[00:00:00] Intro: This is the Texas Land Guys podcast, hosted by brothers Tim Dosch and Tom Dosch. With their partners David Marshall and Tripp Rich, they have built DMRE, the leading land brokerage in Texas. With decades of experience brokering deals between landowners and real estate developers, they take you inside the deals that move the market.

[00:00:28] Tom Dosch: Welcome to the Texas Land Guys podcast, Tim. Good to have you back on.

[00:00:32] Tim Dosch: Yeah, it’s good to be on.

[00:00:33] Tom Dosch: I know we had a couple weeks where we were both traveling different places this summer, and so we weren’t able to link up in the studios to be together. So I was telling you on the way in this morning, I was like, I always feel like we have that brother connection where it’s really easy when we’re on the podcast because we. We’re kind of on the same wavelength. So, yeah, it’s fun to get to have you back on again. I’m excited to hear about what you’ve been thinking about with the market and also just some of what you’ve been up to this week. Summer with the family.

[00:00:58] Tim Dosch: Yeah, it’s been a great summer so far. We were in Hawaii for about 10 days and had to get back for my son Luke’s football. He’s been doing spring football, so we’re doing that. But it’s been a really good summer so far. It’s good to have a little bit kind of different, you know, change of pace, and you get out of the routine a little bit, you know, so you have to kind of find a new routine. But it’s been good so far.

[00:01:17] Tom Dosch: Yeah, that’s great. It’s interesting that you always wonder every summer, is this going to be a summer where there’s a lot of market activity? Is it going to be, you know, is there going to be a lot of busyness? Of course. We’re always working on different deals, and so there we’re never really fully off. I’m sure you were as much as we do try to block time and be with family, because that’s so important in our business. It’s pretty hard to not have to take a call, if not several calls. So you. I’m sure you were trying to figure out how to do that from Hawaii.

[00:01:43] Tim Dosch: Yeah. It’s funny how you always have, like, these big deals you’re working on where there’s not a lot of activity and you go on vacation and all of a sudden it’s like some huge thing happens to the deal and you have to make a decision or, you know, whether it’s an extension or some like, renegotiation or, you know, talking to your clients and kind of helping them out. That definitely happened while I was gone, but that’s just kind of what always happens.

[00:02:03] Tom Dosch: I feel the exact same way. That’s always happened to me, too. As soon as you try to get away, immediately your phone starts ringing and something big blows up. And there’s kind of like an all hands on deck that has to happen. So it’s. It’s interesting. And also I feel like this has changed over the years. But I used to always say that if there’s ever something that just that happened, like it became really important while I was out and on vacation, those were the deals that never seemed to actually close. Like something would ultimately get in the way of them happening. But that. Fortunately, that’s been proven wrong a couple times, and that’s been a complete waste of time to have to deal with that. But I know our families, like our wives, our kids, really cherish that time when we can actually disconnect, be together.

[00:02:40] Tim Dosch: Yeah.

[00:02:40] Tom Dosch: And we’re not. It’s just so easy to be, like, checking your email, checking the phone, following up on stuff, and obviously doing what we need to do. But that’s why it’s also great to have a team and to be able to support each other while we’re out.

[00:02:51] Tim Dosch: Yeah, the team’s huge because there’s people that are watching emails and taking calls and handling things. And so sometimes we have clients who still want to talk to us, you know, want our opinion. But there, it’s definitely not like if we’re out that there’s no one watching what’s going on. So that’s a huge benefit. Especially when you do this for decades. You need to be able to go disconnect and be with your kids and your wife and, you know, get away from, you know, that stress. I was looking at a, there’s a scientific study that came out recently out of Stanford, and they’re talking about how very successful men die early, typically. And a lot of it is just stress. Like, they can’t get away from the stress. They carry all the stress and this responsibility, and that makes them super successful, but they end up dying young because of that. A lot of it’s just inflammation that comes from chronic stress. So having times you’re at the beach or you’re in the mountains and you’re as unplugged as you can be, it’s crazy how just your sleep changes and you get relaxed. You know, I think that’s just really healthy to kind of reset and even just resetting your perspective.

[00:03:48] Tom Dosch: Yeah, I think creativity really blossoms when you can get away and just get a little bit of a break. It’s almost a little bit oppressive when you’re in the middle of these summers that we have in Texas where we were saying this morning, it’s. It’s been nice that there’s parts of the summer where, you know, the mornings aren’t horrible and you’ll actually get like a little bit of a breeze. But then a lot of the summer it’s just like whether it’s midnight or 6:00am you know, it’s so humid and so warm. And that just kind of wears on me after a while. So it’s nice to be able to get a break and get away. So I’m much more of a mountain person in the summer. I love the beach, but I like to escape the heat that we have

[00:04:26] Tim Dosch: Yeah, that’s right. Yeah. No, that’s great. Yeah. From a market standpoint, how are you feeling about the market this summer? Have you seen anything shift or change? Or does it kind of feel like the way it’s been for most of the year?

