Planet Money - Two Indicators: Boomtown & Bye Bye

Episode Date: April 2, 2021

We look at housing prices in Montana, an oil market milestone, and give a fond farewell. | Subscribe to our weekly newsletter here.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money from NPR. Sean Hawksford came to Bozeman, Montana for college and fell in love with it. Great hiking, great skiing, tons of natural beauty. And he also fell in love with a Bozeman local who is now his wife. They decided to settle down in Bozeman, buy a house and start a family. And this plan was looking very good. Sean had a successful business, his wife works. They'd saved up a bunch of money and the bank qualified them for a half million dollar loan. They started looking around and almost right away they saw a house they really

liked. We said, all right, it feels like a huge step, but we'll make the offer. We'll do it. We'll commit to making the offer. The house was listed at $425,000. They offered $435,000, so $10,000 above the asking price just because they wanted to lock it down. But in fact, that was not enough to lock it down. The owners came back to them and said, listen, we've got a bunch of offers. If you want this house, you'll need to do better. So Sean and his wife talked it over and they dug deep. They offered $450,000. They responded and said, I'm sorry, we've accepted someone else's offer. Apparently, it was a cash offer.

Their agent said, listen, guys, this happens. Don't worry, we'll get the next one. They saw a second house they liked. Again, made an offer above asking price, got into another bidding war, and once again, they lost out to an all-cash offer. And then we did that 17 more times. Really? You've made offers on 17 houses? 18 now, and we have been, yeah, we've been turned down on all 18.

Sean says this was hard. They'd see a house they really liked. They'd start dreaming a little bit, kind of mentally moving in, imagining a life there. And then you get the text message at seven o'clock. They took the cash offer. I mean, who cash offers like that's a lot of cash to have. Like, who are these people with this cash? That's a great question.

Sean says everyone in the town of Bozeman is asking this very question. Hello and welcome to Planet Money. I'm Cardiff Garcia. And I'm Stacey Vanek-Smith. Today on the show, two recent episodes of the show that we host together. It is called The Indicator from Planet Money. Subscribe now. One about Sean Hawksford's quest to find a home in Bozeman, Montana. And another about the economic indicators

we're thinking about this week. Also, a little bit of what they call personal news. More like professional news than personal news. You might say it's personnel news. It's more like it. Personnel news. It's it. Personnel news. It's not personnel news. That's not a thing.

On NPR's Pop Culture Happy Hour podcast, we talk about TV, movies, and more, like the new Marvel Disney Plus series, The Falcon and the Winter Soldier, and a definitive ranking of the best Muppets. All of that in around 20 minutes every weekday. Listen now to the Pop Culture Happy Hour podcast from NPR. Sean Hawksford says the real estate wars of Bozeman, all this started some years back. A handful of like ski bum, techie, startup-y types moved into Bozeman from big cities. And they started telling their friends about it. And their friends started getting like second homes and ski cabins there.

And the town slowly started to change. It's a lot of people from California. It's caused a lot of kind of anti-California resentment here. kind of anti-California resentment here. You see people who just, for lack of a better way to phrase it, just look like they're from California. You know, like you don't look like you're from, you know, like there's a certain look about people that are from Montana. Like I think you tend to look a little bit more practical in the way that you dress rather than fashionable. Yeah, you see somebody who's wearing like a big parka with a furry hood on it and is wearing really tight leggings when it's 15 below zero out. And you're like, I don't I don't know if you've been here for very long.

I 100 percent have one of the parkas with the furry hoods. I 100% have one of the parkas with the furry hoods. And Sean says he knows it is useless to be angry at people for moving to Bozeman from out of town. I mean, that's what he did. Yeah. But even so, he says that when he sees the furry hood legging crowd, he's like, you are the reason I cannot get a house. And he's probably not wrong. The statistic that a lot of people have been throwing around for quite a while is that Bozeman is a crazy place because the median household income is 20 percent less than the national average. And the median home price is 20 percent more than the national average. Actually, that's off.

