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Kevin Hassett, Sen. Rand Paul, & the Property Brothers 3/17/26
00:34:13
National Economic Council Director Kevin Hassett discusses President Trump’s resolve in the Iran War, as well as the conflict’s timeline. Senator Rand Paul (R-Kentucky) is preparing for the confirmation hearing for President Trump’s pick for DHS Secretary, Senator Markwayne Mullin (R-Oklahoma). In addition to the hearing, Sen. Paul discusses his opposition to the Iran War. Plus, the Property Brothers Jonathan and Drew Scott discuss the regulatory and “NIMBY” hurdles to solving America’s affordable housing crisis. Kevin Hassett - 4:57 Senator Rand Paul - 17:33 Jonathan & Drew Scott - 28:35 In this episode: Rand Paul, @SenRandPaul Andrew Ross Sorkin, @andrewrsorkin Becky Quick, @BeckyQuick Katie Kramer, @Kramer_Katie
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Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before. Like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy.
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Gut check.
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Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading what do the steam
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engine, electricity and AI have in common? They don't just change how we work, they transform entire economies. Where the Internet Lives is an award winning podcast from Google about the unseen world of data centers. This season we're going inside the AI revolution. From farmers using AI to analyze soil data to researchers discovering new medicines, a new era of AI innovation is here. Listen to where the Internet lives. Wherever you get your podcasts, bring in show music please.
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Hi, I'm CNBC producer Katie Kramer.
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Today on Squawk Pod, there's no way that President Trump's going to back down until he sees us through to the end.
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D
National Economic Council Director Kevin Hassett on the President's resolve in the Iran war and the outlook.
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E
The timeline that President Trump has stated over and over is that it's a four to six week war and that we're ahead of schedule.
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D
Then Kentucky Senator Rand Paul, as chair of the Homeland Security Committee, he is gearing up for the new DHS secretary confirmation hearing and he's speaking out against the war in Iran.
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F
Often people say, oh, this war is in our national security interests. Well, that's a conclusion, not a debate. The debate is really, why do you think this war is in our national security interest? And I think there's a lot of negative for the war, not a whole lot of upside for America.
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D
Plus, the Property brothers addressed the affordable housing crisis. Jonathan Scott on the red tape and the upside to development.
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If I was going to do an affordable housing project today, if I was just going to build a building that cost 20 million just to build it as an affordable housing project using government funds, it's about 40% more expensive.
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D
And Drew Scott on the other issue in housing supply.
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B
It's not a rate issue. Like rates are one thing. When rates come down, everybody gets excited to buy.
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G
It's a supply issue.
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B
80% of people have mortgages under 6%. So nobody wants to do anything with it. They're holding onto it. So all these people looking to buy, you just don't have inventory.
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D
It is Tuesday, March 17, 2026. Happy St. Patrick's Day. Squawk pod begins right now.
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E
Stand Becky by in three, two, one. Cue it, please.
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H
Good morning, everybody. Welcome to Squawk box right here on cnbc. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Andrew Rasorkin. Joe is out today.
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I
Today's top stories, a lot of them. Israel's Defense Ministry now saying that Iran's security chief was killed in airstrikes overnight. Reuters reporting that airstrikes also killed the commander of an Iranian paramilitary unit. Iran has not yet confirmed that report. And President Trump speaking at the White House yesterday about his administration's plans for Cuba.
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J
I do believe I'll be the honor of having the honor of taking Cuba. That'd be a good honor. That's a big honor.
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K
Taking Cuba.
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J
Taking Cuba in some form. Yeah, taking Cuba. I mean, whether I free it, take it. I think I could do anything I want with it. You want to know the truth? They're very weakened nation right now.
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I
The New York Times reporting that the Trump administration has signaled to Cuban negotiators that the president there must go but would leave the next steps up to the Cubans. The report says the move would allow economic changes in the country that the current president is unlikely to support while leaving the communist government. So we'll see what happens next there.
