Motley Fool Money – Episode Summary

Navigating the Housing Market’s Mixed Signals
Date: September 25, 2025
Host: Tyler Crowe
Guests: John Klost, Matt Frankel

Overview

In this episode, Motley Fool Money dives into the persistent contradictions and evolving trends in the U.S. housing market, as illuminated by the latest earnings from major homebuilders Lennar and KB Home. The team also briefly discusses Starbucks’ major restructuring and rounds off with their top stock picks for the current environment. The discussions blend detailed financial analysis, personal anecdotes, and sharp investing perspectives, especially relevant for long-term stock investors navigating today’s changing economic signals.

Starbucks’ $1 Billion Restructuring: Is the Brew Getting Stronger or More Bitter?

[00:00–05:32]

• Starbucks announced a major $1 billion restructuring cutting North American store count by about 1% and laying off ~900 employees.
  • Purpose: Enhance efficiency and “recharge” the brand’s coffee house vibe by focusing on in-store experiences rather than drive-thru or pick-up-only locations.

Panelist reactions:

• Tyler Crowe expresses mixed feelings, noting, “Not throwing good money after poor returns is always preferred... but I don't think contraction was really on people's minds when they brought Brian Niccol in over from Chipotle.” [00:23]
• John Klost is pragmatic:
  • “Not exactly what we had hoped for, but maybe a thing that has to happen... They are saying we're going to get back to net unit growth next year.” [01:59]
• Matt Frankel, as a shareholder, supports the move:
  • “Directing the company's resources at parts of the business that have the most potential is a good thing... The company did say that its store count will resume growth in fiscal 2026, so this does seem temporary.” [02:53]
  • On coffee preferences: “Admittedly, I was sipping a Starbucks cold brew while I was prepping for this show, but I generally prefer smaller independent coffee shops.” [03:21]
• John’s coffee order? “Black coffee at the gas station.” [03:36]

Starbucks as an investment:

• John: “It's hard to be overly bullish... just because of how many unknowns there are.” [04:25]
• Matt: “I'll go on record here as predicting Starbucks will beat the market over the next five years.” [05:07]

Exploring the Housing Market’s Mixed Signals

[06:44–15:39]

Setting the Stage

• The housing market is full of contradictions:
  • Reports of multi-million unit shortages.
  • Existing home sales at recession-like lows amid a larger population than the 1990s.
  • Multiple factors are at play: interest rates, wage growth, home price inflation.

Key Data & Earnings Highlights

1. New Homes Are Booming, But Why?

[08:06–09:00]

• Matt Frankel:
  • “Overall, the market environment still seems to favor new homes versus existing ones…In August, new home sales soared by 20% from July to August to a three year high.” [08:17]
  • KB Home: Revenue exceeded guidance despite a 7% sales decline YOY; 11% of its shares bought back this year.
  • Lennar: 12% increase in new orders, but more incentives used so average sales prices are down.

2. Existing Homes: Locked Up & Unavailable

[09:00–09:47]

• Tyler Crowe shares:
  • “Homes owned without a mortgage recently hit the highest recording since they started keeping track... Downsizing isn’t really happening.”
  • Less turnover means fewer existing homes for sale—new homes must fill the void.

3. Homebuilder Incentives Are the Name of the Game

[09:47–12:18]

• John Klost explains:
  • “According to the National Association of Home Builders, more than one third of builders cut their prices in August and two thirds offered incentives. That incentive deal was actually the highest in five years.” [10:08]
  • Real-life example: Dallas couple got a $38K price cut, down payment reduction, and a rate buydown on a new home from D.R. Horton [10:31].
• Incentives are targeted at attracting first-time buyers and compensating for market affordability hurdles.