[00:04:36] Tom Dosch: It’s interesting because I would say it’s been an interesting year of a little bit of ups and downs that going into the year, I think there was a lot of optimism, just the demand supply fundamentals of different product types, specifically, like very bullish on Texas in general. And then DFW, like industrial multifamily felt pretty strong. We hadn’t had as much supply in multifamily. It’s been really hard to get deals done. We closed 14 multifamily land deals, the DFW market, last year. And although that was a big number for how difficult the year was for our office, that was not a big number. That was a pretty low number of deals. And so we had a lot of deals we were working on that were under contract. A lot of new listings we’re bringing out. So it felt really good coming into the year. We knew single family was going to start to adjust because we had. That was like the one product type that had had a lot of supply. But then I feel like we got to the end of the first quarter and there was a lot of just negativity around, like the Iran war had started. A lot of these big announcements around AI because a lot of the messaging then was more like there’s going to be massive job losses and, you know, the economy could take a big hit. And then fast forward the last probably 45 to 60 days. I feel like now it’s kind of back to a lot more optimism again. We’ve actually seen on the multifamily front, good leasing velocity in different submarkets, not across the board. I mean there’s still areas where it’s very difficult. But several submarkets are telling us we’re getting strong leasing activity. I mean we’re signing 40 leases a month, three straight months. And we’re, we’re hearing that not just from like one developer, but four or five developers all in the same submarket, all in lease up at the same time. So you’re like, where are all these people coming from that are. And the lease rates are pretty good. So we hadn’t heard that at all. I mean it had been a lot of concern that why aren’t we hearing about good activity? I would say rents are more stabilizing than like trending up. Maybe they’re, you know, concessions are starting to burn off. So that has to happen first. Like you have to get the velocity, you have to burn off concessions and then hopefully we’ll start to see some rate increases because we just haven’t for years now. So it’s starting to, I would say it’s starting to feel more optimistic. We took out a property in Plano right at the beginning part of the summer and it was the most activity we’ve ever had on any property I’ve ever marketed my career. I mean, 35 offers in 13 days, non refundable money day one, really aggressive pricing. It was like blue chip developer after blue chip developer that was interested in the site. So that was really encouraging. And what we’re hearing talking to those developers is they’re like, we have capital, we can take the land down if we need to. There’s just like still this pent up demand of equity and capital for the right deals in the right locations. So I would say like right now, I know it’s a super long answer to your question. It’s starting to feel more optimistic again as we’re heading into the back half of the year.

[00:07:22] Tim Dosch: Yeah, I think in Houston, I guess I don’t know if I would go that strong as saying more optimistic, but I think it’s definitely somewhat stable. You know, I mean on the industrial side, it’s still a very active market. There’s huge deals happening here, in some cases almost 200 acre industrial plays. I do think just talking to some of our clients, that we’re getting a little bit in the tail end of that cycle. Not that it’s going away but just it’s gotten of frothy where we were seeing big tracks at big prices. And there, especially in north Houston, I think there’s going to be some need to get those deals absorbed, you know, because there’s a pretty good pipeline. One thing that’s interesting is the timing of that pipeline. A lot of those deals have infrastructure issues, you know, road issues and utility issues that are where there’s just a timing that’s uncertain with that. And so, you know, in some cases, maybe we’re talking about that pipeline being delayed 18 months to two years. So that is kind of interesting. We may see couple deals pop up to fill the need just because the other deals get delayed. But on the multifamily side, I think we’re seeing something similar to you guys. If it’s a really good suburban site, there’s very strong demand. There just aren’t that many of those sites. The market considers very good sites. So we’re seeing, you know, $20 to $30 a foot in some parts of northwest Houston where there’s barriers to entry, or southeast Houston, like in Clear Lake, and you can capitalize those deals. There’s not a lot of those deals. You know, there’s a lot of, Houston has a ton of multifamily side just kind of commodity suburban plays, you know, commodity suburban submarkets that just people aren’t very excited about. And we’re seeing deals in those markets get put under a contract and then follow the contract because they can’t get capitalized. Even with some of the really strong sponsors that historically find a way to get deals done, they’re just needing more time to get capital to some of these sites. So I would consider to be maybe not really commodity. Just they’re not the super exciting site, but they’re still a good site. And then Single family is. I would say it’s similar to Dallas, maybe a little bit stronger here in Houston, that seems like the builders are still doing deals, but I think we’re almost maybe a little bit behind Dallas. And then I feel like some of these areas like Needville and some of these pockets where there’s this activity still. It like the music’s about to really slow down and it just. It hasn’t quite happened yet, but you just kind of get that feeling. So Houston is sort of just, I would say steady, but not super hot. I think one thing that’s interesting is we are seeing more infill development offers, not, I shouldn’t say development offers and deals going to a contract. We have probably five infill deals we’ve either put in our contract or are in the process putting under a contract inside the loop in Houston, which is a really big shift for our office because it’s. Historically we probably did, you know, 20 or 30 infill deals, you know, a year. I mean, it was a huge part of our business and it’s just been dead the last four years. And now we’re actually seeing groups come back and trying to capitalize wrap deals and high density surface part deals. So it’ll be interesting to see how many of those actually get done because it’s, it’s just, it’s been like this little wave of new sites.