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H
And the president posting at 11:14 Eastern Time last night after Venezuela defeated Italy in the World Baseball Classic. Here's what he posted. He said good things are happening to Venezuela lately. I wonder what this magic is all about. Statehood number 51 anyone? President Donald J. Trump.
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J
No place like the White House. Do we agree? Thank you very much for being here. Our powerful military campaign to end the threats posed by the Iranian regime continued in full force over the past few days. They have been literally obliterated. The Air Force is gone, the Navy is gone. Many, many ships have been sunk. They're war fighting ships, but I guess they didn't know how to use them. And anti aircraft is decimated. Their radar is gone and their leaders are gone.
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H
Joining us right now is White House National Economic Council Director Kevin Hassett. And Kevin, good morning to you. How are you, Becky?
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E
I'm doing well.
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H
Let's talk a little bit about the situation in the Middle east. What's happening in Iran and what that means for oil prices and maybe inflation longer term. We have seen prices spike. They came back down yesterday. But there are many questions about how long this will last. How long the Strait of Hormuz will be closed. And I just wonder how you're starting to figure this out how. And you're starting to try and anticipate what that will mean for prices.
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E
Yeah, well, we are basically getting briefed on every nuance of the war every day, and then thinking through the economic implications. We have an enormous amount of success so far in the sense that we've destroyed the military of Iran, we've coordinated 135 countries in the UN including no veto for China and Russia to isolate Iran, and we've coordinated a strategic reserve release of 35 countries which could go up if it needs to. The bottom line is that the timeline that President Trump has stated over and over is that it's a four to six week war and that we're ahead of schedule. And so already you're seeing tankers are starting to dribble through the rates. And I think it's a sign of how little Iran has left. And so I think we're very optimistic that this is going to be over in the short run and then there'll be price repercussions when it is over for a few weeks as the ships make it to the refineries and so on. But we've really got a plan for every corner of the disruption from fertilizer to getting fuel to the west coast and so on. And, you know, we're highly confident that we've got this thing under control and that it will end soon.
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H
Let's talk that through. When you say in soon, you think a matter of weeks, not months, correct?
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E
Correct, that's right.
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H
And when that happens, where do you expect? Let's just say wti. I mean, we can talk through any of the energy prices, but most of the analysts that we've had on, and granted they're all kind of dealing with the fog of war, trying to figure it out themselves, have said that they don't think prices will come back down to the 60s anytime soon. Do you? Is that in your forecast?
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E
Oh, you know, if you look at futures markets, they've got them going down into the 60s again by the fall. And I think that's relatively five was
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H
what WTI was for the December contract yesterday.
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E
It goes all the way down to the 50s past the year, you know. And so I think that you've got to understand that there's going to be a, we believe, an incredible risk premium for ending the terrorism really of the Iranians. The way I like to think about it, Becky, is that if you go back to 1975, Iran was the 18th largest economy on earth. Now it's something like the 50th largest economy on Earth. They've destroyed their own country, but they've also discouraged investment in the entire Gulf region. I mean, don't forget that it's not just the Iranians. Right. The Yemenis have been charging people blackmail to move their ships around. And so we're moving towards a world where the energy of the Middle east is accessible through free markets without extortion. And that's going to be a place where there's more investment and more oil, and it's going to drive oil prices down in the long run. But the final thing is that the US Economy is still, through this, fundamentally strong, that we're still seeing strong signs of productivity growth. We had The Business Roundtable CEOs in town in Washington about a week ago, and everybody was talking about how solid things look. And so the other thing to mention is that Iran's strategy appeared to be that they could hurt the US Economy, and then that would make President Trump slow down. In fact, they're not hurting the US Economy very much at all. While gas prices are higher, the economy as a whole is sound. And there's no way that President Trump's going to back down until he sees this through to the end.
