Wells Fargo's Outlook on the Housing Market

You could debate how many million, but the truth is there is a housing shortage, whether it's two million or four million. We are a very niche builder. We build only in Florida. We've just been through Hurricane Helene and Hurricane Milton, and we've come through it beautifully. Unlike what you see in the news, new construction away from the coastal areas is very different when you're 10, 15 miles in. The home building industry, like Wells Fargo, has been with us through when we were a couple hundred million dollar company to being a two billion dollar company. Home building has gone through periods of normal growth. We survived the Great Recession and the frenzy that it was, the pandemic and post-pandemic. Now we're hitting a normalization period again. Interest rates have finally made, the Fed has made the first cut. Of course, that cut impacted Fed funds rate. It's not the 30-year mortgage rates because people keep on making that connection, and of course, that runs off the 10-year treasury because that's kind of the normal life of somebody in a home. But what it did do is psychologically, it set the stage. Interest rates are coming down. We don't know the pace or how quickly that, if those are going to be 25 basis point, 50. But what it does do for the home building industry is it says at some point that spread between the 10-year treasury and the 30-year mortgage rate should normalize from being, instead of being a one and a half percents to two percent, now that it's almost 2.7, 2.9. So as demand comes down, the certainty around rates comes down, we'll see interest rates come down on the mortgage rates. And I think that'll be a period where we'll be able to see affordability come back a little bit. And it'll also take those people that are in that 3% golden handcuffs kind of mortgage and let them start thinking about, okay, maybe if rates are 5.25, 5.5, 5.75, I finally start making that move. And it puts more houses into the market. So talk to us a little bit, Danielle, about the relationship that you guys may have, taking a company from $200 million to $2 billion. What does that relationship look like? How do you support it? How do you have the faith that it's going to work in that relationship? I just appreciate that question so much. First of all, working with GL Homes and somebody like Maria, it's easy to have the faith. Because in addition to faith, you've seen the execution, you've seen the impact that they can have, and it's a fabulous business. I think also if we take a little step back, think about just what the role of women in business today. It is certainly grown, it continues to grow, it is our future. And I think some of what we look at is, if you looked at between 2019 and 2023, women owned businesses were growing at more than double of other businesses that were starting. And that number has just continued to grow and to expand over time. Why is that? Why do you think that happened? Well, I think the power of the purse is changing. And I think it's one of those things where we take a look at and say, these are amazing people who are now in the right spaces, in the right places, with the right support. Talent and prowess and ingenuity were never lacking, it was opportunity. And so now that there is a focus on opportunity, there is a focus on how we as a firm and many financial firms can support these businesses and growth from the first inkling of an idea in our small business space and our ingenuity and our accelerator programs, all the way through how we work with them in our commercial real estate. We are fortunate at Wells Fargo to be the number one platform in commercial real estate. And as such, we have the ability to look in each and every one of our markets and say, where can we do more? Where can we better? How can we push the system? And how can we be responsible around that? Maria and her company are just a gem of the companies that we work with. Looking at being value add, having the right people, seeing trends, just I think it's constant communication with the team. I think what's one of the things that Wells Fargo has done really well is we are a family owned business, so they know not only the finance team, but the ownership. They know our COO, who's a woman. They know our chief marketing officer, who's a woman. They make it a point to go out to our communities and meet the people that are actually excavating lakes and doing the construction and viewing the product and viewing our clubhouses. So it's a very collaborative kind of growth. So they've seen our growth, and they have been really into our culture as well as our business model, which is very different from a large national home builder. So that kind of collaboration is what made it great for two and a half decades.