Marketplace - A tale of 3 Q3s

Episode Date: November 12, 2024

Financial data from three industry-leading firms tells three very different stories. Concert promoter Live Nation had a scorching-hot summer season, while car rental company Hertz fumbled an electric vehicle investment. Home Depot fell somewhere in between. Also in this episode, housing construction. Are townhouses a solution to the shortage of homes? And why does HUD take years to fund rebuilding after natural disasters?

Hey, if you're listening to this, I will assume you're at least interested in money, understanding the economy and finances as well. Some of us now want to get the next generation interested as well. Check out Million Bazillion, Marketplace's award-winning kids podcast that breaks down money to help dollars make more sense. Tune into Million Bazillion wherever you find your favorite podcasts. A whole new season is out now. Million Bazillion is presented in partnership with Greenlight, the debit card and money

app for kids and teens. Greenlight helps kids and teens learn to earn, save, spend wisely, and invest. When you sign up for a Greenlight account at greenlight.com slash million. We've got some corporate earnings today, a little housing, and stick around for the longest job title I've ever heard. From American Public Media, this is Marketplace. In Baltimore, I'm Amy Scott. In for Kai Rizdal.

It's Tuesday, November 12th. Good to have you with us. For those of us who've been distracted by other news, may I remind you that we are at the tail end of corporate earnings season, and those profit reports and forecasts can tell us a lot about the underlying economy. Among the bellwethers reporting today was Home Depot. The home improvement chain said its third quarter sales came in higher than expected but that customers are feeling cautious. Marketplace's Kristen Schwab takes a closer

look. John Talbot isn't really a seasonal decor guy himself. But I am married and my wife enjoys decorating for Halloween. She's more of the gourds and pumpkins type, not so much the 12-foot outdoor skeleton type, an actual Home Depot product that kind of went viral this year. Talbot, a retail marketing professor at Indiana University, says seasonal decor was a hit for the company. TALBOT I think consumers will spend on things that make them feel happy.

GIGI BORGESON Happiness does have a price limit though. Big ticket transactions at Home Depot, one's over $1,000, those were down nearly 7% compared to the same quarter last year. Consumers are still on the sideline. Jamie Katz is an equity analyst at Morningstar. She says people are still uncertain about inflation and uncertain about when mortgage rates might fall.

And that has kept the housing market in limbo for now. Which of course impacts Home Depot's revenue from what it calls DIYers, aka regular people, and professional contractors. People are just saying, you know, we want to do this project, but let's wait and see if rates pull back a little bit before we tackle it. Drew Redding, a home building analyst at Bloomberg Intelligence, says big projects are on the back burner. Kitchen remodels, bathroom models and the products associated with them.

And one of the primary reasons for that is because those are projects that tend to be financed. But Redding says pent up demand for those projects is building. Home Depot just needs the housing market to pick up. We know that movers tend to spend more than non-movers. A study from the National Association of Home Builders shows that, on average, buyers of existing single-family homes spend more than people who stay put, over $5,000 more in the first year. I'm Kristin Schwab for Marketplace. KS. Elsewhere in earnings news, Hertz, the rental car company, posted disappointing results.

Revenue was down almost 4% from the same time last year. And the company had to write down the value of its fleet by a billion dollars. That's largely because of a big bet the company made on Teslas a few years ago. Marketplace's Sabri Benishor has more on why that didn't go so well. Jessica Lipsky is a media professional who travels a lot for work, rents a lot of cars, and every time she has a choice, rent an electric vehicle or gas. I choose gas. She wants to want to choose electric, but she doesn't. I wouldn't really know the process of like how to charge an electric vehicle, where I should go, how much is that going to cost?

People will do this research if they are going to buy an electric car, but renting, the technical term for all of that, is a hassle. It definitely feels like a logistics challenge when I have other things to worry about. This was one of the big challenges Hertz ran into when it decided to buy an estimated 35,000 Teslas to rent out a few years ago. So it has been offloading thousands of them since. Eugene Belostatsky is with Citigroup. As of now, Teslas are about 3% of the total fleet. It was closer to 10% at the peak.