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H
What does that mean, sees this through to the end, meaning regime change, Meaning
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E
he will straight as reopened, but he wants to make sure that Iran cannot harm its neighbors and the US Ever again. So he's destroyed the Navy, destroyed the Air Force, finished off most of the missile sites, and we want to know for sure that Iran is not going to challenge the world again with terrorism. And once we have a sense that we've accomplished that goal, we've defanged them, then President Trump will make the call out of Zodiac that the war is over.
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H
Kevin, certainly we're in a better position than a lot of our European or Asian country, other Asian countries are because they're so much more reliant on energy coming through the Strait of Hormuz, what kind of pressure do you think, A, they will put on us politically, and B, what kind of pricing increases might we anticipate from things that we import from those nations?
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E
Yeah, well, one of the things that, you know, Becky talked about it before on the show, is that the US Is a net exporter of oil and finished product, but that we have pockets of the country, especially California, Alaska, the East, east coast, where they're importing oil in part because of the Jones act, which we just don't have enough U S made vessels to move the oil around. And so I think that one of the concerns which we're following very, very closely is that the Asian economies, which are much more reliant on Middle east oil, they actually sell a lot of refined product in to the west coast of the US and we're seeing some signs that they might be pulling that back to make sure that they have enough energy for themselves. And we've got a plan for that and we're studying it closely and we haven't seen disruptions yet. But that's the kind of thing that isn't going to happen in the US because we have such sound energy production, but does mean that we might have to move a few chips to different parts of the board.
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I
Kevin, you know, when you think about the President has now postponed this meeting with President Xi in China. And I think one of the big questions is what the impact you think is going to of what's happening on the Straits is ultimately going to be on the Chinese economy to the extent that when they get a cold, we get a cold.
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E
Well, you know, it's interesting, but, you know, the Chinese didn't veto the UN Resolution condemning Iran. The Chinese are highly reliant on Iranian oil and frankly, if the Iran problem goes away, it will be helpful for China as well. And so I think that in this, this is one case where the objectives of both countries are aligned, that we want, you know, a stable world oil market. And I think that President Trump or President Xi are good friends and that, you know, when this, when this war is over, which will be sometime soon, I'm sure they'll get together and have a lot to talk about and hopefully the Chinese will express some gratitude for what President Trump has done.
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I
When you map out the possibilities within your own group about the economy and this impact here, and you say it's going to end sometime soon, what does that look like? Do you say 10 days is one version, 30 days is another, 60 days is another, or you are on a different timeline to compared completely?
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E
Well, again, what we work off of is first of all what the President said, which is that it's a four to six week program and we're ahead of schedule and we're in the third week. And so then we, you could say call that a base case, but of course, you know, I get paid to worry, it's my job here in the White House. And then you think about, well, what if it's a little slower, we don't have much simulating to do if it's faster than that. But if it's a little bit slower, what happens then? But the fact is that the US Economy is fundamentally sound and that if it were to be extended this, it wouldn't really disrupt the US Economy very much at all. It would hurt consumers. And we'd have to think about, you know, if that continued, what we would have to do about that. But that's really the last of our concerns right now because we're very confident that this thing is going ahead of schedule.
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H
Hey, Kevin, you. You mentioned that there are so many other things that come through the Strait of Hormuz that we do have concerns about. One would be fertilizer. Another would be helium, which is needed for the manufacturing of semiconductor chips. You said you have a plan. What is that plan? To make sure that we are getting fertilizer to the proper places that it's needed. Because you can't get the fertilizer there late if you need to plant the crops.