So the median home price in Bozeman is about 75% above the national average, well over $500,000. And the median household income in Bozeman is 25% below the national average, about $50,000. Bottom line, if you are a Bozeman local working a job in Bozeman, buying a house is becoming financially out of reach. The math doesn't work. And this math is happening in small cities and towns all over the U.S. That's according to Glenn Kelman, the CEO of Redfin, an online real estate brokerage. Glenn says that the pandemic has accelerated these trends because as more people start working from home, working remotely, they've been migrating out of big cities and into smaller towns and cities

where they can do their work now. You just got so many people who come from LA to look at a house in Tucson and they're walking through it with a real estate agent and say, so what do places go for around here? Eight or $900,000. And the average price in Tucson is more like $300,000. And the agent's eyes pop out of her head. So the folks who are leaving these coastal cities are totally blowing up these tiny towns. And they walk in with Monopoly money and they get a house that's double the size they ever imagined they'd be living in. And it just distorts the whole economy. And the businesses in that economy. Sean says the town has been changing, too.

Bozeman was a town where on Main Street you'd have ranchers pull up to a storefront and they've got a flatbed pickup with hay bales on the back and their dogs are riding on the back of the truck and they park it and they go in and they get a cup of coffee and there's a Lululemon. Can you picture that guy with his mustache and cowboy hat walking into Lululemon to buy a pair of joggers? Sean says a lot of his friends are talking about moving away. They want to settle down and buy a house. And that just feels out of reach for most of them. And Sean was pretty resigned to this.

But then something changed. He and his wife are now expecting their first baby. My wife and I went in for our 20-week ultrasound. So we found out the gender. We're having having little boy, we got actual like photos of the really clear shape of the baby's face. And then we came home and just had a normal evening. And then I laid in bed for three hours without falling asleep, because my mind was just going into absolute overdrive of importance for me to

provide a place for us to live together, specifically because the house we're living in is, it's not impossible to bring a baby home here. And I know a lot of people have made do with a lot less, but it's 400 square feet. It's really old. It grows mold on the walls in the winter time because it's not insulated. Sean suddenly felt like he had to find a house for him and his family. And that's when it came into his mind. I might not have cash, but I do have some local cred, and that has value too. Like maybe I could leverage that cred into a house for my family. So he got a big piece of cardboard and a Sharpie.

I made a sandwich board. I was going for efficiency. I wanted to communicate as much as I could without having to hold too many things at one time. So he wrote, please sell me a home. Local business owner, wife pregnant, paid rent here 10 years. John spent three days standing outside in 15 degree weather. He says he did get a few leads, people who said they might be selling their house and they'd like to sell it to a local. And it worked. It did work.

We just got word since talking to Sean that a local who saw his sign offered to sell him a house. They said they really wanted a local family to buy it. And Sean and his wife saw it and loved it. Their offer was accepted and they're planning to move in later this month. After the break, more indicators. Some macro indicators and some about as micro as it gets. OK, so next up, we are going to do a little segment that we call Indicators of the Week,

where we discuss numbers that we find interesting in the news, in the world, or basically anything we want. Yeah, surprising, shocking, fascinating, intriguing. And Cardiff, go first. All right, excellent. Well, then here is my indicator of the week. It is 26.6 million barrels per day. That is the gasoline demand for the whole world in the year 2019. And here's why that's such a big deal. A new report

from the IEA, the International Energy Agency, predicts that that year was peak gasoline demand, that we may not actually get back to that amount of gasoline demand ever again. And there's a couple of reasons why this might be the case. Like the whole globe was shut down because of the pandemic. So one of the reasons is like a little rough, right? Just for 2020, right? So 2020, everything kind of collapsed. But the IEA is essentially saying that even after the pandemic ends, we won't get back to the pre-pandemic peak in gasoline demand. And one reason is simple.