[00:10:23] Tom Dosch: Yeah, I think there’s an incredible opportunity to develop into that those fundamentals that you’re talking about. I mean, if you could go get a well located apartment track developed in Houston with the amount of industrial supply that you have and just the jobs that Houston’s gonna be generating, I think that this would be the right time to do it with construction pricing where it is not a lot of competition. But obviously, I know we talked about rents a minute ago. I think the rent story is important because those rents just need to come back, you know, and start to increase again to justify that development. I think they will. It’s just taking longer than we expected to start to see that.

[00:10:56] Tim Dosch: Well, one thing we’ve talked about is what’s unique for Texas is, you know, there’s at least tens of billions of dollars of investment, but maybe, you know, $100 billion worth of investment coming to Texas. When you look at, you know, what Elon’s doing and these different big AI plays, different data center plays. I mean, there’s a lot of development and investment happening in Texas, which I would think would be driving just more population growth, more job growth. I mean, even if we do have some job losses, there’s going to be job growth as well. So that should offset some of that.

[00:11:27] Tom Dosch: Let’s talk a little bit about maybe some predictions, trends, things that we think are going to be big news. And probably what we’ll be talking about at the end of the year that we’ll see in the second half of the year. And so I’ll ask, we’ll kind of hit some different topics. But one of those I wanted to talk to you about was rates. We hadn’t been probably talking as much about rates the first half of the year. We maybe went into the year thinking that we might start to see rates come down. And then we’ve been sidelined talking a lot about the Iran war and, you know, geopolitics and then, of course, a lot of just different advancements in the news. But what are your thoughts on what we might see in the second half of the year and what’s being predicted right now regarding rates?

[00:12:07] Tim Dosch: I think what you said was really good. Before we started recording that the market had a very hard reset, you know, back in the fall of 22 and 23, we went from the rate being almost zero to getting up to. What’d you say was it was up to 5.3 at one point. I mean, it was a complete reset of the market. And so the hope has been we could get under three and maybe that that would happen this year, you know, so you, you know, not back to where we were, but at least back into the twos, maybe two and a half to three, which would be very bullish for the market. And I think the Iran war is a big part of, you know, the, at least what we’re hearing is a big part of why we may see rates go back up, you know, some, to some extent, instead of going down. So maybe instead of another 25 to 50 basis point drop through the back half of the year, Maybe there’s a 25 to 50 basis point raise in rates in the Fed rate, which I think is, I don’t know that it actually matters that much from like a pure practical standpoint, because like we talked about, the market’s adjusted to rates being higher. And so whether it’s 25 basis points higher, 50 basis points higher, is maybe not a huge practical deal, but it’s a huge psychological deal because it’s going the wrong direction. And we’re talking to many land sellers who’ve just been holding on now for four years. And it’s like it’s going to keep coming. It’s going to come back. It’s going to come back. And they have land loans, in some cases are at these lower rates, you know, that were kind of pre, you know, the rate rise and the banks aren’t giving them extensions. And there’s this hope of we, if we just hold on long enough, you know, the market’s going to save us and it’s going to come roaring back. And I’m very bullish on Texas real estate, but I do think we’re going to see more of like this kind of stable market, you know, where things can improve over time, but not these dramatic shifts, you know, where things just go on fire. Then maybe that we do see that in certain pockets. But as the market as a whole, without rates really coming down and cap rates coming down, I just don’t think you’re going to see that. And so I think that when you talk about rates, Iran war is a pretty important thing to, to bring up as well, because if you look at what we know about the negotiations happening right now, it doesn’t look very good. And there’s probably a lot we don’t know. But just from everything I’ve seen, you know, it looks like we’re kind of trying to kick the can down the road and we’re not really resolving anything. And so if you have a situation where over the next three to six months or even 12 months, there’s these periodic, you know, the Strait of Hormuz closes and oil prices jump up and there’s renewed bombing and there’s peace, and there’s just kind of this seesaw of things going back and forth. I don’t think that’s very good for the market. And definitely I don’t think it’s good for inflation if fuel prices keep going back up. So I don’t know what you think about that, Tom, but, yeah, I would say it’s. It’s slightly bearish, but maybe it doesn’t change things that much, at least in Texas, because like you’re saying, a lot of our development clients that are moving forward right now are optimistic about rents coming up, are not expect they’re not doing a deal because rates might come down 100 basis points. They’re doing a deal whether rates go up 50 basis points or go down 50 basis points or stay the same. I mean, that doesn’t factor into their thinking that much, I don’t think. But I think overall it is a psychological hit to the market.