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E
Right. Well, the thing about fertilizer is that I know there are some people who live in fertilizer land on cnbc, but probably most people know about how fertilizer works in the US but it's almost planting season, and there's a lot of fertilizer that usually goes down during planting season, including fertilizer that's based on ammonia and urea and nitrogen. And then there's potash that goes in as well, though the potash usually comes in the fall. And a lot of this stuff is made from liquid natural gas. And there's a facility in Qatar that produces so much fertilizer that it supplies maybe about 20% of the fertilizer in the U.S. and so what we've been doing really, as an insurance policy against disruption is we've been finding other sources and doing so really quite successfully. We've put licenses, established licenses for Venezuela to produce more fertilizer, or we've had discussions with Baroco, which has the largest reserve of potash anywhere on Earth. And so we've had all over the fertilizer problem. And I'm not saying that we can eliminate what disruption there is so far, but we can minimize it for sure.
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H
And that would be available for US Farmers or available throughout the world. How does it work and what's the.
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E
We're focused on U.S. farmers in getting stuff to U.S. farmers.
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B
That's right.
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E
But you're convinced we've identified the supplies that are disrupted from the Gulf and tried to successfully found alternative sources for a lot of it.
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H
Kevin Hassett, thank you for joining us this morning. Kevin, we appreciate it.
- [15:11]
E
Thank you, guys. Great to be here. Cheese will be next.
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D
Coming up on Squawkpod, we're a day away from the confirmation hearing for President Trump's pick to replace Department of Homeland Security Security Secretary Kristi Noem. The lawmaker leading that hearing, Senator Rand Paul, speaks to us about his colleague Senator Mark Wayne Mullen's day in the hot seat.
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F
I promised the administration a couple things. One, I would do this quickly. I didn't promise my support for the nominee, but I did promise I would do it quickly. But that doesn't mean it's going to be a hearing without scrutiny.
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A
Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help. And access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading all right, ladies, when
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D
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welcome back to Squawk Pod from CNBC. Here's Andrew Ross Sorkin.
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I
We are over one month into the funding lapse of the Department of Homeland Security and this week, the president's new pick to lead the agency will take the hot seat. Senator Mark Wayne Mullen is set for his confirmation hearing tomorrow. Joining us right now is Republican Senator Rand Paul. He is the chairman of the Homeland Security Committee. Let's start with the question you want to ask Mullen. What's your position on him and what you want to know?
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F
You know, if I let you know that today you wouldn't come to the hearing. We're going to have a very fulsome discussion at the hearing. I think there will be really important questions asked about whether or not he has what it takes to lead these agencies. But I'm going to save that discussion for tomorrow. But I think it's an important one. I mean, look, the agencies are closed down because a lot of Americans, myself included, were upset at the improper use of force in Minnesota. I think Tom Homan came in and corrected a lot of those things. But really, ultimately, I think for Democrats to refund this, there's going to have to be an admission that the policies weren't being obeyed, the rules of engagement weren't being obeyed, and that they're going to do a better job. Now, whether or not this new nominee is willing to do that, that's an open question. Whether the new nominee will be a change in direction or more of the same direction is an open question. So I think we'll find that out a lot more after we go through the hearing tomorrow.
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I
What is your thought, though, going into this? You've worked with him before. You know him. Do you think that he's the right man for the job?
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F
I have some serious questions and we will ask him tomorrow, but I'm not going to preview them because I want to ask questions tomorrow. And we're going to find out a lot more after the hearing tomorrow.
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I
Let me ask you a different question. And this has been in the news around Mark Wayne Mullen. The New York Times reported that Mullen has been a prolific stock trader. I don't know if you've followed this. He's argued that he hasn't been making these, these trades himself, but they go on to document some remarkable trading, by the way, remarkably successful trading oftentimes with in stocks that he potentially oversaw or at least was exposed to. Given the committees that he has been on.
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F
Yeah, the, the committee, for example, Armed Services, my understanding is that the staff there is forbidden from trading in defense contractors. That seems to make eminent sense to me. I think we ought to address that. Currently, there are no rules. But as far as a congressman or a senator on Armed Services Trading and Raytheon or other companies that are large contractors with our Defense Department, I think a lot of people look at that and say, hmm, that doesn't really pass the smell test.
