Faribault Mill has been a common thread for generations of Minnesotans
The Faribault Mill is celebrating its 160th anniversary this year.
The mill was started in 1865 in the city that bears its name and is one of the oldest manufacturers in the state.
At one point, the Faribault Mill made more than half of all the blankets made in America.
FARIBAULT, Minn. (FOX 9) - The Faribault Mill is synonymous with the city it calls home.
Big picture view
On the shores of the Cannon River, on the outskirts of Faribault, there's a company that has been woven into the fabric of Minnesota for more than a century and a half.
Some say the Faribault Mill manufactures magic, turning wool into its signature blankets and other accessories meant to stand the test of time.
"Wool, as we call it, is nature's original performance fabric. It keeps you warm when you're cold. Most people know that in Minnesota," said the company's president and CEO, Ross Widmoyer.
This year, the mill will make 125,000 blankets that will bring craftsmanship and comfort to every corner of the globe.
From traditional designs to maps of the state and North Shore, the Faribault Mill is on a mission to show the world that wool can be cool.
"We're the longest-standing manufacturer in the state of Minnesota. We've been doing this for 160 years. In fact, we're celebrating our 160th anniversary this year," said Widmoyer.
The backstory
The mill was founded by German immigrant Carl Klemer in 1865, just a couple of months after the end of the Civil War, as a way for local sheep farmers to sell their wool after shearing their sheep during the shearing season.
But in the beginning, it was another animal that made the mill go.
"We still in our tour room today have a horse collar and the horse collar was for a horse named Jenny. And Jenny's job at the original mill was to walk around in a circle, day after day after day, to generate the power needed to run the mill," said Widmoyer.
The company moved to its current location in 1892, and went from horsepower to hydropower, harnessing the nearby river to fuel its operations.
One of its longest-standing clients is the U.S. military, with the mill making blankets for the army and navy during both world wars, which pointed the company towards its future.
"After World War II, as the G.I.'s came home, they bought homes and they needed blankets for their homes. And so this company really kind of started on the consumer journey," said Widmoyer.
At one point, the Faribault Mill produced more than half of the blankets made in America, but in the 80s and 90s, the U.S. textile industry largely moved overseas to China.
In fact, the mill is one of only two left in the country that can take wool from bale to blanket, all in one place.
"We can do every single step of the 22-step process it takes to make one of our blankets. We can do every single step here in this building in Faribault, Minnesota," said Widmoyer.
Local perspective
That process starts with a bale of raw wool, which is dyed and dried, and then run through a couple of machines that comb the fibers and spin them into yarn.
The yarn is put on a loom, where it is woven into fabric, which is eventually brushed to make it softer.
The fabric is then cut into blankets, which are edged and labeled, before they are packaged and sent to customers, with the entire process taking anywhere from 8 to 12 weeks.
"It's a complex process, but it's really interesting. And you can see it from start to finish," said Steevie Brown, director of product making and product development.
What they're saying
The mill closed in 2009 during the Great Recession, but new owners brought it back to life within a couple of years.
It now has 85 employees, and for many of them, working there is a family affair.
"So my grandma worked here for 63 years, and then I believe one of her sisters worked here as well. And my brother works here. My nephew works here. My son works here. My cousin works here. So there's a lot of us that either work here currently or have worked here," said Elizabeth Boudreau, the company's supervisor of finished goods.
Recently, the mill made headlines when it announced it is permanently cutting the price of some of its iconic blankets by $100 to help fight inflation.
"It's not the easiest thing to do, but we think it's the right thing to do," said Widmoyer.
But after more than a century and a half as a Minnesota mainstay, employees hope the Faribault Mill continues to spread the warmth.
"This is an icon. And we're proud that the company's been around for 160 years. And we feel like we're doing the work to lay the foundation to ensure it's here for another hundred and 60 years," said Widmoyer.
