and the scope of it and kind of where we are in thinking about that problem right now.
Toni Moss (31:13)
Okay. I just, I want to remind you real quick that session, fatal abstraction in 2020 was where to buy, where to sell and when to freak out. Cause I was trying, I mean, you can lead a horse to water, right?
Jack BeVier (31:27)
Mm -hmm.
Yeah, absolutely.
Toni Moss (31:33)
How blatant could I have been? Right? So anyway, sorry, what was your question, Jack?
Jack BeVier (31:43)
Well, it's like, so what is the, you know, how do you think about the scope of when you were designing this, when you were designing the story that you wanted to tell here and your research, you know, leading up to that, like what, like tell us, tell us the story. Like what are the, what are the, what are the factors that you see coming together? What do you think the implications are and where are we as a country and as industries in, preparing for those risks?
Toni Moss (32:14)
The story that I wanted to tell was contemplate an uninsurable future and what will the housing market look like? Because there is no part of the United States that is immune to climate change at this point. We're no longer at a point of, well, Florida has hurricanes and...
You have tornado alley. I mean, you're getting tornadoes in Southern California now, right? So between fire, flood, hail is becoming a massive issue here in Texas. In fact, my own homeowner's insurance went up 48 % in one year alone due to hail damage. And...
Jack BeVier (33:08)
Yeah, I think that, I think that most people started to interrupt you, but like, I think most people, when they think about the impact of climate change, they're like, yeah, Florida and Louisiana, right. And, and maybe like Galveston and like, those are the areas that we all like immediately, your brains immediately go to. And so, Hey, if I'm on the coast, maybe I've got a problem. Like if, you know, even if you're thinking about it, you're thinking about it as a coastal problem. But then I feel like the, the California wildfires that just happened a couple of years ago, that kind of elevated the consciousness of.
Toni Moss (33:17)
Right.
Jack BeVier (33:37)
that risk. And then the tornadoes and hail have been and then the and the derecho, the the you know, the torrential downpours that are just in areas where you know that that just never happened before. That wasn't the thing.
Toni Moss (33:53)
Yeah, Maine and Rhode Island flooding and New York flooding and yeah.
Jack BeVier (33:56)
Yeah. And I think our understanding of like the risk factors and what those the maps of risk, frankly, over the past five years have changed pretty significantly, I think, because these all these storms are hitting levels that are causing losses, right, causing insurance losses. That's the direct tie to the economy.
Toni Moss (34:18)
Yeah, a billion dollars every three weeks on average.
Craig Fuhr (34:22)
Tony, before we jump into the content of the last conference, which we haven't really even touched the surface of yet. I mean, this is obviously a third rail topic for many people at this point. You know, it's either, you know, you're either a believer, almost a new religion, or, or someone who doesn't, we don't like to point fingers, frankly, you know, we like this, we like to stay open to many views. And so,
Jack BeVier (34:23)
Yeah.
Toni Moss (34:39)
or an idiot.
Jack BeVier (34:41)
you
Toni Moss (34:45)
No, let's call it what it is. You're an idiot.
It's not a view. It is not a view. Gravity exists. Climate change exists. If you don't believe it, you're an idiot. Sorry. Actually, no, I'm not even sorry. Because I'm not talking about what's causing climate change here. I'm talking about the fact that it exists.
Craig Fuhr (34:57)
Okay.
I guess my point of all of it was.
Okay, we'll stipulate the but but for those who believe or those who don't, it's become a highly charged topic, political. It's become you know, but but but I think the point of our discussion today, for those who are listening who might be going, I'm just not a believer. I don't see it. If that's not the point here.
Toni Moss (35:18)
Unfortunately, yes. Yes.
Or do you believe in billion -dollar losses every three weeks? Because that's really happening too.
Craig Fuhr (35:33)
Not the point. I think that I think the bigger point of all of this discussion, which I was excited about today was just the financial impact of it. And not only that, it doesn't matter whether you believe or not that the world's top corporate leaders believe it's happening. The world's top politicians and legislators believe it's happening. And when you have all of that money and all of that force behind any topic, it's going to move that, you know, the topic, whatever the topic is, that topic will move for.
in some way. And that I think is the brilliance of the discussion here, the financial impact to not only homeowners, but investors of all kinds all over the country and world.
Toni Moss (36:05)
So.
So Craig, when I did the event, the reason I called it going to extremes is I was talking about extreme climate and extreme weather. So using the words climate change, I mean, this is like talking to first graders where you say to the first graders, listen, do you notice that the weather's getting a little extreme lately? All right, so.
People who have the mentality of a first grader can accept the fact that there's extreme weather. We don't even need to call it climate change. And extreme weather is what's causing all these billion dollar losses. So from a financial impact perspective, if you have a home that is uninsurable, it's only a matter of time.
before that home is going to lose most of its value. And those neighborhoods that that home is located in are going to become dead zones because they're not going to be paying their property taxes, which means they're not going to get city services and utilities and fire and medical support and police support. That's what we're looking at. And you can't say it's going to get better. It's only getting...
worse. So I haven't even talked about what we can do about it or what we need to do about it. I'm not even talking about fossil fuels. I'm just talking about here's the reality that we're facing and either people can deal with reality or they don't need to. They can take drugs or they can fall into some ridiculous conspiracy theory. There's no difference.
Jack BeVier (38:06)
Well, yeah, the insurance companies are apolitical things, right? Like they're just, they're run by actuaries and like the loss rates are higher period, right? So like, you know, at that point, but I think that, you know, even the fact that the loss, they just started to really affect rates though, right? Like the, the,
Toni Moss (38:12)
Right.
This year was a turning point in terms of rates. Yeah. And, you know, the thing is, what's behind climate change denial is the fear of losing jobs and the fear of losing money, which is very real. And I totally understand that. But I think the consequences of ignoring and doing nothing.
we're gonna pay the price and we're already paying that price and it's only going to get worse. What happened to Craig?
Jack BeVier (39:04)
must be internet connection. It'll be fine. We'll, we'll loop them back in the, I was talking to, so I'm sitting at your conference and, you know, I'm listening and, you know, and I'm thinking, Hey, I'm in, I'm in Maryland. Maybe, you know, it's, it's, it's a relatively, it's a, you know, it's a relatively calm area from a weather point of view. It's a pretty moderate area from a weather point of view. Maybe this just isn't on my radar and other investors.
Toni Moss (39:06)
Okay.
Jack BeVier (39:31)
other real estate investors are thinking about this and already trying and taking this into consideration. So I text a text, a buddy of mine in Jacksonville. And I figured like he's, you know, close enough to it, not ground zero for, for risk, but you know, on the higher end. And I'm like, Hey, do you, you know, are you, are you thinking about climate change? Is it impacting your investment decisions? And he owns several hundred houses he built. He's a builder as well. He's a flipper. He's a wholesaler. Like he's very in, in, in that.
in that market. And, and he was like, Hey, I mean, frankly, like, frankly, no, you know, it, our insurance rates just went up, but we aren't really sure if that's a one time thing or not. And, you know, nobody else is talking about it. So like, you know, why, why would I, you know, like the market isn't the market isn't putting a price on this risk right now. And until this insurance rate,
you know, just hit just happened. And by the way, a chunk of that was inflation. So, but quantifying how much of that was inflation and how much of that is losses in excess of inflation hasn't really been explained. You know, that's not part of it has not been part of the dialogue. And, and I think that's the case that, you know, no one's really pricing this stuff right now, because they don't know if they should be putting it into their model on a future point of view, you know, from a futures point of view, and,
Something, one of the things that really hit for me at the conference, and I know this idea academically, like I know that my insurance company only writes me an annual contract and has the opportunity to reprice me every year. Like I know that academically to be true, but also in my mind, there was this idea that the insurance company's job is to think about risk and is, you know, should be a forward thinking and, you know, any rational economic actor would be a forward thinking entity.