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I
Well, let me just give you some numbers and you tell me whether this passes the smell test. According to financial disclosure form that he filed back in 2012, he was worth. His net worth was 2.8 million to $9 million. You have to give ranges. That's how this works. Today in 2024, remember, he's been a senator the entire time, is now worth between $29 million and $97 million.
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F
Yeah. Wealth alone doesn't bother me. I aspire to be rich like every other American. I think people who make wealth I'm not opposed to. I think the question is in the details. If it's all, a lot of it is defense trading or trading on defense stocks, I think then the public will have to judge that. And I think more and more the public is skeptical of things like this. And so I think trading on stocks where, you know, any information about the stocks or even the run up to war, I mean, we're more aware of it here than maybe the public is, although I don't know the that's inside information. But, you know, trading and defense stocks in the run up to war, you know, I think it raises real questions. Once again, we'll reserve judgment till the hearing tomorrow and I think there's going to be a full hearing of this. I promised the administration a couple of things. One, I would do this quickly. I didn't promise my support for the nominee, but I did promise I would do it quickly. And so as a favor to the administration, I've done this very quickly. This will be done in record time. We will have the vote on Thursday as well. But that doesn't mean it's going to be a hearing without scrutiny. It's going to be a hearing that has sufficient scrutiny and there will be a public hearing of all of this tomorrow.
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I
Senator, you mentioned the word war. We're all trying to understand what's happening in the Strait of Hormuz and how that may end if it can. How do you see this playing out?
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F
Well, the one thing's for certain is rumors of war, even preceding war, jack up prices very quickly. The oil price went up very, very quickly on the rumor of war. And then with the actual war, the question is, is how sticky is it on the downside. Even if the war doesn't ultimately involve boots on the ground, if the extent of it is, you know, the extensive bombing, which is significant, it'll depend on how many oil refineries have been hit, how many, how much oil infrastructure has been hit, not only in Iran, but in the Gulf states as well, I suspect it's going to be quite sticky on the way down. I just think it's easier. I think emotions bid things up quickly and then the calming of emotions brings things down slowly. And I think the danger for that politically for Republicans is, you know, the war goes on another month. Maybe the stickiness or the slowness to prices come down. Is it really complete by October, November, and has a big effect on the election. Now, I'm against the war not for electoral reasons. I'm against the war because I don't see a national interest in US, you know, expending 12 billion dollars a day. But I also don't see it for our young men and women, some of whom I know that will serve in this. I really just don't believe that ultimately it's in our national interest to send our young men and women in to fight and die in Iran.
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I
Can you just say, explain though, how you, how you think this ends? And I ask because Ray Dalio, the investor, said just yesterday, put out, put out a note saying that, you know, people talk about an agreement, and he says that no agreement will resolve this war because agreements are worthless. Whatever happens, leaving Hormuz in Iranian hands or taking control away from them is likely to be the worst phase of the conflict. This final battle, which will make crystal clear which side won and which side lost control, is likely to be a very big one.
- [23:24]
F
I think he's probably accurate that there's not going to be an agreement. In the end, I don't think we know who we'd make an agreement with. This has been one of my complaints through the years, not only with Iran, but with China and other adversaries, is that we don't have good confliction. We don't have good general to general, intermediate level, senator to senator. We don't have a lot of discussion. So I think we have no idea even who to pick a phone up to even call. We have. Most of the leadership has been killed and continues to be killed. I also don't see people that are really facing extinction. I don't see them backing down. So I think this would go basically to civil war in the streets if there is an opposition that rises up. But ultimately the only way there's new government. Iran is not bombing from the air. It almost never works. I think it's really would take an instruction on the ground, and that would have to be led by Iranians. I think ultimately liberty is only won by the people who are there. You know, the outside help certainly has destabilized the regime, but ultimately the people there will have to fight. I haven't seen a sense of that yet. I could be wrong. I hope I'm wrong. I hope the Iranians do rise up and fight. But it could also end the same way it ended last summer in Declaration of Success. We obliterated their nuclear weapons until we say we didn't obliterate their nuclear weapons and they're only a week away. Again, you know, that Canard's been out there for some 20 years. You know, we must attack Iran. It's imminently going to happen. They're getting a nuclear weapon next week. There literally are videos of people saying that 20 years ago. So I think there needs to be a more fulsome discussion of the pros and cons of what our national security is. Often people say, oh, this war is in our national security interests. Well, that's a conclusion, not a debate. The debate is really, why do you think this war is in our national security interest? And I think there's a lot of negative for the war, not a whole lot of upside for America.