And as it offloaded these cars, Hertz collided with another problem, says Alan Baum, head of market research firm Baum & Associates. Tesla reduced the sales price of their retail cars, which obviously reduced the value of those vehicles for Hertz and put them in a very bad position. But according to Citigroup analysis, the hemorrhage has stabilized and Hertz is at a more sustainable

level of electric vehicles. And for all of Hertz's problems renting EVs, people are still interested in buying them. David Green is an auto industry analyst with Cars.com. We're seeing strong demand growth, particularly in used EVs. And some of those used EVs might just have been previously owned by Hertz. In New York, I'm Sabri Benashur for Marketplace. Wall Street hit a speed bump today. We'll have the details when we do the numbers. Continuing our corporate profits tour, Live Nation, the big concert promoter and parent company of Ticketmaster, told investors yesterday it had its biggest summer concert season ever,

with profits up 39% year over year for the third quarter and 144 million tickets sold through October. All this as ticket prices, at least for the big acts, get more and more expensive. Marketplace's Matt Levin explains why music fans are still willing to splurge. Matt Levin Madonna Coldplay and Bad Bunny were some of the biggest concert draws in 2024. It cost an average of $209 a ticket to see the Material Girl on her Celebration Tour. University of Miami Music Industry Professor Sarona Elton says coming out of the pandemic,

live music is just a bigger part of our lives and our budgets. We've come out of the revenge spending era, except that we now have an even more deep understanding of how important those experiences are to us. And we are now in a different mindset about prioritizing our spending. Post-pandemic, concerts aren't just a place to go see live music from your favorite artists. They're also increasingly one of the few places you can hang out with people who share your

interests. You know, outside of Reddit thread? Wendy Katzenstein is a consumer strategy specialist at Deloitte Consulting. Especially in a world where there's a lot more divisiveness, the chance to be able to go to a Taylor Swift concert and be with other Swifties who you know have a fairly like-minded mentality about the way they approach the world is a big deal. a Taylor Swift concert and be with other Swifties who you know have a fairly like-minded mentality about the way they approach the world is a big deal. Although there may be some downsides

to concerts increasingly serving a social purpose, music critic Stephen Hayden has noticed an evolving norm at the 20 or so shows he's been to this year, groups of friends talking through the concert. There's always like a pretty big section of the audience that doesn't seem to care about the music on stage. If you ever do ask them to stop talking, there's an indignation that comes into play. Like, how dare you? I paid $200 for these seats. I can talk as much as I want.

I'm Matt Levin for Marketplace. Recovery from a storm, wildfire, or other natural disaster is expensive, as many folks in the southeast are learning after back-to-back hurricanes. In the immediate disaster response, FEMA funding can help cover urgent repairs and HUD, the Department of Housing and Urban Development, provides longer-term funds for rebuilding. States including Florida, Louisiana, and Texas have received billions of dollars over the years to reconstruct destroyed homes and build new housing after devastating storms. But it takes a long time. In Houston Marketplace's Elizabeth Troval has this story.

Just north of downtown Houston, Louisa Chavez gives me a tour of one of four brand new houses on the block after a ribbon cutting ceremony. We have the three bedrooms upstairs. She's a project manager for nonprofit developer Avenue. We're in a gray two story. The left side, we have a kind of like a mud room and in the, and a half bath. Unlike most of the new homes popping up in this gentrifying, historically Latino neighborhood, these will rent at affordable rates. The new construction catches the eye of 61 year old John Cortez, who

happened to be passing by. His budget is around $700 a month. Gave my final move out. I'm looking for a place quick. Cortez may have stumbled into a new home, one that was seven years in the making, built with federal dollars in response to one of the costliest storms in U.S. history, Harvey. built with federal dollars in response to one of the costliest storms in US history. Harvey.

FEMA helped with initial repairs, but the big rebuilding dollars came from HUD. The city of Houston ended up spending around $660 million of HUD's disaster funding, says Derek Sellers with the city's Department of Housing and Community Development. We had a multifamily program, a down payment assistance program. And a program for affected homeowners. So rehabilitation, reconstruction. That infusion of funds has led to major multifamily developments opening, more than 3,000 designated affordable units once construction is done.

You get a billion dollars into your jurisdiction for affordable housing, you really can rebuild people's homes in a more resilient way. You can put more affordable rentals on the ground. Sarah Labowitz is with the Carnegie Endowment for International Peace. She says the problem with this money is the timing. Polices more recently hit by disasters are still waiting on their money, like Hawaii after their wildfires. Because Congress has not appropriated any money for affordable housing recovery for any jurisdiction since May of 2023.