But what really what you really rub my nose in on that one panel about the insurance companies is that they are not it was about the risk transfer is that insurance companies are not risk takers. They are risk transfer agents. So let me say that again. Insurance companies are not risk takers. They are risk transfer agents. They if they lose a bunch of money one year they.
Toni Moss (41:43)
Yes.
Jack BeVier (41:54)
update their pricing models and Jack all of our rates up and they get all of those losses back plus their overhead plus their profit. And they make sure that they are, you know, that they over a long period of time, make the return that they deem appropriate for being a big insurance company, but they don't lose like that's not a thing that they do. They don't, they don't, they're not taking losses over long periods of time unless they actually end up going bankrupt. And so they don't have an ex there's no economic incentive.
for an insurance company to think more than a year or two ahead. The only the regulatory cycle is as long as they need to think about. But a five year plan, a 10 year plan is not, they don't do it because they don't need to. They've got no economic incentive to. If they price it appropriately when everybody else doesn't, they'll just lose business. So they'll actually do worse off if they think rationally about this idea.
Toni Moss (42:52)
Right. And, and, you know, hence the problem in that mortgages are 15, 20 and 30 year products and insurance is a one year product. So you've got a duration mismatch that's extreme. And one, one thing, Craig, with regard to whether you believe, whether you don't believe, you know, let me ask you,
Would you want to be a lender holding the note on a property in Miami in 30 years?
craig fuhr (43:29)
you know, as I look at the, I was looking, over the past few days at sort of, significant weather patterns over the last a hundred years, and there's no appreciable other than a blip around 2010 through 12 real blip in, hurricane activity. it's, it's actually been pretty average over the past hundred or so years in category one through category five.
And so to answer your question, I don't see any lack of building in those areas. And so I always wonder, you know, just a quick story. I live in a place called Ellicott City, Maryland, and in Ellicott City, we had a thousand year flood. It kind of it's a old Civil War town, tiny little cute town where you go and shop for antiques. And this is five minutes from my house. We had a torrential downpour one night a few years ago and.
basically it was like a thousand year flood flooded out. If you look it up on YouTube, Tony, it would blow your mind at how fast the water rose in this town. And so they rebuilt and everything got back to normal after two years and almost two years to the day it happened again. The same thing.
Jack BeVier (44:45)
They had another thousand year flood two years later.
craig fuhr (44:48)
Unbelievable. And frankly, what the town realized and what the county realizes, it's one of the most affluent towns and counties in America right outside of DC. And what they realize is, hey, you know, we're doing a lot of development around this gully. And we have a lot of impervious surfaces that the water is just running off. It was basically a stormwater runoff issue. And now they're fixing that problem because the entire all of Ellicott City basically was built over a river.
And so one can't be surprised when you put up 10 ,000 houses and roads and highways around it that the water had to go somewhere and it usually flows downhill. And so, you know, I, I look at it as, you know, an interesting issue from a development standpoint, people have someplace, they had to have someplace to live. And I think the guiding philosophy over the next 15 to 20 years will be affordable housing for all. And so, you know,
My bigger question is in the Miami areas, the coastal areas, I don't see any lack of mansions, $100 million mansions being built in those areas. I don't see any lack of, you know, high rise buildings being underwritten in those areas.
Toni Moss (45:56)
But is that your criteria for whether or not climate change is real? Is it lack of development?
craig fuhr (46:04)
You know, honestly, it's no, I don't look at it as this is not a question of me whether it's real or not. It's what do we do about it? It's, you know, what do we do about the rivers that might be overflowing in Mississippi or Ohio or, you know, what do we do about those coastal towns where there's being tremendous, you know, development being all the time?
Toni Moss (46:23)
Yeah, actually the
Good point, Craig. The greatest flooding in this country is in the Mississippi Valley River Deltas. But you look at, I'm sorry, go ahead. Were you going to say something?
craig fuhr (46:33)
Interior.
Jack BeVier (46:42)
Go ahead, go ahead, go ahead.
Well, I was going to bring up the point about like.
craig fuhr (46:45)
He'll get there.
Toni Moss (46:48)
So.
Jack BeVier (46:50)
The FEMA, the, but we had 2000 year floods in, we had 2000 year floods in a three year period. So like the maps are wrong, right? Like, and that's something that really struck me like, yeah, the, and the, and we're pricing, we're, we're either buyers of insurance based off of those locations, right? Because our lender requires us to, or if we're concerned, you know, if we're like, I don't know, economically rational about it, we.
Toni Moss (47:04)
They're outdated. Yeah.
Jack BeVier (47:19)
should buy, we should be buyers of insurance because it's subsidized insurance and the maps are incorrect in that they are not nearly conservative enough. When they tell us it's a 500 year plane, we're actually probably in, I'm making up shit here, but like, you know, we're in a 50 year plane or a 25 year plane. And so if you're in an, if you're in a flood zone, you have the opportunity to apply it by insurance from the national flood insurance program at subsidized rates. And yet.
Toni Moss (47:35)
Sure.
Jack BeVier (47:48)
many consumers that don't have a lender requirement to do so aren't consumers of that insurance, even though it's a subs a heavily subsidized product. The maps themselves are not correct. So when you're a homeowner, you're thinking you're buying and you're like, yeah, the the flood zone is three blocks that way in that big storm and the river, you know, river banks overflow, I'll be okay. And that's a lie, right? You think your family's safe when it's not.
And those maps aren't getting updated. And unfortunately, something that I heard over and over and over again from the public officials at the conference were that what a driving reason behind why the maps aren't updated is because of this pushback as to whether, you know, this, this third rail, you know, these third rail words. And regardless of the debate about that, it's a real shame that we're ignoring the data that would drive.
appropriate, not only economic, but well appropriate economic and like frankly, safety decisions for many of the most at risk people in the country. because we're because the data isn't coming out, right? Like, and I think that after your conference, I've seen a bunch more articles about this topic. I think you'd absolutely were able to increase awareness on this, but as of four months ago, my buddy who owns 300 houses in Jacksonville, isn't thinking about this at all.
The flood maps haven't been updated since those floods and we're making poor decisions, right? And everyone listening to this podcast is making long -term investment decisions and I'm concerned that we're doing it with the wrong information. And that to me is like, I don't know, that's what I care about when I get up in the morning on Monday.
Toni Moss (49:45)
You know, let's, let's talk about Miami again for a second, but, I was doing a lot of research and actually talking to developers in Miami who were building some of the most expensive real estate in the world there right now. And one of the developers says to me, we're elevating our buildings. So we're not worried about flooding. And I said, how about the streets that access your buildings?
craig fuhr (50:01)
Mm -hmm.
Toni Moss (50:16)
And the guy was totally silent. I mean, it's.
Jack BeVier (50:19)
And by the way, also condo developers and national builders, the inventories off their books in a 12 month, in the 12 month cycle, unless public perception shifts massively in a very short period of time, they're, they're not, their pro forma is not going to be affected by this issue. Like they don't have, I just want to call, you know, call out the incentives of the system that we all work within and flippers builders condo developers don't.
insurance companies don't need to worry about this. It's not going to affect their pro forma to worry about this idea.
Toni Moss (50:56)
Sounds like the subprime crisis, doesn't it? Right? And that's...
Jack BeVier (50:58)
It does. It does, right? Like the people holding the bag, the people holding the bag are the consumers and the investors and the government, the taxpayers, the ultimate holders of the risk here.
Toni Moss (51:12)
Right. So, you know, I'm interested in asking both of you a question. What do you think?
craig fuhr (51:19)
Hey, we ask the questions here, Tony, all right?