- [25:17]
I
Senator, I want to thank you for joining us this morning ahead of that hearing tomorrow. We look forward to it and we hope you have come on back and we can discuss.
- [25:26]
F
Thank you.
- [25:28]
D
Next up on Squawkpod, we take on affordable housing with the property brothers. Drew and Jonathan Scott are in the weeds with developers, regulators and buyers. And one of the biggest hurdles they see to solving the crisis, the not in my backyard attitude.
- [25:44]
G
When you talk about affordable housing on a big scale, especially large multifamily projects, a lot of people assume affordable housing means it's going to be a slum palace. Like it's going to just be a terrible place where there's drug that is not the case. I am a strong believer that people should be able to live where they work. These are nurses, doctors, teachers.
- [26:01]
B
We have a 3.8 million house shortage, so there's a lot that has to be done, especially in your major cities.
- [26:07]
D
We'll be right back.
- [26:08]
K
Foreign.
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L
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.
- [26:41]
M
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E
Three, two, stand Andrew by Up and Andrew Q.
- [27:43]
I
You're watching Squawk box on cnbc. I'm Andrew Ossorkin along with Becky Quick. Joe is off this morning. Let's talk about housing because the topic of housing affordability front and center in Washington. It's the big topic and right here at the table as well. Drew and Jonathan Scott, the Property brothers, are here. They help people try to buy homes and renovate them on budgets. Skills, of course, important and maybe more than ever as customers try to navigate what is turning out to be a very tight and expensive housing market. Do you think that the affordability gap is somehow meaningfully worse than it ever was or. This is a feeling that's, that's sort
- [28:18]
G
of a vibe, 100%. In fact, every time we come on your show, it gets worse the next time we come on the show and it's because nobody's really addressing it. And it's a combination of, you know, factors. It's, you know, just the world we live in right now. You know, the NIMBYs are the worst part of it. You can't, you can't develop projects without the cost skyrocketing. In fact, if I was going to do an affordable housing project today, if I was just going to build a building that cost 20 million just to build it as an affordable housing project using government funds, it's about 40% more expensive because of all of the regulation
- [28:52]
H
in order to do it quick because of rent.
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B
Well, honestly, to be told that union wages jumps it up. We have some projects we're looking at doing with LAUSD and whatnot. And that makes a difference. Obviously tariffs, cost timeline for building.
- [29:05]
H
Yeah, but why for affordable housing in particular?
- [29:07]
G
So there's a lot of stuff like they have certain set wages, prevailing wages, even though, you know, when we're building a building, we're paying good wages to everybody that's involved.
- [29:14]
H
But if you take government money for it, they say you now have to.
- [29:19]
G
So we have so Many, you know, partners who are big builders and they're just not, not incentivized to build low income housing.
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B
And if you look at it too right now, I mean, it's not a rate issue. Like rates are one thing. When rates come down, everybody gets excited to buy. It's a supply issue. There's no supply. And even you look right now, I think it's 80% of people have mortgages under 6% the rate under 6%. So nobody wants to do anything with it. They're holding onto it. So all these people looking to buy, you just don't have inventory.
- [29:45]
H
You know, I will also say just firsthand where you point out, not in my backyard, the NIMBY situation with it, some of the laws, at least in New Jersey that I can speak to with familiarity that have been set up to try and incentivize more affordable housing really have been abused by developers who come in, we say, okay, we're going to devote all of this space to affordable housing. But they come in, they force the project, they'll put in one or two units that are below the market average and every other unit there is more than a million dollars.