And Congress has to jump through extra hoops for that HUD money for post-disaster housing needs, compared to FEMA dollars. There is no bucket at HUD that is a permanent program for disaster recovery that recognizes the need for affordable housing and resilience after disasters that Congress can refill. While FEMA money is flowing to places battered by recent natural disasters like North Carolina, HUD money isn't and it'll take time and politicking, says consultant Mike Sprayberry, who used to oversee disaster recovery for the state. Our congressmen and women are up there lobbying for a big chunk of change. Sprayberry supports permanent authorization of this bucket of funding, though bills designed

to do that haven't passed in recent years. That would go a long way for a smoother and more successful program implementation. Krishel Pillay also supports permanent authorization. She's with Organizing Resilience, which helps communities respond to disasters. She's also living disaster response firsthand. There are exposed studs and rafters. We're inside her Houston home that was damaged by the Houston windstorm in May. The recovery is happening relatively fast, she's insured. But many residents across the city wait years dealing with government delays and red tape,

like one family she knows, hit by Harvey. They went through the process, the application process and all, and they were scheduled to go and sign the final contract to get work underway. The husband dies. But the home was in the husband's name, not the wife's. So now the house can't be rebuilt. Because of delays getting out funding for that family,

help never came. In Houston, I'm Elizabeth Troval for Marketplace. I don't see myself working a nine to 5 anytime in the near future. Fair enough. But first, let's do the numbers. The Dow Jones Industrial Average shed 382 points, 9 tenths percent, a close of 43,910. The Nasdaq gave back 17 points, less than a tenth percent, and at 19,281 the S&P 500 lost 17 points, three tenths percent to finish at 59.83. Sabri Benesher was telling us about the troubles at the rental car company

Hertz. Well, Hertz's stock was up eight and six tenths percent. Rival Avis' budget grew two and four tenths percent. Enterprise Holdings, the country's largest rental car operator and owner of the Alamo and national brands, gave back 2.25%. Ecommerce firm Shopify soared 21% after posting better than expected third quarter earnings and revenue. Bond prices fell, the yield on the 10-year T-note rose to 4.42%. You're listening to Marketplace. This is Marketplace. I'm Amy Scott. Most of the homes in this country are detached single-family houses, more than 60 percent according to U.S. Census data. And as I'm sure I don't have to tell, many of you hire home prices and persistently high mortgage rates these days have put owning one of those houses out of reach for a lot of people. But what if we built differently? Heather Long

wrote about that in a recent column for the Washington Post. She's also a regular on our weekly wrap. Nice to have you back on, Heather. Thanks, Amy. Let's start with your headline, The New American Dream Should Be a Townhouse. Why townhouses? It was a bit provocative of a headline, but the basic idea is people are in desperate need of affordable housing. And one of your obvious options, if you're from other countries, would be why don't you look for a condo or a high-rise building? And the reality is the United States has built almost no condos since 2009.

But what we are building are townhomes or what's known as medium density housing. So everything from duplexes to townhomes to cottage courts. I didn't even know what a cottage court was until I started researching all of this. But a lot of young people like them because they're low maintenance lifestyle. You don't have to spend every weekend raking the leaves and doing the yard. Usually there's some sort of homeowners association that does that for you. And it's a better use of space. You can fit more of these types of houses near a public transit hub or near a lot of grocery stores and amenities, but it's just a lot more affordable.

And how much more affordable can this be? It's pretty substantial. Obviously, it varies a lot, like everything across the United States, but we had Zillow run the numbers and in a major metro area, like let's take Los Angeles or Miami, it can be $200,000 less in the sale price versus a single family home. And the other thing that people forget is it's less to maintain something like a town home or a row home because you are splitting those costs. You share that one or two walls with the neighbor.

Usually the insurance costs are a big one. Those are usually lower on a townhome than a standalone home. Taxes are often lower because you're on a smaller lot size. So a lot of that quickly adds up for people. And that's why I think it used to be seen as just a starter home. And as I called around the country, builders kept telling me, I'm constantly amazed at the large age range of people and types of people who are interested in townhomes today that would not have been, you know,

25 years ago. Given the appeal you just described, it might surprise people to learn that townhouses are actually illegal in many communities. Why is that? They're hard to do. I know everybody keeps talking about zoning, zoning, zoning. There's some funny building codes that make it really difficult in some communities. Often townhomes are usually two stories high, but in some places it might be three stories

high. And some building codes and zoning codes start to consider three stories in a very different light. It has to have a lot of different requirements that are built in that make it cost prohibitive. I will say on the positive side, some communities have become embracing of townhomes, not just because they're more affordable, but a lot of communities don't want to zone single family traditional homes right next to say a grocery store or a Walmart or some sort of shopping center, but they will allow town homes as a transitional from the shopping

center. Then you can have the medium density, and then you can have your more traditional single family. COLLEEN O'BRIEN So I'm wondering how much of this is about people's preferences versus what builders are offering. I mean, is there enough demand for townhouses to drive more construction? There is now. In the encouraging news, there's actually been, I would call it a mini boom in townhome

construction in the last two or three years. What's interesting is we've been talking a lot in the United States about the shifting of family size and preferences, and this is playing into what people want too. We have more and more families that are going childless, more and more who are only having one child. And so you don't need a home with five or six bedrooms. You don't need the big, big mansion anymore.