[00:15:12] Tom Dosch: I agree with that. I think that if you looked at just the majority of the large institutional developments that are getting done, I would say all of the large institutional developments, they’re being done by very sophisticated developers, and they can’t assume in their numbers that rates are going to be 100 basis points lower, you know, and just and so when they’re out making offers and underwriting these deals, like, they can’t assume that. Now, on the other hand, I have talked to a lot of more speculative developers and investors. Maybe we’re investors. And the market was so hot post Covid, and I was looking at, if you looked at rates, I have a graph up right now. So during COVID when, really when Covid started, the Federal Reserve rate was below 0.1%, which is incredible. I mean, it was so low. So it’s, you know, 0.0 got as low as like 0.07 in March of 21. And then it started to really slowly creep up, and then it just started to spike. So when you got to, you know, the end of 21, it was still 0.08, but then it got up to, you know, 0.33 in April of 22. And then suddenly by 23, you’re at 5.33. And although if you look historically at, okay, well, how does that compare to the historical rate? You go all the way back to 1950, 75 years, and it’s not a very high rate to be at 533. But that adjustment so quickly is what caught a lot of these more speculative investors and developers that did choose to go acquire land, which obviously mattered to us. They went and bought land ahead of maybe having their construction loan and their equity partner signed up. And so now it was that recalibration of the market that you talked about earlier. How are these deals going to underwrite? You know, if you assumed that I’m buying this land for $10 million, it’s going to be a $80 million project, and my debt’s going to cost me X. Well, now it’s going to be like X +3 on the debt. And so the deals don’t underwrite. So there are a lot of these, like I said, more speculative landowners, developers that, you know, I’ve been talking to them now for three or four years. Are you, you know, are you interested in selling? I have maybe a developer that would be interested in buying the property, and they’re still holding on to these prices from like 2021. You know, I want 30,000 a unit in Melissa, which is like, no one’s able to pay that right now. So I want 30,000 unit Melissa. And the reasoning is, you know, well, maybe in the next 12 months, if rates drop another 100 basis points, I think it’s going to underwrite. Like, it’s going to underwrite on someone’s model because if rates drop, debt will be cheaper, cap rates should start to come down. Like this is how they’re thinking about it. And so I do think, like you said, overall, if it stabilizes, if it goes up 25 basis points, that really isn’t or shouldn’t be a huge impact. But I think some of these landowners are going to get caught realizing that probably should have sold the last couple years, maybe too late, may now lose their properties. We’re talking to a lot of banks right now that have loans maturing this fall. These different land sites around DFW and you know, fourth extension, they’re on their fifth extension. And the bank’s like, I’m not doing this again. And to your point earlier, you may be at a, like a 3% interest rate on a land loan.

[00:18:19] Tim Dosch: Yeah.

[00:18:20] Tom Dosch: So that bank’s losing money and so they just can’t keep extending. And so I think it’ll be really interesting to see if we see a little bit of an increase in rates back half of the year. I think we’ll start to see some of these properties either finally capitulate and say, okay, we’re going to sell at more of a, like a truly market price, like a market adjusted price, because the market has adjusted. Like the number that it makes sense at is now a different number than 2021 and. Or some of them might go back to banks.

[00:18:46] Tim Dosch: I think the investment sales side is such an important part to talk about because I think you’re right. I mean, the cost of borrowing has gone up and so your loan to go build something to be more expensive than it was, and that’s a significant cost. But I think what’s maybe even a bigger issue is the fact that cap rates have gone up so much, which all that does is devalue these properties. So whatever their performer was, it may be down 20 or 30% from what they were hoping it would be. And I think a lot of land sellers don’t understand that, but that’s a huge difference in value. And so because of that, you have this huge portfolio of legacy deals that all these developers are holding. A lot of our clients are saying, we’ve never held this many deals. And so all the equity is holding these deals too. They don’t really want to sell them. They don’t want to either get a loss or get, you know, significant number underneath their Performa and basically just not make any money after holding it for four years or five years. And so that’s also hurting the market as well because like, they don’t want to go do new deals when they’re holding all these deals they can’t sell. And it’s just been this waiting game of if we keep waiting, rates come down, cap rates come down enough, we can get out of these deals, make a little bit of money, and then they can go recycle that cash that recycles money for the banks and for equity. And so if you have rates go up, it’ll be interesting to see. I think at some point, they’re just going to sell and they’re going to take losses or not have a profit because they just want to move on. But it is hurting that part of the market. And I think the typical land seller just isn’t in touch with that part of the market. It’s sort of like this mystery over here that’s just, they don’t think about. But almost all the developers are merchant builders. They’re just thinking, what can I build this for? What can I sell for in a couple of years after I lease it up? And what are all the risks for, why that may not work, you know, why I couldn’t lease it up, why I couldn’t get these rents, why I couldn’t get this sales price. And so, you know, that part of the market which is really the most important part for a lot of our developer clients has been broken now for a couple of years.