- [30:16]
B
100% agree.
- [30:17]
H
I think not affordable housing that's coming in under these affordable housing.
- [30:20]
B
No. I mean there needs to be some sort of stricter guidelines. I mean there's so many layers of issues. It's also, you know, if you're looking at building ADUs like second, second units on properties, it's not quick, easy process like it should be. I mean the timeline. I have one right now. I'm putting an ADU in my house. It should have been done in a weekend. We should have gotten our approvals. Like it should have been fast. And it says five bias because his
- [30:40]
G
project is taking so long, five and
- [30:42]
B
a half months and there's that, nothing to change. They just literally had to say, go ahead.
- [30:46]
G
I think the big problem too is when you talk about affordable housing on a big scale, especially large multifamily projects, a lot of people assume affordable housing means it's going to be a slum palace. Like it's going to just be a terrible place where there's drug. That is not the case. I am a strong believer that people should be able to live where they work. These are nurses, doctors, teachers, people who are going to be in that community working.
- [31:08]
I
How much of this is about building versus somehow trying to free up and create this mobility issue, which is the mortgage issue, meaning the folks who are not going to sell because they're Screwed if they sell because they can't go and buy something else. I mean, how much of it is that?
- [31:24]
B
I think it's a little bit of
- [31:25]
G
this and a little bit of that.
- [31:26]
B
I think it's everything. Right. Because you know, we have the opportunity. Density is a big problem. Right. So we're in a lot of the big cities. If they can allow more density, allows people to build a secondary unit or multiple unit, I'm allowed now in where we are in California, I can have two guest suites and so I can have two rental suites. But I think on top of that it's getting people a little bit more. More people are renovating right now because they can't afford to sell and move on to a house that they want. So people are staying where they are getting together with family or friends.
- [31:52]
I
What about folks who basically invested there are, you know, by the way, Treasury Secretary talked about it before, this idea that there's people who own multiple properties. They're planning to hold them for a long time, but a lot of them also don't want to actually get taxed on the way out. And so some of them are trying to hold on to them.
- [32:09]
B
Yeah, I mean you have a gift to heirs and you have your 1031 opportunities. Like you can get out of or you can move from one property to another without having to pay the tax. The one thing you see that they. Institutional investors that own multiple single family dwellings are now being penalized because they're saying you can't sell or you can't own multiple. Well, I have a portfolio of 250 plus houses out in North Carolina. So now I can't just go and sell that because it's one person owning that many. That's not a solution because institutional ownership of single family dwellings is, I think it's around 5% or less than 5% of the market. So when the government's trying to say we're doing something for the people and then they're focusing on that, that's not really going to make a difference. There are other things they can do. They need better incentives for developers, better incentives for people to get into developing affordable housing.
- [32:56]
H
Speak specifically. What would you do if I put you in the biggest charges for this?
- [33:00]
G
If I, if I buy a building, I can't pull very much money out of that building so that I can continue developing or building other things. So you look somewhere north of the border in Canada, there's opportunities where you can pull out up to 90% of a multifamily project. 95% whereas here 60%, maybe 65. So that means investors are leaving a lot of money in these projects and it prevents them from building even more.
- [33:22]
B
I'll give you the example. In Canada, I have a portfolio up in Calgary. The Canadian government has a program called MLI select with cmhc, their government insurer.
- [33:30]
H
M I L Select with cmc.
- [33:32]
B
MLI Select.
- [33:34]
H
Okay.
- [33:34]
B
And anyway the program, it allows developers, incentivize developers. If you hit a point system for sustainability and affordability, you can refi up to 95%. It gives you about 1% below market rate for your funding and they'll do a 50 year amortization. So right there, multiple things that really encourage a developer to get into affordable housing. Yeah, it makes your, it brings your rates way down.