Jack BeVier (51:20)
Yeah
Toni Moss (51:21)
No, but what do you think is the role of government ultimately? If government has one crucial role, what is the role of government in society?
craig fuhr (51:25)
That's a great question.
to defend the border. I was just being facetious. I apologize. To protect liberty and to protect the interests of the citizens who elect the government officials.
Jack BeVier (51:37)
You
Toni Moss (51:49)
Jack, what would you say? Good answer, Craig.
Jack BeVier (51:53)
I would say to pull resources for the overall benefit, for the benefit of the overall society, act as a stabilizing force towards the positive direction of society.
Toni Moss (52:10)
Okay, I would argue that the role of government, and it's close to what you guys both said, the role of government is to manage risk on behalf of its population, right? And the government is the ultimate risk manager. What concerns me about extreme weather and extreme climate, which is continuing to worsen, is that the government's gonna be left holding the bag.
And I think we need, I think that in light of climate change, that the housing market as we know it is broken already. We just haven't come to that realization yet. And I can't believe I'm saying this, but that's the truth. And Jack, what I really do for a living is I do scenario planning and I work with different climatologists and I work with different experts on different topics.
But my job is to look into the future at the risks that are going to impact the market. That's the consulting work of AmeriCatalyst is scenario planning. And when you start looking at the future, it's terrifying. And I'm concerned about the losses that these investors are going to take. And I'm also concerned that those losses are going to be passed on to the taxpayer. And I'm concerned about future administrations.
who want to ignore this entirely and refer to it as a hoax when we know that the weather is worsening, when we're having thousand year floods, when we're having thousand year hurricanes, when we have oceans that are warming. I mean, one of the reasons that they didn't catch that hurricane that
escalated in Mexico from a category one to a category five within 24 hours is they had underestimated the degree of ocean warming and currents. And that tornado hit like, you know, a skateboard and just accelerated. I mean, the hurricane just accelerated. And these are things that are, you know, how many times do we hear the words unprecedented?
unprecedented. Here we go again, unprecedented. There's a point at which we're going to have to start realizing, wow, this is the new reality. This is the new abnormal, right?
Jack BeVier (54:46)
Why do you think that like to your point about like the ultimate holders of risk there, like the the investors, right? Well, you know, so who who owns residential who owns the highest risk tranches of residential mortgage backed securities or who wouldn't, you know, who owns the risk tranches of residential mortgage backed securities matters a lot there, right? Like, so it's the agencies, pension funds, insurance companies.
Toni Moss (55:08)
pension funds, the insurance companies, yeah.
Jack BeVier (55:12)
And they're the ones that...
that well, they're the ones that will end up taking a loss, right? If a property is under insured, or not insured, right? Because they're that location is no longer insurable because the insurance companies are pulling out of certain areas. Those ultimate holder are the ultimate holders of risk as well as the owner, the property owner that owns their property free and clear that.
chooses to under insure it because it's gotten real expensive, you know, and they're like, Hey, at us, I'm in a 500 year flood zone, I'm going to risk it. And they get wiped out because they're in a 12 year flood zone. The How do you think how do you think that'll play out? Right? Like, you know, do you do you see that affecting the you know, is mortgage price, you know, say we've got two more years of real bad storms, does the mortgage rates need to go up because the risk premium wasn't enough?
Toni Moss (55:46)
Right.
Jack BeVier (56:12)
And so like, you know, and as a result, that's another thing that's going that increases the risk premium of, well, it should increase the risk premium. So things should cost more. So mortgage pricing could go up as a result of that should go up as a result of that, right? If insurance costs don't mortgage rates will to accommodate for it.
Toni Moss (56:35)
This is exactly why I say the housing market is already broken.
Because there's only so much that mortgage rates can bear and it be affordable for the average person, right? We've already reached that limit. We've already reached the limits of rents and we've reached the limits of housing affordability. Now you have people who can't afford the ongoing costs of home ownership because they've got a fixed rate mortgage and an arm escrow.
And they've got these balloon payments due to insurance or property taxes. Right. Remember with the American catalyst event, I added that additional day and called it renting the future. Remember and focused on single family rental. And when I did that, all the mortgage people were like, who are these bunch of Yahoo cowboys coming into our conference? Right.
And I kept saying, hang on, hang on. You have a lot more in common with them than you think. And renting, comma, the future. And I was making a statement about a decline in home ownership and an increase in renting because people want access over ownership. And I think that ownership is going to become so much of a burden, even for these investors.
I mean, the valuable companies to me are the property management firms, right? Because they're going to be dealing with all the risks that are going to be faced as we head forward. But you asked me about solutions and, you know, who's going to take the hit? Will mortgage rates go up? I think that there was a guy, Cliff Rossi, who had a, from University of Maryland.
who talked about a GSE for insurance. And I think that that's probably one of the best ideas that I've heard is that we need to pool, somehow pool the risk and be able to spread that risk. But at some point, if people are going to be idiots and be in denial about it, then they should pay the cost, not me as a taxpayer. And as a person who can actually afford,
stocks and bonds and I have a pension, I'm going to get hit twice. I'm going to get hit in my pension. I'm going to get hit as a taxpayer. How fair is that for a bunch of investors that had their head elsewhere?
Jack BeVier (59:29)
The emergence of this state as an insurer of last resort was because it's not an issue in Maryland was something that I didn't really appreciate. It sounds like Florida and California. Those are very hot topics of conversation.
Toni Moss (59:43)
Yeah, and they're not going so well.
Jack BeVier (59:45)
Yeah, what's what's your take on how that's going? Like the idea basically here is that like, in for example, in Florida, where certain areas people have insurance companies have pulled out of the market, and those consumers are having a really hard time finding any bid for to ensure their property. And so the state is it's become such a public policy issue that the the state of Florida has decided to step in and create an insurance fund to act as that insurer of last resort.
But how's that experience going?
Toni Moss (1:00:14)
But the problem is Florida's got so many problems, right? So you're localizing the risk. I mean, the only way to really distribute that risk is to do it on a nationwide basis.
But you have this whole movement toward the state level. When you've got an entire state that's subject to flooding and hurricanes, a fund like that only goes so far because it's going to tap out. So.
Jack BeVier (1:00:49)
Well, what's your, what's your take on the appropriate way to, what's your take on the appropriate way to distribute that though, right? Like if, if, if the idiots are going to keep moving to Florida, you know, if the idiots are going to keep moving to Florida in spite, despite the data on, Hey, you're, you know, you're, you don't understand the risks that you're taking being in those areas. Why not let them pay for it? Right? Like why would, why does Michigan need to subsidize someone moving down, moving out of town?
Toni Moss (1:00:55)
I think it needs to be at the federal level.
Okay. So I have a caveat. There are people who are unaware and then they're idiots. Right? And I don't hold as much disregard for the people who are unaware as I do the idiots who have been presented with the facts and still say,
You know, my mind is made up. Don't confuse me with facts. I think we need much more awareness of this much, much more so that people understand the consequences that they're going to face by moving to certain areas. And, you know,
It's a politically divided country. It's getting hot. And where I think it's going to get even worse is over water rights, water issues, and climate change migration within the United States. When we look at what's happening at the border,
A lot of these people coming across are farmers who can no longer farm their land in other countries and are trying to make a living here. Right? You've already got climate change migration happening, but what happens when the United States realizes, my God, we need to live in the Great Lakes region. Right? Because of access to water and the climate there is becoming, you know, much more mild.
you know, these are going to be the really interesting issues. And I'm not talking 50 years from now. I'm talking 10 to 15 years from now. And I, and I, that that's, that's the issue, Jack. And, you know, we were talking about, do you remember, when we had climate AI on stage and he was talking about the aquifers in San Antonio, Texas running out of water.
Jack BeVier (1:03:02)
What is this?
Toni Moss (1:03:20)
And I made the comment about living in Austin and said, I am so out of here, right? He's talking about seven years.