[00:20:41] Tom Dosch: Well, to your point, earlier the 10 year right now, so that, you know, we were just talking about like the short term Federal Reserve rate, but the 10 years is remaining up. It’s above 4, it’s, it’s in around like 4, 4, 4, 5 as we’re having this conversation, whereas the short term rate’s more like three, six. And so if you’re looking out and saying where are rates expected to go? They’re expected to stay up and they’re expected to be higher than they are today. And so I think, you know, for the, for the landowner or the speculator, it’s going to be hard to just kind of count on rates coming down in the future and just believing like we’re just going to see rates come down, you know, because it, it looked there for a while like, you know, Trump was maybe going to try to force that. You know, you get the new Federal Reserve chair in there and then you almost start forcing rates coming down. But there’s been a pretty big shift. I would not have thought, you know, that we’d be talking about rates potentially going up in 2026 and just first part of the year. I’m not sure about you, if you were thinking about this at all, but I just would not have had that on my radar at all for this year.

[00:21:36] Tim Dosch: One thing that people are talking about, and this is kind of speculative, but, you know, Kevin Warsh’s new Fed chair and he’s talked in the past about financial repression as a monetary policy, which basically just means that we will lower rates significantly below the 10 year. So the short term rate would be lower. The reason we would do that is, we have almost 40 trillion in sovereign debt, and we have to refinance a lot of that. And so, you know, if you’re raising rates, you’re basically just making it really expensive to carry that debt. That debt now is a huge percentage of the federal budget. And so, you know, how do you get yourself out from under that over the next 10 years? And, you know, one way you do that is just print a lot of money and then also lower rates so that it’s cheaper to service that debt, which is probably really bad for the economy, you know, because you’re going to have runaway inflation if you do that. But they’re in a very difficult situation now with the federal debt. And I think there’s a lot of people who really do talk about that, how significant that is. But it’s funny to me how the market is almost blind to that. Like, none of our clients talk about that. No one’s really that worried about. It’s like, oh, they’re just going to figure it out. But if you look at just what inflation has done to the value of money, we. We watched a show called Alone Is a Family, which is a great show. And the prize in this show, these people go out in the wilderness, have to survive, and then whoever survives the longest wins. He makes $500,000. And my son Luke told me that yesterday. He’s like, you know what? $500,000 in 2018 is what the value of that is today. And because what we’ve done to inflation now, it’s like $687,000 to have the same buying power is $500,000 in 2018.

[00:23:11] Tom Dosch: Wow.

[00:23:11] Tim Dosch: So people don’t really understand, but, like, what’s happening is they’re printing so much money and increase the monetary supply so much that your money’s just not worth as much as it used to be. And I think that’s just going to continue to happen because that’s one way to handle the federal debt, is you just. You print money and. And you make the payments.

[00:23:28] Tom Dosch: Yeah. Well, so. So interest rates, I think, could definitely be something that could be a big surprise to even a lot of our audience, that maybe we’re going to actually see an interest rate increase back half of the year, even if it’s marginal, even if it’s 25 basis points, you know, something small. But just the fact we’re talking about an increase and not a decrease, that could be a big surprise. How about. I mean, you kind of just hit Tim a little bit of like, the struggling consumer. Cause I know that was a theme that you had for 2026 going into the year, but maybe connecting that to jobs and the overall economy and what we are, maybe this is just an interesting conversation. What do we think we’re going to see in the back half of the year? What’s the storyline going to be for just the greater economy and jobs specifically? I think we have to talk about AI because that’s where most of the narrative is around job loss or job gain.