- [33:54]
G
And then the other thing is just convincing neighborhoods that it's a good thing. I mean any, if you look anywhere in the world, any city that has embraced affordable housing, low income housing, they flourish. And so I think there's this mindset that people think it's going to devalue their properties if all of a sudden there's a bunch more multifamily somewhere. That's just not the case.
- [34:13]
K
Case.
- [34:13]
H
So who's done it? Well, what's the city in the world that has done?
- [34:16]
G
We were actually just talking about this the other day. I would love to actually come out and I don't have it on me but I know for example in Utah, they've done a bunch of work in Utah where they've almost eliminated the homeless problem that they have. And I think that's a huge thing. And people don't like seeing. Yeah, it's a, it's totally supply. In fact, when you look at affordability and I think in California it's one of the most expensive places in the city. Housing is the number one element that they need to conquer. Housing regulation and taxes.
- [34:44]
B
Freddie Mac says we have in the US we have a 3.8 million house shortage. So there's a lot that has to be done, especially in your major cities. And we're focused on it. We are owners of a modular company. We're trying to see if the modular angle is a way that we can come in and bring price down. But then you have to make sure you're not just selling a house at a lower cost. Because we can build up in Canada we're building one bedroom units for $180,000 Canadian. And so to bring that model out into the US would be great. But you don't have somebody buy that and Then just turn around and sell it at current market rate because then they make the margin and it doesn't affect the house price. It doesn't bring the price down.
- [35:18]
H
Does, you know, the, the rental properties like a VRBO or Airbnb, does that have an impact, particularly on cities?
- [35:27]
B
I don't know exactly what the, what the percentages are, but it can. And that's why I think a lot of cities, like even where we are in Pasadena and if you few others have a lot of restrictions about how many short terms you can have.
- [35:36]
G
Well, there's a stat that came out too, and again, I can't quote it, but the. It was saying that so many people own second and third homes that they just leave vacant all the time. And that's another thing that's really affecting, you know, the market. We need housing that is actually going to be housing people. It's fine. If somebody wants to have a second or third property and they can afford to do that, that's great. But the government can't look at total inventory and say, oh, well, we have all of these properties if most of them are sitting empty. That's not helping the problem.
- [36:04]
I
Guys, want to thank you. Wanted to also thank you for. For jump. We should tell the audience just jumped off a plane.
- [36:09]
B
Do I look like I just got off a plane? Because we literally did a red eye.
- [36:13]
G
Yes. Jonathan, you can change. I was literally half naked in the bathroom when your producer's like, get out of here.
- [36:19]
B
We're going. They only wanted me. They actually tried to distract you.
- [36:22]
H
He's not wearing pants.
- [36:23]
B
Yeah.
- [36:23]
G
You have no pants on right now.
- [36:25]
I
So there's pants.
- [36:26]
B
That's a different crisis.
- [36:27]
I
There's pants. Thank you, guys.
- [36:29]
B
Thank you.
- [36:29]
I
It's always great to see you guys are great sports and no coffee either.
- [36:32]
H
We really appreciate your talking us through exactly what's happening on the ground. You guys see so much.
- [36:37]
G
I'd love to see us come back, figure out a solution.
- [36:39]
H
Yeah, come back. Let's brainstorm some more about this because I think it's from people who are actually in the market seeing these things
- [36:45]
B
that we'll get back that actually care, that aren't looking to take advantage. Yeah.
- [36:48]
H
Thank you guys very much.
- [36:49]
I
Thanks.
- [36:52]
D
And that is Squawk pod for today. Thank you for listening. Squawkbox is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. You can tune in weekday mornings on CNBC at 6 Eastern or get the best of our TV show right into your ears when you follow Squawkpod. Wherever you like to get your podcasts. We'll meet you right back here tomorrow.
- [37:15]
E
We are clear. Thanks guys.
- [37:27]
K
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