I will say, and we got a lot of blowback on this on the piece, it's not for everyone. The number one issue is stairs. Town homes, row homes, even something like a duplex do have stairs. And obviously, people who want to age in place, that can be a challenge. And mobility, anyone with a mobility issue just cannot do the number of stairs. But the reality is we only have 10% of our entire housing stock in this country that's high rise apartment or condos that would be really well suited to some of that aging in place and mobility issues. And so I see this growth of townhomes as helping to free up more of that limited supply of

housing that works well for the mobility challenge if we can get other folks buying an affordable townhome. All right. The new American dream. Maybe it's a townhouse. Maybe it's a mix of housing. Heather Long is a writer at the Washington Post and a regular on our Friday Weekly Wrap. Thank you so much, Heather.

Great to talk to you. Heather Long Thanks, Amy. Keep an open mind on the town. About nine million people work multiple jobs in this economy for a lot of reasons. Not being able to find a full-time job or needing extra hours to deal with the financial situation. Some folks need the flexibility. And if you heard the show open, here's your payoff from the latest installment of our series, My Economy. My name is Eliana Marianas. My pronouns are they, them. I live in Atlanta, Georgia, and I am an actor and a standardized patient and an audiobook narrator and an artistic

associate with a French speaking theater company and a holiday caroller and a ghost tour guide and a teacher of viewpoints and a burlesque performer. I started acting when I was in kindergarten. I got a lead in the holiday pageant and I was hooked after that. I always knew that this was what I wanted to do. It took getting two back-to-back contracts with a theater company here in Atlanta to give me the confidence to strike out on my own. Once I got those two back-to-back acting contracts, I realized I needed more jobs to supplement and strike out on my own. And once I got those two back-to-back acting contracts,

I realized I needed more jobs to supplement my income, and that's how I wound up with 12 jobs. I don't see myself working a nine-to-five anytime in the near future. I am neurodivergent, I have ADHD, so actually having this many jobs is incredible for that because I never get bored in anything. And if I do get bored, chances are good it's a seasonal job and once the season's over, that job will go away and I'll be able to replace it with a more fulfilling, more stimulating job. So during the pandemic, I realized that I needed a different living situation. So my parents had moved up to their lake house pretty much full time.

And my original idea was that I would buy a tiny house, park it on the property, and run their house as a rental property for them. And I knew that there was absolutely no way that I could afford this giant house. So we got a little creative with the mortgage situation. And also I have turned it into a sort of artist commune. So there are now five of us living in a house. We're all actors full time. A really hard thing for me to learn was that I need to be really honest about what I'm

capable of doing and that I need to ask for help from my artistic collaborators when I need it. And also that I need to take jobs that bring me joy because I've got something that fills me up artistically, something that is creative and that brings out the best in me as a person and as an artist. Ileana Marianis, actor among other job titles in Atlanta, Georgia. You know, we can't do this series without you, so please tell us what's happening in your economy at marketplace.org slash my economy. This final note on the way out today from Axios. Wall Street bonuses are expected to rise for the first time in three years. That's according to the consulting firm Johnson Associates. Investment bankers working in debt underwriting could fare the best, with 25 to 35 percent increases. Those

in equity, sales and trading are looking at 20 to 25 percent bumps. In real estate and retail and commercial banking, though, bonuses could be flat or even down, thanks in part to high interest rates. Our digital and on-demand team includes Carrie Barber, Jordan Mangy, Dylan Mietanen, Janet Nguyen, Olga Oxman, Ellen Rolfes, Virginia K. Smith, and Tony Wagner. Francesca Levy is the Executive Director of Digital and On-Demand. I'm Amy Scott. We'll see you tomorrow. This is APN.

What do they say? More money, more problems, and way more questions? From your kids, right? But not to worry. Million Bazillion, a podcast from Marketplace, has you covered. I'm Bridget Bodner, and with my co-host, Ryan Perez, we take you and your young ones on grand adventures and comedic sing-alongs to answer all the questions your little ones have about money. Join us as we explain how banks work, why name brands are more expensive, and what happened to Black

Friday sales. Listen to Million Bazillion wherever you get your podcasts.