Jack BeVier (1:03:28)
Yeah, Phoenix has those issues as well, yeah.
Toni Moss (1:03:30)
I mean, yeah, Mexico City has run out of water. You've got Durban, South Africa ran out of water. What do you do? You know, you've got desalinization, but then you have the problem with transportation to the interior of the country. And then what do you do with all the salt? Not to mention the cost. But what concerns me the most is
the fact that we're not looking enough at the things that we can do now. And in terms of opportunity, there's a hell of an opportunity for single family rental investors to start doing climate remediation on properties, change the roofs, secure the property. I mean, they're gonna need to do that to reduce their insurance premiums to begin with, but...
when you're able to market yourself as having a safer home to live in and to rent. I mean, isn't that part of the beauty of single family rental is that you're giving people access to homes that they typically couldn't afford if they were to purchase them.
Jack BeVier (1:04:44)
Yeah, this, the term hardening houses was one that I hadn't previously encountered, but, you know, if you want to Google like, you know, how can I harden my home against, you know, against, you know, weather impacts that's it's kind of the, there's the, the, that's the thing to do. If you're curious about that topic and, and to your point, Tony, the, something that we've heard, something that I have heard more, particularly over the past year in the face of rising insurance rates.
are investors who own enough properties to raise their deductible, making the decision to raise their deductibles because, you know, they've got a hundred thousand dollars and so they don't like the rate. You know, they don't like the $5 ,000 deductible rates, but they can stomach the a hundred thousand dollar deductible rates and Hey, they've got a couple hundred grand in the bank. And so they're going to raise their deductibles, which is, but then they're self -insuring against exactly the risks that we're talking about here.
And then as a result, if you're going to make that decision to cut costs, it would be wise to maybe also make some capex improvements so that when that category two comes through your town and you've never had a hurricane before that, you know, that you've got the roof that's not going to blow off. And when, when you're the one, you know, who's actually now the one taking this risk, we're, we're now holding the bags on, on this idea. and I think that that's going to be a trend of, of, of.
capex improvements and like you said, property management companies are going to serve a function to serve an education function to say, hey, yeah, you know, here's a cheaper option for insurance. But by the way, if you're going to do that, you may also want to consider some capex improvements. I think that's going to be in the consciousness for the next couple of years for, for investors.
Toni Moss (1:06:33)
Yeah, I mean, that's a Bank of America did a study and cited that it's a $3 trillion opportunity to do climate remediation on housing. But we do need to change the way that we build and the materials that we're using. And it's got to be more climate efficient. I mean, look at what just happened in Houston a couple of weeks ago.
Jack BeVier (1:06:47)
Mm -hmm.
Toni Moss (1:07:03)
I mean, they had 120 mile an hour winds on just a normal thunderstorm. Normal. I mean, you know, it's hard to use that word anymore. What's normal, but you know, a thunderstorm rolls through and they've got 120 mile an hour winds. I mean, the, the devastation was unreal.
Jack BeVier (1:07:24)
I wonder if it becomes a, like, if it becomes a national insurance issue because, you know, back to the previous point about that, this isn't just a coastal issue anymore. That, you know, when you look at the, I got my hands on a FEMA risk map.
Toni Moss (1:07:40)
Yeah. Well, what, what do you think about the federal level versus the state level? Do you think that states can, when they have so many claims because things are happening so frequently, do you really think that states are able to fund themselves like that or look at Louisiana?
craig fuhr (1:08:06)
Well, my question to you is you speak with not only corporate leaders, but I would assume also, you know, folks in DC who are policymakers and decision makers. You know, things move like a like a slow melting glacier in DC these days. And so where do you see any movement from a legislative level or appetite? You know, I see a lot of people wanting to take away gas stoves and
and give us EV cars and things like that. But I don't see anyone talking about what we can do from an infrastructure standpoint and what we can do from a risk standpoint.
Toni Moss (1:08:47)
The Biden administration just rolled out a massive plan for infrastructure change with regard to climate change. That plan exists and there's a lot of money that's being put forth and it's not just about EVs, it's about changing the way that we build. And it's a very complex plan that's been put forth. But the fact, I mean, where we really start is just,
talking about it and acknowledging it. If we could just get people to acknowledge it and talk about it, we're halfway there.
Jack BeVier (1:09:26)
Well, Tony, you mentioned like you asked what the role of federal government was. And I would put a slightly different spin on what you said in that you were talking about that you want them to to de risk, you know, the situation and, you know, absorb that risk. Yeah, manage the risk. I'm in my mind as a last resort, like the caveat that I would put on that as as a last resort. But the first step that we could.
Toni Moss (1:09:30)
Yeah.
huh.
or manage the risk, yeah.
Jack BeVier (1:09:55)
that we could take to managing this risk is educating everybody publishing data. If you recall, one of the my comments on the last panel of the conference was that the climate scientists are getting up here and giving presentations and showing us a bunch of maps. And but the denomination of all of the but but but the they're they're they're all in Fahrenheit and projected Fahrenheit and I don't speak Fahrenheit.
Toni Moss (1:10:01)
Yeah.
Yeah.
Yeah, that was the float of the conference.
Jack BeVier (1:10:24)
I don't run my household.
Yeah, and I don't run my house and consumers don't run their households off of projections of Fahrenheit. They run it off of projections of dollars. And
Toni Moss (1:10:36)
Yeah. So, Jack, you know, I'm doing a white paper on all of the topics that we covered at the event. And one of the most exciting aspects of this white paper is I'm working with two companies that I can't name yet. But between them, I've got a hundred percent of the data in the U .S. mortgage market. And I'm going to quantify the costs of climate change to the housing supply and the housing market.
Jack BeVier (1:11:06)
Can we quantify that?
Toni Moss (1:11:06)
I think it'll be the first time anybody's done that. Quantify what's at risk.
Jack BeVier (1:11:11)
Can we quantify projected insurance rates? Like to me that was it, like give me a five year projection on insurance rates.
Toni Moss (1:11:18)
Talk about a black box. My God. The insurance companies.
Jack BeVier (1:11:21)
Yeah.
And the frustration I had was that, yeah, they either didn't know or didn't want to talk about it. And I couldn't get, and we couldn't get anyone to talk about a five -year projection in that's denominated in dollars so that I can make, so I can frankly put it into my discounted cashflow analysis and like make a business decision. Right. And, and, and, and, but households should be, you know, able to, you know, be asked to do the, or I think there's like a moral obligation, right? Like we're, we're,
We're subsidizing homeownership based off of, based off of net cashflow, but we're, we're, we're using this year's insurance rates and everyone on the stage is telling me that the insurance rates are going to be higher. And then I say, how much higher? And then they say, I'm not really sure. You know, and then, and then they, and then they, you know, veer off and I can't, I can't get them to nail them down on, on that. And I'm like, if so, like, I don't,
Toni Moss (1:12:16)
You know, Jack, and I want to roll a hard four hopping too. Roll a hard four hopping on the next roll. It's going to be a hard four. What's the next roll going to be?
Jack BeVier (1:12:20)
You wanna what?
Yeah, yeah, but like, yeah, but like, give me something right? Like we're setting up a new GSE for insurance before we've published projected insurance rates. Like give me something like give me a give me a big wide turn of uncertainty something to work off of.
Toni Moss (1:12:41)
I have a response. I don't know how much of an answer it is. My dog's got an answer. And I totally forgot my point. Catherine Hayhoe. Do you remember the maps that Catherine was showing? Okay, and so she was showing future projections of what cities were going to look like.
