Sam Dickie: Fisher Funds expert on the state of the US housing market

The US housing market has been undergoing an unusual period.

Various aspects of the sector have been found to be running at different speeds - with new builds selling at significant highs and older homes selling at record lows.

Sam Dickie from Fisher Funds explains what's going on with the economy.

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Episode Transcript

Speaker 1 (00:00):
Together duple cls.

Speaker 2 (00:01):
Something quite weird is going on in the US economy.
The big drivers of the US economy being the housing market,
the consumer, and the goods and services sectors are all
running apparently at very different speeds. Under the hood. Sam
Dickey from Fisher Funds is with us. He's been having
a look at it.

Speaker 1 (00:15):
A Sam, good evening.

Speaker 2 (00:17):
Okay, So let's look at each of these ones individually.
So let's look at the housing market. What parts of
it are running at different speeds?

Speaker 1 (00:24):
Yes, super interesting, weird. As you said, under the hood,
they are in an extremely different speed. So take new
build or new home sales. Those numbers are at decade
high so ten year highs, whereas the number of existing
or secondhand home sales are at ten year lows. In fact,
existing home sales are at twenty five year lows.

Speaker 2 (00:44):
And what about the US, by the way, can you
explain that? Why is that happening?

Speaker 1 (00:48):
Yeah, So it's to do with the rapid rise and
mortgage rates. So if you think about it, most people
who own home in the US sign mortgages or I
think the eight you're ninety percent of them sign mortgages
below three percent, So they're sitting on two and a
half three percent mortgage rates, and the prevailing mortage rate
in the US has sort of was seven and a
half percent now about six and a half percent. So

(01:11):
the only reason and that mortgage is fixed for thirty years,
so the only reason you'd have to refinance that is
if you sold your house and moved, So even though
you might have to move for a job or whatever,
you're just not selling your house, so you're trapped in
your mortgage. Whereas that people do need housing demandments this
household formation every year in the US, so that the
new homes of satiating that demand.

Speaker 2 (01:33):
What about the US consumer then? What are you seeing
under the hood there?

Speaker 1 (01:37):
So the midden high end consumers in pretty good health.
So overall retail sales in the US about three percent,
which is very solid certainly to New Zealand anyway, and
the mid and high end consumers probably growing faster around
four percent. But the low end consumer is in pain
and they're spending as probably flat or going backwards, so
they're effectively in recession.

Speaker 2 (01:57):
Yeah, and that's pretty self explanatory, right, we can figure
out why that is and what's going on with the
freight market.

Speaker 1 (02:03):
Yes, we've got in at a decent freight recession in
the US for the past eighteen to twenty four months.
So I think about the volume of goods transported. They've
been pretty anemic, and freight rates have been falling pretty sharply,
and the manufacturing sector, which is part and parcel of
a very weak freight market, is effectively been in recession. However,
that the service is part of the economy, and again

(02:24):
this is the two speed and nature of this. A
lot of these key drivers has been very strong. So
think of services as finance, healthcare, restaurants, air traveled. That
part of the US economy has thankfully been booming.

Speaker 2 (02:35):
Why has it been booming.

Speaker 1 (02:38):
Well, so particularly talking about that. Remember the back end
of COVID, you during COVID, the back end of pop COVID.
We talked about this before we all wanted to buy goods.
You remember this, global supply chains were all snarled up.
So if you're aboarding one bike, the bike shop ordered
three and it was big waiting lessons on everything from
boats to car parks around the world. And then, as

(03:00):
always the case with these kind of Bullworth effects, the
supply chains unstarved and all the inventtry arrived at once,
and by that stage we didn't want these bikes anymore.
We were more interested in going to restaurants and traveling
and all that good stuff. So we had this huge
kind of glut of goods inventory around the world, and
that's taken eighteen to twenty four months to unwine, and

(03:20):
hence the freight market in the US, which carries all
these surrounders in recession.

Speaker 2 (03:25):
I see, Okay, Now, I can't imagine that this is
normal at all? Is it?

Speaker 1 (03:30):
No? Usually? I mean, the driver's under the foot of
any set that can move a little bit in different directions,
but that this extreme sort of dispersion is quite unusual.

Speaker 2 (03:43):
What does it mean for investors? Sam, What should investors
take from this?

Speaker 1 (03:48):
I just think that we just need to be aware
that the global economy still isn't working properly. I know
you and I have talked about this quite a few times,
So we need to be more cautious than usual on
Macreek and I forecasts, and more cautious than usual debts.
You know, if you study in the company and its history,
that that history won't necessarily repeat because this is quite
a weird economic cadence. Ruin right now.

Speaker 2 (04:12):
Sam, Thank you as always really appreciate your very interesting
insights into what's going on that Sam Dickey of Fisher
Funds For more from Heather Duplessy Allen Drive, Listen live
to news Talks.

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