[00:24:14] Tim Dosch: Well, a lot of people are talking about a K shaped economy, and at the same time, you have Elon Musk becoming a trillionaire and you have people really benefiting from AI and the value of these companies and some of these investments. You have a lot of people who are just trying to get by and inflation is just crushing them. When gas prices go up, that hurts them. If you’re living paycheck to paycheck, just your grocery bill alone is getting hard to pay for. And we have a lot of consumer debt, people living on credit cards. And, you know, I think for a lot of people, they’re just, there’s not a lot of hope, you know, like, how do I get ahead? You know? And so I think that’s going to be an issue that we have to face over the next couple years. And I think that even could be a reason why we’re seeing rents that are kind of soft in some of these areas. You know, if you’re, it was a couple years ago, if you’re graduating from college, we were interviewing all these kids who were kind of like, you know, everybody wants me. You know, I’m, I’m negotiating the best deal. And, you know, there was, it was competitive to get a lot of these college grads. And now there’s a situation where a lot of college grads aren’t getting jobs. They’re not, they’re. Maybe they’re underemployed, so they’re getting a job, but it’s not a great job. And so people are kind of pulling back. They’re living at home with their parents. You know, they’re living with roommates. You know, there’s, you know, instead of going to get in your own place, you know, maybe there’s two or three roommates, you know, and so those kind of things have a big impact on multifamily rents, you know, on home prices and home, the velocity of home sales. Because people are like, I don’t know if I want to go buy a home or if I can afford to buy a home, you know, if I just don’t have this extra cash flow every month to pay that. And so I think there’s just a lot of challenges with the consumer that I don’t know if they’re going to get that much better in your term. And I think when what you bring up is the potential for a lot of these people who are in these kind of lower end white collar jobs that we’re seeing AI start to replace, it’s just, it’s able to do a lot of these tasks, it’s able to do it much more quickly, it’s able to do it better. And we do think there’s going to be jobs that are created because of the new AI technology, but that could be further down the road and that could be jobs that some of the people who are getting displaced by AI are not qualified to fill. People use the example of when you had all the globalization happen and the Internet became a huge thing and really changed the economy. You know, you had all these manufacturing jobs we lost to China. And, you know, the joke was, you know, well, those people can go like, learn to code and they can do software. And it’s like, well, they’re probably not going to do that. Like, they’re just not built for that. And I think that’s one of the challenges people say today, like, oh, well, the, they can just go be an entrepreneur, they can go create their own business and they can go use all these tools because it’s so much easier now to do that. And that’s true. But how many people are actually going to go do that, you know, and be able to be successful at it? And so I think that’s going to be the challenge. There’s going to be a part of the workforce that’s lost, you know, and that’s trying to find their place. And we’ve talked a lot about the political side of this and just looking into the 2028 election and there’s going to be a lot of people that are not happy. And so I think that’s going to play pretty strongly into that election. And politicians are already pandering to it, but they’re going to continue to pander to it.

[00:27:17] Tom Dosch: There was a lot there. Let me break it down, because there’s like three different topics you hit that. I want to go a little deeper in the first, just related to affordability. It reminded me of an interesting stat I heard, which was, and this blew my mind, it was like 50% of Americans could not put together $500 in cash in an emergency which I was like, whoa. I mean, and that really speaks to what you’re talking about. About, about a lot of it’s over leveraged credit card debt just being squeezed so hard because of inflation. But that’s a real problem. I mean, because obviously emergencies happen and $500 these days is not going to really knock out a very significant emergency because things are just so expensive. So that was crazy. And then I had a conversation the other day with a developer and it was actually with a city. And we were just talking about affordability. And so with how high construction pricing has gotten, if you’re going to build a home, if you’re going to build an apartment, it’s so expensive for the future home buyer to go buy the home, the renter to go rent the apartment. And so these apartments had gotten to a point where they were all over 2000amonth for a one bedroom. Who’s going to pay 2000amonth? I remember 15 years ago when I graduated school and I was looking for a one bedroom. I was purely shopping price. And it was like, how can I be at like 700 a month? And I remember I found, you know, Jake Slasberg helped me get into one of his deals in Houston in the Galleria. It like pretty close in and you know, it was, it wasn’t like his newest project, but it was a nice project. I think I was probably like 900 amonth.

[00:28:46] Tim Dosch: Wow.

[00:28:46] Tom Dosch: I mean, to be able to live, that’s 15 years. And. And so then, you know, we were talking and having this conversation and the developer was like, I’m trying to build a nicer project in a good location, but have it affordable. And it was really interesting because the city was like, well, don’t use the word affordable. Like we all want affordable, but we don’t want that in our city, you know, and it’s like all he’s really saying is like, I’m trying to make it affordable and nice. But you know, it is. There is almost this, you mentioned the K shape economy that like there’s the uber wealthy Elon Musk and however many billionaires got created because the SpaceX IPO. And then there’s these people that, you know, couldn’t put together $20 in cash in a case, you know, so you have like this crazy divide. And what sad is, you know, then when you see a lot of decisions being made by a lot of these cities, we run into this a lot. And DFW was zoning cities, you know, requiring like acre lots or requiring 2 acre lots if you can believe that there’s cities that are requiring like 2 acre lots. An acre lot is too dense. All that does is make it less and less affordable for people to buy a home. Because you can’t go build like an inexpensive home on an acre lot, I mean, unless you’re just way, way out. So I think that affordability component you’re talking about is huge. And I know that’s why that, you know, tying that into regulation. That’s why this recent House bill was passed, you know, that Elizabeth Warren brought out. And it was like bipartisan, and it just passed after months of going back and forth. And that’s supposed to help start to solve, you know, the affordability crisis. But affordability is big. And then let’s go a little bit deeper into maybe jobs, because just in general, I think going into the year, and I was even hearing this late last year, there were some predictions that maybe we would see like hundreds of thousands of jobs lost by the end of this year. What’s been positive has been the job numbers have actually remained positive. And so I think some people question, like, what exactly are we measuring here? How are jobs actually positive? But they have remained positive so far this year and we haven’t seen these, you know, significant layoffs. And in a lot of cases. I was telling you this this morning, like, part of my opinion that is AI is great and these models are incredible. And ChatGPT has a billion users now, and so everybody’s familiar with it and they love it, and it’s writing emails for them and doing all this. But to go replace people’s roles and companies, it’s more about systems and processes than it’s just about really smart models. Because you can have a really smart model, but if you don’t have a system and a process, then what that really becomes is people just trying to do more, and then that’s going to ultimately break down. And these bigger companies, they can’t afford to go lay off, like whole divisions and teams without a real plan as to how it’s all going to be integrated. And a lot of companies are having a hard time figuring out how do you actually integrate AI. You know, like Steve’s using Claude and Jimmy’s using ChatGPT, and, you know, Mary’s using Gemini. And they all think it’s great and they’re all using it and they’re getting benefits. But from the company’s standpoint, like, how do you actually add real value? And so I just think that’s going to take time. And I think an  optimistic way of looking at it would be maybe because that takes some time. You don’t see the layoffs as quickly where people could be displaced. And at the same time, you start to see some creation of new opportunities because of AI. Because I do believe there’s going to be new opportunities. The question, like you said, is, are people going to be able to step into them? What are they going to be? You know, how are we going to be able to both replace and grow our job base, not just see jobs displaced?