Jack BeVier (1:12:46)
You
Toni Moss (1:13:07)
And the criteria that she was using is if we're able to limit climate change to 1 .5 degree increase, here's what it's going to look like. If we don't manage that and we hit two degrees, here's what it looks like. And at three degrees, here's what it looks like. Catastrophic. Right? She wasn't saying, you know, in...
five years it's going to look like this, in 10 years it's going to look like this, because it's all dependent upon what we do. So insurance companies are also saying it depends on the extent to which you remediate your property.
Jack BeVier (1:13:46)
Yeah.
Yeah, yeah, I get that. But like, can't we just can't just give me a baseline though? Like what it was? So what if I do nothing? What are the numbers?
Toni Moss (1:14:01)
Your baseline is today. I just saw a 48 % increase in one year. There's my baseline.
Jack BeVier (1:14:08)
Yeah, but it's but expected losses, but no one's projecting that expected losses are going to increase by 48 % every year. Like this was a catch up year. My question is, what's the growth rate going to be? I believe that it is well above inflation. But should I be project in my pro forma for buying a house? Should I be projecting my insurance increases at 4 % 6 % 8 % 12 % 14 16 18 20? Like I need like, I need a band of uncertainty. The problem is, I don't
Toni Moss (1:14:34)
20. 20.
craig fuhr (1:14:36)
per year.
Jack BeVier (1:14:37)
I don't think I believe that. But that's a doubling every that's a doubling of losses every three years. That's the that's the implied, you know, rule of 72. That's that's a doubling of losses every three years. That is, if that's the case, the world is totally fucked. And there's nothing we can do about it. Like, I don't think it's that dire.
Toni Moss (1:14:38)
for a year.
I think we need to think the unthinkable. So, I mean, if you're gonna go worst case scenario, go 20%. If you're gonna go best case scenario, go seven to 10.
Jack BeVier (1:15:09)
Yeah, that's...
Toni Moss (1:15:09)
And how are you going to pass that along to the tenants, to the residents? I, this is what I mean by, I think the system's broken. Who's going to want to own homes? Homes are going to become such a liability unless, unless you have a climate resistant home. I mean, I'm looking at this issue with a client right now. And, and I, you know, there were times when I was putting together.
Jack BeVier (1:15:25)
Right. That would be the, that's the inference. Yeah.
Toni Moss (1:15:38)
the sessions for that event that I was talking to different professionals and in particular climatologists and actuaries. The actuaries scared the hell out of me. I mean, there were times when I was actually just speechless at what I was hearing, just speechless and petrified. And, you know, the only comfort,
is that we're in a state of disbelief along with everybody else. But this is this disbelief. This is what I mean by, you know, when we talk about the costs of addressing climate change and no one wants to confront those costs, they don't want to confront job losses in the oil and gas industry. But look at what we're confronting with not doing anything.
and look at the price that we're paying, and it's only going to get worse and more painful. We've got to do something. We've got to do what we can. And I know, by the way, Katherine Hayhoe would be so upset with me for calling climate change deniers idiots because we're supposed to validate their perspective.
Jack BeVier (1:16:50)
I guess I...
I just I'm struggling with the I'm struggling with the lack of quantification of it. Like it's I'm I think that that's the I think that I think that those I think that those who want to were like, who feel that this is a moral issue, and this is a problem for America and like, we need to fix this. Well, then the best thing to do is to learn English is to speak the language of the American consumer and stop talking down to them in Fahrenheit and start speaking to them in dollars.
Toni Moss (1:17:11)
I agree with Jack, the import modification.
Jack BeVier (1:17:29)
And to me, that's like, if we don't do that, well, then we're not going to, then we're just going to be like yelling at each other and never, because we're yelling, you know, one person's yelling in English and the other person's speaking Chinese, you know, like.
Toni Moss (1:17:30)
Let's start.
Let's start lobbying Laurie Goodman and Andy Davidson to quantify the problem. Get the two best thinkers in the market on it. But I agree. Andy Davidson is Andrew Davidson and company. He's the guy that did the session, the coal mine.
Jack BeVier (1:17:49)
Is Andy CoreLogic? Where's Andy?
yes, yes.
Toni Moss (1:17:58)
who originally, when I asked him to do that session and to look at risk transfer throughout the housing ecosystem and find a way out, and he couldn't find a way out. He spent nine months trying to find a way out as the system currently exists. And remember, his conclusion is there is no way out. We need to restructure the housing finance system. That was his conclusion.
But I agree, we need to quantify, but here's my question. You can't even get people to believe that the weather is worsening. Will they really believe those numbers once we quantify them? Or is it just going to cause a whole new argument over the methodologies that were used on the quantification? People are going to be in denial.
whatever you do. But I agree, it's a worthwhile exercise to start quantifying to see if we even have the capital to support a housing system as much as we are and subsidize a housing system as much as we already are. Every country in the world subsidizes the housing market. Do you know why?
Jack BeVier (1:19:22)
Good for society, fabric of society and all that jazz.
craig fuhr (1:19:26)
people need a place to live.
Toni Moss (1:19:27)
Well, the greater the degree of home ownership, the less likely people are to go to war. That's the history of subsidizing home ownership.
Jack BeVier (1:19:39)
Check it out.
craig fuhr (1:19:42)
It's also I think as well it's it's been proven to you know, as a as a wealth builder over time and a wealthier, wealthy citizenry is always going to be a happier one.
Jack BeVier (1:19:48)
forced wealth.
Toni Moss (1:19:50)
Well that -
Yeah, that came later, right? But I'm talking about Middle Ages and how it progressed. But actually, you know, one of the most interesting projects I've ever worked on was back in 2008. With all the terrorism in the Middle East, I was asked by the Saudi government,
Jack BeVier (1:19:54)
Not a thing.
Toni Moss (1:20:19)
to help create a housing finance system for the kingdom because they were concerned that you had to be a member of the royal family to own property there. So they wanted to start from scratch. How do we create a housing finance system? What kind of products do we want to have? How do we want to fund those products? Do they want to be on balance sheet, off balance sheet? That was really fun.
Are we going to use realtors? No. That kind of stuff.
Jack BeVier (1:20:54)
That's funny.
Toni Moss (1:20:54)
I'm getting in more trouble on this podcast.
craig fuhr (1:20:55)
As somebody who has, as someone who probably has racked up more frequent flyer points than most and traveled the world, you know, you know, we're sort of in the post industrial West. However, what we, it's a big globe. It's a big planet and we have half of the world now that is industrializing who, you know, in China, they're building a few coal plants a week. you know, you could say probably the same for the whole Eurasian landmass.
Toni Moss (1:21:21)
Yeah.
craig fuhr (1:21:25)
And so what do you say to them who really appear to be thumbing their nose at, you know, the 90 % of climatologists who believe that, you know, we're living in Armageddon times? I mean, and what, and frankly, and frankly, what is their responsibility in this rather than, you know, the richer West at this point?
Toni Moss (1:21:39)
Well, first of all...
Well, here's the argument. First of all, let's be clear. The United States is the worst polluter in the world. That's a fact. But that said, some of these other countries, and in particular, third world countries, are saying, hey, wait a minute. This is not fair. We want to industrialize. You guys did it. We want to gain wealth. How do we go about that? And who are you to tell us not to do it?
So, you know, the only conclusion I can come to is we need good leaders. We need effective leaders who really know how to guide people and on a global basis. You know, I mean, that's the problem with nationalism, too. Everybody's reverting to protecting our borders. Well, the ocean doesn't recognize a border.
Right? And I'm not arguing for a one world government. I'm just arguing for better leaders like Angela Merkel. And we're losing a lot of our great statesmen. And the whole concept of statesmanship is dead, which is incredibly unfortunate.
Jack BeVier (1:23:09)
Do you think that, do you think that, good.
Toni Moss (1:23:09)
We need, we, you know, actually Jack, so in 2015, one of the, the theme of the event that year was called the entanglement. And I was trying to make the point that we need a new enlightenment. And if the enlightenment was about independence, the entanglement is about interdependence.