It's just greater fuel efficiency. So you keep getting better mileage for each gallon of gas that you put in your car. That means you just don't need to buy as much gas. Another is you can imagine there are some societal trends like more teleworking that will lead to a bit less driving. But the big one seems to be that a technology that's been simmering for a very long time and which just hasn't gone to market is now finally here and seems like it's ready for mass adoption.

And that's electric vehicles. In the case of GM and Volvo, they've announced targets for when they are no longer going to even sell gas-powered vehicles. They're going electric. And so I think there's a big lesson to draw here, and it includes issues like political incentives to adopt newer technologies, right? Which is that we've been hearing for so long that electric vehicles are going to be a thing, long enough that I think a lot of us have become kind of cynical, right? But this is actually quite common for a technology to be improving, to be tinkering, but not yet be adopted because a number of things have to happen first. One is that you need like new infrastructure to be built to accommodate that technology.

Another is the technology itself doesn't just need to improve. It needs to improve to the point where it's cheaper than other alternatives. And one of the things that helps is when the government does provide incentives for that technology to finally be adopted, like what's happening in California and a lot of other places where, you know, electric vehicles have either been subsidized or gas-powered vehicles have been discouraged. And that is what it seems the IEA is expecting and why gasoline demand for the whole world may have already peaked. That is a beautiful indicator.

That is a beautiful indicator. You're welcome. Thank you. I mean it. Yeah. So, yeah, that one's mine. What is your indicator of the week, Stacey? Okay.

Mine is a little sound cue, so hopefully you can hear this. Okay. All right. I'm Cardiff Garcia. And I'm Stacey Vanek-Smith. This is the indicator from Planet Money. A show about work, business, and the economy. Do you know what that is?

That sounds like a very, very, very early indicator, like from the earliest days of The Indicator. It was, in fact, our very first indicator. It was the very first time that we said those words. And, in fact, we have said them almost 750 times since then in the like three plus years that we have been doing the show. That is my indicator today, 750. That is quite a milestone.

But yeah, I think I know why you brought it up. Of course, Cardiff. The reason that I am bringing this up is that you are leaving the indicator. This is your last indicator of the week. You are moving on. You're starting your own podcast. You're starting a company.

It's a very exciting time for you. Very sad for me. It's also sad for me. I mean, you know, leaving to go do this project I'd been dreaming about for a very long time. But obviously I'm going to be ambivalent about it because it means leaving behind this great experience of having made The Indicator and most of all, of having partnered with you from the very beginning and having gotten to do all these great shows together. And I'm also very sad and I'm so just proud of how hard we worked and of the shows that we made together it's been it's

been really awesome but you're right this this is today my my last indicator as a full-on member of the indicator team so yeah it's i don't even know what to say i'm getting a little emotional over here yes okay so cardiff here is to i don't know here is to 750 shows don't know, here is to 750 shows, 6,000 minutes, and to your new venture, which we're all excited to hear about. And we'll have you back to talk about it. You bet. This episode of Planet Money was produced by Emma Peasley and Jamila Huxtable with help from Dan Gurma and Nick Fountain. It was mastered by Gilly Moon and edited by Jolie Myers. And it was fact-checked by Sam Tsai.

It was mastered by Gilly Moon and edited by Jolie Myers. And it was fact-checked by Sam Tsai. Sam, by the way, wrote this week's Planet Money newsletter, which is all about unemployment insurance and what the latest round of unemployment insurance tells us about work during the pandemic. You can find and subscribe to the newsletter at npr.org slash planetmoneynewsletter. That's all one word, npr.org slash Planet Money Newsletter. And if you're looking for more Indicator episodes, you can go over to our feed. You could, you know, subscribe if you want.

Definitely subscribe. Definitely subscribe. Cardiff has ordered it. I'm Stacey Vanek-Smith. I'm Cardiff Garcia. This is NPR. Thanks for listening. Do you have a business idea that you're trying to bring to life? Thanks for listening. of the How I Built This Summit. For tickets and more information, head to summit.npr.org. And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.