[00:32:14] Tim Dosch: Yeah, I mean, one thing that people talk about with AI that’s pretty interesting is that it’s. You may think it’s only about efficiency. You know, that now we don’t need people to do this job, or AI can do it for us. But what’s also happening is an increase in productivity. So the more a company embraces AI and can use it effectively, the company can become more productive and more successful. And so there’s an argument similar to what happened with the Internet in computers. I think that maybe it’s Bill Gates or someone was saying back like the 80s with computers, they would replace, there’d be all those job losses because now it can do all these things, which it did. It did replace jobs that people were doing things by hand and, you know, drying things out and stuff. And software replaced that. But what also happened is just an increase in productivity. Now you could do more work, you could do it faster, you could communicate differently. And so that could be an interesting argument for a lot of these companies. If they embrace AI, they become more productive, revenue goes up, they start to expand, and there’s still a need to bring in more people to meet that. And so that will be interesting. I know, like, what Elon’s talking about is like just insane, like GDP growth. And so if that happens, you know, you would think that has a pretty broad benefit. Obviously, certain industries and people will get extremely wealthy with that, and so it won’t be like a fair disbursement of capital. But you would think everybody is going to do better because of that.

[00:33:36] Tom Dosch: Well, if you listen to the podcast pretty often, you’re probably like these guys all they do is talk about AI, like, every episode. The reality is, though, we live in an AI economy now, and like, our economy is only growing because of AI. You take away AI and we would not have the growth that we’ve had. We would for sure be in a recession, no question, because people have still argued, are we still in a recession? But the growth we have is because of AI it really is. And so we have to figure out a way to solve these big issues. Like we brought up a lot of them, but you know, our national debt, you have our workforce, transitioning workforce. Then there’s going to be a lot of regulation too. I think that’s another big storyline for the second half of the year would be what may we see related to regulation, especially with the midterms, you know, and they, that might trickle into the beginning part of next year. But we were talking earlier about with the regime change you could really see more federal regulation around things like data center development. We’ve already fallen way behind in that area. I mean China is well ahead of us in power plant development and data center development. And you have a massive opposition here, even in Texas to data centers. So Texas has the most, I mean we’re data center capital of the world, but incredible opposition. I was in a meeting the other day and we’ve always said like multifamily is a four letter word. For some reason, just like cities can’t stand it, neighborhoods always come out against the next multifamily project. And we’ve always felt that because we’re the ones normally working on trying to help a landowner sell their property for multifamily or trying to help a developer find a property. And the multifamily developer tells the city official, he goes, well, at least we’re not a data center. They’re like, oh yeah, that’s, that’s, yeah, that’s right. Like, and everybody’s kind of laughing and it’s crazy. But people have hated multi-family. It’s gonna impact the schools, it’s gonna impact traffic, we’re gonna have crime. Like the same three things you hear every, it’s like every multi family project somehow brings horrible people into a community. And then it’s like, but data centers, they’re so horrible. And you and I were talking about, and we’re going to do it, we’ll have a specific, you know, a separate episode just on this topic because we’ve talked a lot about this and it’s actually a really critical issue for us to figure out and it’s a really bad thing that there’s so much negative press around data centers. But we’ve talked so we can save maybe like getting deep into that. But I would just say potential regulation, like moratoriums against data center development that we’ve already started to see some places around the U.S. i think that those could be some storylines that could start to pretty negatively impact the overall economy if you start seeing that happen.