And the skills that we need to survive in the world today, and I'm talking about survival, not even thriving, just survival, are compromise, coordination, collaboration, cooperation. And all those words have become vilified. They're dirty words in the American vernacular. And we're interdependent.
craig fuhr (1:24:00)
Well, you know, I...
Yeah, maybe I think it's a wonderful concept and I absolutely see the benefit but I think the average American just looks at their life and goes, you know, I don't feel that, I don't see it, I'm just making my bills, I'm going to work every day, yet more and more I get, you know, can't do this, can't do that, can't have a lawnmower that's gas, I've got to go buy the electric one and I'm making, I'm trivializing.
Toni Moss (1:24:15)
Yeah.
Well, you don't have to. Hopefully you will want to, but you know, you have to.
craig fuhr (1:24:32)
I'm trivially, I made a small point. But I think grand concepts and certainly noble ones. And trust me, I believe more than anyone that we need better leaders, folks who go to serve rather than to enrich themselves. And so I think that, and frankly, I don't see any light at the end of the tunnel there.
Toni Moss (1:24:36)
Sure.
Yeah.
craig fuhr (1:25:00)
I don't see where we're getting more and more people who want to serve in local, state, and federal government levels who aren't necessarily there for power and to enrich rather than to protect the interests of their constituents.
Toni Moss (1:25:17)
Well, you're seeing the effects of Citizens United, right? Here we are.
where every politician can be bought by their donations. This is the impact what we have today. But when I say we need a new enlightenment, I wish that people were inspired to look at what is sustainable in the future. I wish that people cared about their children and the world that their children are going to inherit.
And I think that a lot of people, you're right. I mean, they're living hand to mouth. It's tough out there. It's very tough for most people.
craig fuhr (1:26:01)
You don't think that most Americans do?
Jack BeVier (1:26:08)
Well, I don't think people look, I don't think people look, I don't think people are forward. I don't think consumers are generally forward thinking beyond, you know, beyond the next six months, you know, they're the I just don't, I don't think people anyone is like thinking ahead on these issues, they assume that, you know, there's a price on things and they manage their budget to, you know, on an annual basis at best. And that's it, you know, and
For me, that's, that's the rubber hits the road is like, I don't think we change people. I don't think we change human behavior until we make, until we hit their wallets today. And that's like, that's where I circle back to is like, give me more information, help me quantify it. If someone wants to, you know, if, if someone wants to move to Florida and the insurance costs are higher in Florida or someone wants to buy, you know, the, and then, and they can afford it and they can afford to rebuild their house every 30 years, let them, right. Let them, you know, make, make that.
Let them make that decision as a taxpayer. I'm not that excited about paying for about nationalizing this idea and allowing folks to live in places that are like, you know, that, that shouldn't have houses. like as much as I love, you know, I think it's a nice idea that people should be able to like, you know, live in the neighborhood that they grow up in. I don't think that I should have to pay for them to be able to live in the neighborhood that they grew up in.
you know, and we all have to manage our own household finances.
Toni Moss (1:27:37)
But you just commented about the fact that people aren't forward looking and they don't look to the future much. But isn't that sad that in this country, we're also eroding history where people don't look back either. And usually they made projections about the future based on what's happened in the past. So yeah, I worry.
But you know something, the fact that we're even talking about this is great because hopefully the people who are listening out there are getting some ideas on what they can do. That it's enlightening them and they're starting to think about, gosh, where's my risk? Where should I be buying? What should I be doing? It really does start with just acknowledging and talking about the truth.
Jack BeVier (1:28:33)
Yeah. And, Tony, I want to thank you because I mean, before the conference, you mentioned to me that, you know, you made this conference open and invited the press for the first time. You would never allow, you know, didn't allow press in the room at previous conferences. And I, that was an, it created an environment that I, you know, that I enjoy, but this one, you intentionally invited the press because you were hoping to spark or comp, you know, spark this conversation and.
Toni Moss (1:28:44)
Yeah.
Jack BeVier (1:29:00)
I have to say that since the conference, I have seen maybe there's just a little bit of confirmation bias here, but I perceive that I've seen a significant increase in just articles and deep dives by journalists on these kind of topics. And I think that it's my perception that you legitimately did elevate the awareness of these issues and that is a necessary part of the path forward.
Toni Moss (1:29:27)
I talked to a lot of journalists, including the economist, before that big article came out. I sent the program to almost every media outlet in the world, trying to get them to start talking about this issue. But I also think that in groups like Real Investor Roundtable, that it's incredibly serving to them.
Jack BeVier (1:29:33)
Mm -hmm. Mm -hmm.
Toni Moss (1:29:54)
to get them to start thinking about these issues, how they can have a better business, how they can protect their risk and where they can see actual opportunities from this. One of the things, by the way, that I think is great about single -family rental is that when people are renting, they consume less crap, right? Than when they own a home. So, in a sense, it's doing a public service, right?
Jack BeVier (1:30:23)
Great, it's green to rent.
craig fuhr (1:30:24)
Sorry for all you self storage guys out there. Less crap coming.
Toni Moss (1:30:24)
Yeah. Yeah. God, self storage. What a racket. I just had to put stuff in storage yesterday and I'm like kicking myself. I can't believe I've got a storage unit.
Jack BeVier (1:30:26)
I'm sorry.
That's hilarious. Nice. Well, Tony, I really, really appreciate your time today. This is a really fun conversation. Glad we were able to spice it up a little bit too. And appreciate you playing ball. I told you it goes fast, doesn't it?
Toni Moss (1:30:43)
Yeah.
We're at the end already?
Yes, it does. I have all these questions for Craig. Like, where...
craig fuhr (1:30:55)
We've been speaking. geez. Well, maybe, maybe I can be a plus one for Jack at the next conference.
Jack BeVier (1:30:57)
I'm sorry.
Toni Moss (1:31:03)
But, but Craig, I mean, your last name...
craig fuhr (1:31:04)
That was a total no, by the way, Jack. She...
Jack BeVier (1:31:07)
Hahaha!
Toni Moss (1:31:07)
Pure? How do I pronounce your last name? Pure. Awfully close. What's your?
craig fuhr (1:31:10)
fear.
come on.
Jack BeVier (1:31:15)
Yeah.
craig fuhr (1:31:18)
There used to be an umlaut over the U.
Jack BeVier (1:31:19)
But.
Toni Moss (1:31:22)
What is, what is, is it?
What's your ethnic background?
craig fuhr (1:31:30)
Italian and German.
Toni Moss (1:31:33)
Hmm.
Jack BeVier (1:31:35)
I'm a mutt, like Scottish, Polish, all kinds of European mutt.
Toni Moss (1:31:40)
I'm a mutt too. We're all mutts. That's my favorite thing to ask people when they're absolutely anti -immigration is to ask them where their grandparents are from. Now it's a fun one. Now they just get mad at me for asking the question. But we didn't even.
Jack BeVier (1:31:43)
Yeah. All right.
craig fuhr (1:32:00)
Who would be anti -immigration in America? That's ridiculous.
Toni Moss (1:32:04)
Yeah, well, careful what you wish for when you look at housing costs and the cost of home building, because we've I remember I was building my guest house when I showed up here in Texas and I lost all the workers on the project. I was not the one that hired them. It was my contractor. But the whole state of Texas, they did a sweep.
anti -immigration sweep and the housing construction costs went up 38%.
Jack BeVier (1:32:39)
yeah, we had a nice sweep five, six years ago here and I lost. Well, I didn't lose them, but they were, you know, some, some guys were detained, had to go do some paperwork. We were out of work for a couple of months. It was, yeah, I didn't, I didn't enjoy that. Those are my best guys.