4. Is Demand Actually Weak?

• Matt Frankel disagrees:
  • “The demand for housing, especially entry level homes for the younger generations, is off the charts strong. But affordability is what's keeping people on the sidelines for now.” [11:40]
  • Incentives from builders are bridging the affordability gap and attracting buyers in a low-inventory landscape.
  • “In a normal housing market, about 10% of sales are new homes. Right now it's closer to 30.” [12:10]

5. Valuations & Sector Outlook

[12:18–15:39]

• Tyler notes builder stocks are trading at extremely low price-to-earnings ratios—“single digits”—suggesting a bargain opportunity.

Analyst positions:

• John (on KB Home):
  • Praises its focus on customization and disciplined incentives:
    • “It's been able to take advantage of this with strong profits and reduce that share count by 25% in recent years. So. And it pays the dividend. I like KB Home here.” [13:20]
• Matt (on the sector):
  • Optimistic for next 5 years if mortgage rates drop:
    • “I'd give that a big yes with the caveat that over the next five years mortgage rates are going to be significantly lower than they are today on average. If that's the case... there's a lot to like about the home building space right now.” [14:40]
• Tyler cautions on picking quality:
  • “Even the dumber of my two dogs could be a home builder CEO and probably make a pretty good return... But I don't know if I want to put my neck out for the whole home builder industry... I want to pick the good ones.” [14:53]

Stocks on Our Radar

[16:40–20:20]

Panelists each spotlight an intriguing investment idea:

1. Miami International Holdings (MIAX) – Tyler Crowe

• Recent IPO, operator of the world's third biggest options exchange.
• Partnering with Bloomberg; key institutional owners.
• “Exchange market companies like Intercontinental Exchange, S&P Global, Nasdaq... have been great businesses over the long term. So I’d like to see if Miami International could be one of the companies that replicates the success we’ve seen with exchange markets.” [17:10]

2. Floor & Decor Holdings (FND) – John Klost

• Specialty retailer for flooring and home improvement.
• Revenue has doubled over 5 years, with aggressive footprint expansion plans.
• “This is a stock that I think will double in value over the next five years and that's especially if the interest rates go down like Matt is talking about.” [18:10]

3. The Trade Desk (TTD) – Matt Frankel

• Programmatic advertising leader, down 67% from 52-week highs.
• Matt dismisses worries about Amazon stealing share, emphasizes resilience post-election-cycle.
• “I think the fears about Amazon stealing its market share are ridiculously overblown… although the business is far stronger now than it was back then.” [19:24]

Notable Quotes & Memorable Moments

• Matt Frankel:
  • “The demand for housing, especially entry level homes for the younger generations, is off the charts strong. But affordability is what's keeping people on the sidelines for now.” [11:40]
• Tyler Crowe:
  • “Even the dumber of my two dogs could be a home builder CEO and probably make a pretty good return in this business.” [14:53]
• John Klost:
  • “Stock price…has essentially gone nowhere. You look at what it’s wanting to do here…double that footprint over the next 7ish years…growth opportunity here at a Lowe’s valuation but with much better prospects.” [18:10]

Key Timelines & Timestamps

| Time | Segment | |-------------|--------------------------------------------------| | 00:00–05:32 | Starbucks restructuring and investment discussion| | 06:44–15:39 | Housing market trends, homebuilder earnings, sector outlook | | 16:40–20:20 | Stocks on our radar |

The Motley Fool Takeaway

• Starbucks’ contraction is a tactical retreat by CEO Brian Niccol, with an eye to a back-to-basics, third place experience—panelists cautious but largely constructive for longer-term investors.
• The housing market sends mixed signals: booming new-home sales bolstered by incentives, sluggish existing-home market due to locked-in equity and unaffordability.
• Homebuilders, especially quality operators, present compelling value, but selectivity is critical.
• Three “stocks on our radar” offer fresh ideas spanning exchanges, home improvement retail, and digital advertising.

“There’s a lot to like about the home building space right now.” – Matt Frankel [14:40]

This summary covers all major segments and highlights thoughtful analysis and stand-out moments, enabling investors who missed the discussion to grasp the key issues, opportunities, and stock ideas presented.