[00:36:08] Tim Dosch: No, I think that’s a great point. And I think you are going to have this discontent that continues to bubble up, you know, and people unfortunately, AI now has sort of this negative connotation now, especially with the youth. You know, a lot of people in college or graduate from college feel competitive with AI, which I think is unfortunate because I think they’re the ones who could actually benefit the most from it by fully embracing it and learning to use it to create value. But you have a lot of people who are like, man, it’s going to take my job, it’s taking my opportunity, I can’t get ahead, you know. And so I think there is going to be a very, or already is and will be continued, I think strong response against AI, which is very self defeating for the United States. But data centers seem to be a big target of that. And so even if you, they allow them, but they regulate so heavily that it gets ridiculous, you know, or you can’t practically do it, or you can only do it in very small areas, that’s going to be a big challenge. And so it’ll be interesting to see how that plays out because that’s going to impact not only, you know, real estate and where a data center can be, but also just how much we can develop AI and how much can be integrated into our society and be used by these companies. Because the big limitation is power and compute. And so if you put a hard ceiling on that, you know, it already takes years to develop these data centers. It isn’t like you can just go pop them up and they’re just online in three months. I mean, a lot of these are taking three years or four years to get done. So we’re already talking about a huge bottleneck anyway, you know, with power and even on a fast track, we’re talking about a lot of these not even being active till maybe 2030 or 2029. But if we slow down even more than that, I think it’s going to have some consequences for us as a country.

[00:37:48] Tom Dosch: Well, the last thing I was going to say was I do think we say this a lot. Very thankful to be in Texas, very thankful for the growth that we have. And I’ve actually been now jealous of Houston twice in the last week, which is not, not very often that I have jealousy because I know that you guys tend to be frustrated that we just always have like a line of investors and developers that want to do stuff up here. But I was on the phone with the developer from the Midwest, and they’re working on some stuff in Houston. So I was asking them about Dallas and what they thought about Dallas, and they’re like, for now, we just really want to focus on Houston. And I was like, I don’t think I’ve ever talked to somebody that wasn’t from Houston. You know, that was their response. But there was like actually from somewhere else that was like, we’re looking at Texas and we just want to focus on Houston.

[00:38:34] Tim Dosch: We want more of those guys.

[00:38:35] Tom Dosch: Well, you guys are working with them, so you’ve already got them. But yeah, I was just like, man, this inside told the guy that. I was like, man, I feel a little jealous right now. And then the other one was when Elon did his SpaceX deal outside Houston instead of DFW, because I’m like, what’s going on? Why are these massive investments from Tesla and SpaceX outside Austin and outside Houston? So, and I know we have plenty of our own big announcements up here, but I think it’s really exciting to see that. I think that that’s been huge for Austin to have Samsung and Austin, to have the huge, you know, Tesla facility and what he’s doing out in Bastrop and then now to have what SpaceX is going to be doing outside Houston. That’s just going to be incredible for jobs, for growth. I mean, I think the ripple effects of that are enormous. Really can’t be, like, understated.

[00:39:22] Tim Dosch: Why do you think he went to Grimes County? Have you heard anything about that? Because that is interesting. You know, he didn’t go to Dallas county, you know, one of the surrounding counties there. He didn’t do it somewhere in the Central Texas. I don’t know if it’s just as, you know, somewhat close to Central Texas, you know, if that’s why he did or if it was just the right incentives with Grimes County. I haven’t really heard the reasoning on that.

[00:39:43] Tom Dosch: I mean, this is 100% speculation, but I would assume it would be a combination of, like you just said, he got. He created that massive incentive zone. He likely bought the land pretty inexpensively. And then there was an existing, you know, pretty large plant there that had been like a big electrical plant. And so to me, again, I don’t know a ton about it. I know he’s going to build his own power, so he’s. So he can be off the grid and not tax the grid there. And so I’ve got to think the fact that there was an existing plant that had been there was important because I don’t know how many of those are just like sitting around, you know, ready to be purchased and. And, you know, redeveloped  into something else.

[00:40:21] Tim Dosch: Yeah, those are all good points. That makes a lot of sense.

[00:40:23] Tom Dosch: Well, Tim, this was good. I think, like I said earlier, pretty optimistic about the second half of the year. I do think some of these topics like rates, jobs, AI, there’ll be a lot of just really interesting headlines, things we’ll experience second half of the year that are, you know, it’s so hard to call things these days. Not that it’s ever been easy, but going into the year, I don’t know that this is really what I would have been thinking. We’d be talking about, you know, heading into the back half.

[00:40:48] Tim Dosch: Yeah, it makes it exciting every year because you try and make predictions, you guess, and then there’s all these curveballs ahead. So it’ll be fun to keep talking about it.

[00:40:55] Tom Dosch: Well, thank you to our audience for joining. We always appreciate your support. We’d love to hear from you, too. Whenever you send either one of us an email, Tim or I, really simple tim@dmre.com or tom@dmre.com love to hear from you. Love to hear what you enjoy about the show, the type of episodes you like listening to. Definitely check us out on YouTube. These podcasts are all filmed and we post them there and so you can like or subscribe to our channel and then we also have clips on LinkedIn, so definitely follow our page there as well. Thanks, Tim.

[00:41:25] Tim Dosch: Thanks, Tom.

[00:41:29] Outro: Thank you for listening to our podcast today. If you have questions about land you own in Texas, send us an email at texaslandguys@dmre.com and follow us on LinkedIn to stay updated.