Toni Moss (1:32:55)
Wouldn't it be great if we had a system that allowed people that have the skills that we need to come in? I mean, you know, I've lived abroad, so I've been an immigrant and I lived in a country where I totally mangled the language. I mean, in Dutch, do you know how you say good morning? Or, you know, how are you? It's, who gaat het met je? Right?
craig fuhr (1:33:20)
Very nice.
Toni Moss (1:33:21)
It is not a pleasant language to learn, but I had that experience of living in other people's countries and their frustration with me for not being able to speak the language well. And then Jackie talked about Argentina. You know, I think that if more Americans had the experience and the luxury, it is a luxury, of course, of living abroad, that we'd have such different attitudes. But.
Jack BeVier (1:33:51)
Whenever I'm, whenever I'm mad about America, I just go travel. And then I'm like, and it's a nice place to visit, but like, if you stay for an extended period of time, you start to like, wow, like there's a lot about America that like actually runs really, really well. And like these predictable institutions are pretty nice. So like, if you want to like live and run a business anywhere, good luck, like, you know, any, anywhere else, but, but America have, have fun with that. Like you'll, you'll come, you'll come running back.
Toni Moss (1:33:51)
Yeah, we need a better system.
Jack BeVier (1:34:20)
in before before the year's end, in my opinion. So yeah, my favorite thing to do is
Toni Moss (1:34:24)
Wouldn't it be cool if we had a nationwide work program where every young person had to do some type of public service for two years? Wouldn't that be great?
craig fuhr (1:34:38)
Yeah, we used to have that all the time. I mean, AmeriCorps was a great thing. The apprentice programs all over the country that help people learn how to be carpenters and electricians and plumbers. You know, all of those things still exist. I just don't think that, you know, well, notwithstanding the stigma that came from being a blue collar person, you know, starting in 1980, you know, I think those things still exist. And I think we need to get back to that.
Jack BeVier (1:34:42)
Yeah, AmeriCorps, yeah.
Toni Moss (1:34:43)
Yeah!
craig fuhr (1:35:06)
And I think those the kids that are in those programs by and large are excelling much greater than those who graduate college with $250 ,000 a day.
Jack BeVier (1:35:17)
In my next life, I want to start a trade schools everywhere, like all over the country. I think those people would be worth giving loans to, to learn real skills. That would be a good investment.
Toni Moss (1:35:17)
So.
craig fuhr (1:35:23)
Count me in.
Toni Moss (1:35:24)
Yeah.
So.
I have a question for y 'all before we go.
craig fuhr (1:35:35)
Love this.
Toni Moss (1:35:37)
What do you think is going to happen if Trump wins with regard to climate change and this discussion? Like, Jack, do you see me holding the event in Washington, DC under that administration?
craig fuhr (1:35:55)
I think, but don't you believe though, Tony, that the issue has gained way more momentum than one individual?
Jack BeVier (1:36:07)
Yeah, I think the insurance companies are driving the awareness. Events like yours are driving this awareness. And I guess I don't think that the political leaders can stop the climate change and stop the losses. And as those losses hit consumers' pocketbooks, the politicians will figure out their own flavor.
of how to pander to that idea and address that pain. But that's what they do, right? They're not real people, right? They pander to whatever they think they can, the momentum that they can gain. And once it hits those consumers' pockets, they'll have the, all of them will have their own version of pandering to that idea.
Toni Moss (1:36:47)
But speaking of catering.
Right, and speaking of pandering, what just happened at Mar -a -Lago, where Trump addressed the apparently four to five heads of oil and gas companies and said, if you give me a billion dollars to my campaign, I'll eliminate climate change regulation that impacts you. So there's the price of our future.
craig fuhr (1:37:22)
So is this isn't I think that's where you know we might part ways. I look at you know modern day climate theory as more energy theory at this point. What we were talking about for the last hour was financial impact. Pardon.
Toni Moss (1:37:39)
Wait a minute, Craig, explain that. Explain, I look at climate theory as energy theory?
craig fuhr (1:37:47)
Because the two seem to be so intertwined now, Tony, that you can't speak about one without speaking about the other. I can't solve climate issues unless we take away all the bad fossil fuels and things that run a modern society. And that, I think, is where I think there has to be some give and take. You're not going to go straight from being an industrial society that was built on fossil fuels to...
Toni Moss (1:38:10)
Sure. Sure.
craig fuhr (1:38:12)
a post -industrial society where who the hell knows where everybody's going to work in a post -industrial society that runs on green energy. Green energy is not going to fund or is not going to fuel our economy until we have actual green energy that can act on a sustainable basis like coal, gas, and natural gas. And to say and
Toni Moss (1:38:36)
Right, but we gotta start somewhere, right? We gotta have that conversation.
craig fuhr (1:38:39)
but to simply turn them all off, turn everything that we've known as energy off. And while the rest of the growing industrial world decides, no, this is exactly what we need. And America is gonna foot the bill, the trillions of dollars that it would take to be post -industrial green. There you go. Then...
Toni Moss (1:38:52)
Yeah.
More than trillion.
craig fuhr (1:39:02)
And by the way, with, you know, $35 trillion and growing at a trillion dollars of debt every 90 days at this point, where is that money coming from? We're borrowing it from someone. And and I feel that there's a lot of a lot of our debt holders now they're saying, Hey, no, thanks. You know, we're we don't see that, because we're building our industrial society based on all of the things that you did. And even though we all live on the same planet, we're just gonna go ahead and do our thing over here while the entire West goes green. I just
Toni Moss (1:39:18)
Yeah.
craig fuhr (1:39:32)
That is where the...
Toni Moss (1:39:34)
Is that your excuse for the West not going green because of what they're doing over there?
craig fuhr (1:39:40)
I wouldn't, I only care. I live in America. I love this country. Don't intend to leave at any point. And so I care about what happens to the average American here in the short term and in the long term. And if that means, yeah, both. And so, you know, if that means going green or some partiality of that, count me in. If that works, fantastic. But if it's going to...
Toni Moss (1:39:56)
in the short term.
craig fuhr (1:40:07)
affect my liberty, my kids' liberty, my freedoms, all of those things in the process, there's gonna be some hurdles along the way. I mean, it's, so.
Toni Moss (1:40:13)
it down.
Let it burn!
Jack BeVier (1:40:18)
Hey, Tony, you are you are you new? Are you pro? Where are you in the nuclear conversation? You pro nuclear?
Toni Moss (1:40:26)
You know, that's a really good question and I'm not informed enough to answer it. So I definitely understand all the arguments and I know it's going to be painful to make transitions and we need to talk about those transitions in a more rational way. We need to start making some kind of progress and there's a balance that needs to occur. But, you know, while we're...
sitting here talking about climate change or even arguing about what needs to be done about it. Meanwhile, here comes AI, right? The greatest change is the pace of change. I mean, you know, we're not going to have any jobs if you really look into AI, right? And then you're going to have universal basic income. Gosh, I feel like a hemophiliac in a world full of knives.
Jack BeVier (1:41:13)
White collar. White collar drum.
Heheheheh
Toni Moss (1:41:25)
when I look at the future. But so Craig, actually, I do agree with you on a lot more than you think I do. I just think we need to get started. Sorry. Sorry, I cut you off. I just think we need to get started in the conversation. And it's nice to be able to talk openly and without fear about, you know, what you think.
craig fuhr (1:41:33)
I'm sure, and I'm sure I agree with you on a lot more than you think I do.
No, please.
Yeah, I would get back to sort of the intended and unintended consequences for big policy changes. And, you know, there's a huge story over the weekend how, you know, the Biden administration put seven billion dollars into putting out five hundred thousand at least charging stations all around the country. Philosophically, I don't know how I feel about the government owning the thing that I have to charge my car with. However,
Toni Moss (1:42:20)
Yeah, batteries aren't so good for the environment.
craig fuhr (1:42:23)
However, that $7 billion bought us seven, I think eight charging stations so far in four years. And so when we start spending trillions of dollars or multiple hundreds of billions of dollars in DC, my spidey senses go up and I say, that's not gonna be the most efficient way to get things done. And so it's the unintended consequences that trickle down to the average American that I...
that I really start to take great pause with in these big economic shifts and policy shifts and especially large topics such as climate change.
Toni Moss (1:43:02)
Do you remember the movie Annie Hall with Woody Allen and Diane Keaton? Are you old enough? Me too. Do you remember Alvy when he was a kid and he's talking to the psychiatrist and Alvy is suffering from existential anxiety because, you know, the universe is expanding and the psychiatrist gets all frustrated and says,
craig fuhr (1:43:04)
you know, of course. Yeah. I am that old. I think I saw it in the theater. No.
Toni Moss (1:43:30)
But what does that have to do with you? Right? I feel the same way. It's like, my God, climate change, AI, income inequality.
craig fuhr (1:43:33)
Right.
Exactly, exactly. It's been a fascinating conversation, Tony. I think we could speak all day and I hope you come back on at some point. Honestly, it's been one of the most pleasurable episodes that we've done. It's gone long. I hope people have actually enjoyed it. And so thank you for taking the time.
Toni Moss (1:43:50)
It's fun.
Well, thanks for what you guys do too. Cause I think the world of you.
Jack BeVier (1:44:04)
Hey, I would be remiss if we didn't mention that you're working on a white paper that summarizes, why don't you tell us what you're working on there.
Toni Moss (1:44:15)
So I'm essentially trying to extrapolate from the sessions from the event and go out the next 10 years, quantify how much this problem is going to affect the market and look for ideas. We're not going to have solutions. We're only going to have ideas that make things less bad.
You know what I mean? And that's very sobering. But what's starting as a white paper is turning into a book. But I'm really racking my brain to think about what is the future of housing finance look like? And who's going to want to own these homes when they've gone from an asset to a liability?
Jack BeVier (1:45:13)
Hey, I have a different, by the way, just a little, I can't help myself. The, the, the idea I've mentioned it on this podcast before, but I don't know if I've ever mentioned it to you. this idea of the operating costs are going up for houses. And so the assets go from, you know, do the, do the houses go from an asset to a liability because they just cost too much to run. And I'd give it, I propose a counterpoint to that in that we,
Toni Moss (1:45:29)
Yeah.
Jack BeVier (1:45:42)
In all the, in the, in many conversations about housing affordability, actually all the conversations that I've ever heard about housing affordability and that is, is a crisis levels. We, we know the whole, you know, all that. and I agree with all that, but the thing that all the economists hold constant is consumption. They say, you know, it's, it's how, how much can you buy today's house for today's income? And they measuring that, but they're not measuring the fact that we are consuming.
multiples in terms of square feet per capita than we did 70 years ago. And there's, and everyone takes it for granted that we as if we need to consume this much housing. And it's not true, right? Like we do not. The answer is we do not need to consume. I came over the number off the top of my head, but you know, 1100 square feet of housing per capita. Like we do currently people were, you know, we, we could consume 500.
Toni Moss (1:46:19)
Yeah.
Jack BeVier (1:46:39)
and houses would be twice as affordable immediately. Now there's an adjustment period and the houses may need to be modified to accommodate more roommates. And you need a higher ratio of bathrooms to bedrooms than we currently have. But I think that the equilibrium in both housing affordability and in terms of this issue about the higher operating costs, the equilibrium in the market comes through lower consumption.
Right? Like if, if insurance does cost three times as much, well, then you need a roommate and a half or two roommates to afford that house. And so you'll have four, four people where you used to have one and a half in that house, but that will be affordable based off of future incomes, but we will be consuming less housing per capita. And I think that's where the equilibrium, that's where the market will find an equilibrium.
Toni Moss (1:47:19)
Right.
That's a really good point. Also, you know, remember at the event we talked about with the insurance issues, the possibility, probability and likelihood that home prices will come down about 20 % as a result of climate change. Remember that? We'll discuss it. Like what's going to give?
Jack BeVier (1:47:56)
Yeah. Yeah.
Toni Moss (1:48:01)
what's gonna give and the big question is, will that come from house prices and will those go down? And I think it's gonna be very disproportionate. It's gonna be on a geographic basis.
Jack BeVier (1:48:16)
I think that it's not going to come down via housing prices because replacement cost because AI is going to disrupt white collar jobs, not blue collar jobs, nor, nor any of the other inputs in create in the creation of housing. And so I actually think that I think that real estate values are going to outpace inflation on a going forward basis because of that issue because of the replacement cost issue, but consumption is going to come down faster than we all think, because of
Toni Moss (1:48:26)
Yeah.
Jack BeVier (1:48:45)
the affordability and the increased operating costs issues.
Toni Moss (1:48:49)
Do you think we're looking at the right variables and we're asking the right questions when we're looking at how to construct a housing market and how to create a pro forma? Are we really asking the right questions? I'm always asking myself that because I mean, I don't know how anyone can...
refer to themselves as an expert when there's so much to know. You know what I mean? And yet you hear these guys on the news and economists. One thing 2007 and eight showed is that economics is a failed academic discipline, right? Yeah. But, you know, I, and, and one thing I would caution your listeners is,
craig fuhr (1:49:34)
It took us that long to figure it out.
Toni Moss (1:49:45)
You know, quit looking at what the masses are doing and your gut instincts, your hunches, you know, do your own due diligence and constantly question if you're asking the right questions. You know, because they see so many people basing their decisions on what everyone else is doing. And right now, you know, it's those developers in Miami that are elevating the buildings, but.
not the streets that access them, right?
Jack BeVier (1:50:18)
Yeah, absolutely. All right, sounds good. Tony, really appreciate your time today. Thank you so much. Such a pleasure as always.
Toni Moss (1:50:25)
Hey, when's the next RIR in person? Yeah, where is it?
Jack BeVier (1:50:28)
It's in July. You want to come? Baltimore.
craig fuhr (1:50:32)
Always in Baltimore.
Toni Moss (1:50:34)
When in July?
Jack BeVier (1:50:35)
July 11th. And if anyone else wants to come shoot, shoot me an email, jack at the dominion group .com and I'll hook you up with the powers that be that organize the event. And no, but Tony, I'd love to have you. It would be wonderful. I'll send you details.
Toni Moss (1:50:48)
Cool. All right. Thank you so much. And I'm sorry to all the idiots that I call them an idiot. If there are any. I don't think your listeners are idiots though, right?
Jack BeVier (1:50:55)
wait, and then also.
craig fuhr (1:50:55)
No, you're not. You're not sorry.
Jack BeVier (1:51:00)
We also need to, if folks want to get in touch with.
Toni Moss (1:51:03)
I'll lose sleep over it, Craig, believe me. I'll lose sleep over that.
Jack BeVier (1:51:07)
If folks want to get in touch with you, how can they do that? What's the website? What? How would you like them to reach out to you?
Toni Moss (1:51:13)
Just americatalyst .com is the website. So that's the easiest way to reach me. That's how all the spammers reach me. We've got an info at americatalyst .com. Or just contact Jack and ask him how to reach me.
Jack BeVier (1:51:27)
Awesome. Sounds good.
Alright, sounds good guys.
Toni Moss (1:51:33)
Guys, thank you. That was fun. All right. Deal. Deal. All right. Thanks, you guys.
craig fuhr (1:51:34)
I'll be waiting for the invite to the next one. Excited. Honestly, it was a pleasure.
Jack BeVier (1:51:37)
Absolutely.
craig fuhr (1:51:42)
Thank you. That's today's episode, everyone. Hope you enjoyed it. Great conversation. Real Investor Radio. We'll see you the next time.