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Frum: Oh, so, so grateful to you. So let's just start with the open-end question: What is going on in the housing market? We've had a terrible spring. There's more bad economic news this summer. What's the state of the housing market? Kelman: Home prices are softening. So for the first time in nearly a decade, home prices seem likely to soften in the second half of the year. Interest rates may go down just because the jobs news was weak, and that would be a welcome respite, but inventory has been very low for a long time. Sales volume has been extremely low, probably 30 percent below historic levels on a per-capita basis. We haven't seen this sales volume since 1997, when the United States population was about 30 percent smaller. So the market has been moribund, but home prices have held up, and we're going to see that in the June numbers. But if you look further ahead, 35 percent of listings are staying on the market for more than 90 days. We have many unsold listings right now. It has just gotten hard to sell a house, especially in the Sun Belt, and so that may bring some relief to homebuyers who really need it. The average age of the first-time homebuyer is 38. It used to be 31 just a decade ago. Frum: Well, one of the things that is strange, and you're sort of anticipating the question is, this is a market that is experienced as a bad market, both by sellers and by buyers. Kelman: Mm-hmm. Frum: And normally, at least one of those two groups is happy. Bad news for sellers, good news for buyers. Bad news for buyers, good news for sellers. Now, they both seem unhappy that the prices are high. Buyers can't buy, but the buyers aren't there, so sellers can't sell. Everybody's miserable. That doesn't seem like an equilibrium state. Kelman: No, it isn't. I think we're at an inflection point. So mostly people who have had to sell their home have been able to do so quite easily over the past two or three years. So even in the post-pandemic correction, it was fairly straightforward. But now home sellers are struggling, especially people who bought a house during the pandemic. We are talking to them about lowering their price and they can't, because they'll be short on their mortgage. Now, we're not going to have anything like the great financial crisis in 2008, where there was a wave of foreclosures. But for a particular population of folks who did buy during the pandemic, it has suddenly gotten very hard to sell their home and pay off their mortgage. And so right now the market is just teetering in a very unhappy equilibrium. I think that prices will come down, and I'm one of the people who views that as good news. When bread prices come down, when gas prices come down, most Americans view that as cause for celebration. But when home prices go down, about half of us are worried about it and the other half are throwing a party. And really, for the younger generation, we need prices to come down. Frum: Well, is the cause of the misery that the people who bought during the pandemic and a lot of people were buying with money that was almost free? Very, very low interest rates? Kelman: Yeah. Frum: And now it's five years on and the cheapest money is the five-year interest rate that resets after year five, and those people are now thinking about selling, but they're selling to people who have to go borrow at real interest rates. And so that's the mismatch. The secret is one group has a low monthly payment, but wants to sell the house at a high price. The other group has a high monthly payment and cannot possibly meet the price. And that's the mismatch and that's why everybody's miserable. Kelman: That is a huge part of it. So about 75 percent of American homeowners have a mortgage below 5 percent. We're unlikely to see a rate like that anytime in the foreseeable future, and so those folks create this rate-locked inventory. Many, many people in America—more than half of all Americans—really couldn't afford to buy their own home at current interest rates. So it's very common for us to go to a listing consultation with someone who has had another baby or is going through a divorce, had some kind of life event where they need to move, and when they realize what they're going to be able to afford from the sale of their home, they decide to stay put instead. Frum: Let's go around the country, and let's start in what it's like—what I understand, like what the Dust Bowl was during the Great Depression, Florida is to today's real-estate market. It is just the endless source of bad news. So tell us the story of Florida, and then let's go around the rest of the country. Kelman: Well, Florida has all kinds of problems, and some of them are climate change–related because insurance rates are shooting through the roof. So, so many buyers in Florida get a home, get a mortgage, and they think that's all there is to it, and usually that's the case. But now there's a third rail, which is getting insurance, and because there have been so many storms, insurance rates are sky-high. The state has tried to regulate that to some degree, but it's really a triple whammy. Because home prices have gone up; many people are moving into the state. That has started to slow. Florida has always been a real-estate-driven economy, so the overall economy struggles when real estate struggles like no other state in America, and that just makes it extremely volatile, especially condos in Florida right now. Very hard to sell. So there are places where it's still easy to sell a home in Florida, but those are getting more scarce, driven by those three factors. Frum: What's the strongest real-estate market in the country? Kelman: Strongest real-estate market in the country is probably in the Midwest right now. It just saw less volatility than before. So if you went to a place like Austin, Texas, somewhere in the Sun Belt, home prices went up 40 or 50 percent during the pandemic and then came crashing down. But a place like Chicago has been very Midwest and stylish as you would expect Chicago to be, and so that market has been holding up. I think it's some of the markets where we saw the biggest pandemic highs that we're now seeing the most volatility. West Coast markets are doing better because there were a bunch of Amazon workers or Google workers who thought they could move to Texas and keep their jobs, and now they're being called back to the states. And so this exodus that we saw from California and Washington State is now reversing, and that is supporting the market. If I had to say the biggest split in the market right now, condos are just always more volatile than houses. Townhouses are also much more volatile. Those are the first parts of the market to go. Builders are really struggling right now. Yeah, so the incentives that they're offering the homebuyer usually involve buying down the rate, and then they're offering 5 or 6 percent to a buyer's agent, when normally it would be 2 or 3 percent. That's an incentive that the consumer herself doesn't see. It's an indication that home-builder sentiment is very negative. I think it's been negative for 15 months. They've got their own double whammy where consumer demand is softening, but also their labor supply is shrinking. Frum: Well, let's talk to the generational aspect because that's probably one of the most socially debilitating. So you said, a decade ago the first-time homebuyer averaged 31 years old. Today, the first-time home—how old, say it again? Kelman: Thirty-eight. Frum: Thirty-eight. So let's talk to those 29- and 30-year-olds who said, I thought I was one year away from buying a house, and now I discover I'm nearly a decade away. I'd like to have a house when I'm of age to have children. What hope is there for me? What hope is there for them? Kelman: Well, we just need a correction with a correction. So we already talked about this phenomenon where home sales plunged at the end of 2022, but home prices kept increasing, and that was because all this inventory was rate-locked, and now we're starting to see inventory pile up. It's getting harder to sell a home. We think prices will go down by at least 1 percent in the second half of the year, and that means that homebuyers may catch a break, but 1 percent probably isn't enough. The second part of this is that there just has to be a building boom. There's this big debate on the left about whether or not we should continue with the current policies or be much more permissive about building not just houses, but nuclear power plants and high-speed rail and all sorts of other projects to bring the American economy forward. I will be quite explicit about this. I am a 'yes, in my backyard,' YIMBY kind of politician. I really think America has to be good at building houses or the next generation is really gonna be in a pickle. We always talked about 'the bad vibes economy,' where Joe Biden wondered, Why are people so down on the economy, especially this younger generation, and it's just hard to be optimistic about the economy, even when unemployment is low, if you're living in your parents' basement. And so I see some hope—Tim Scott and Elizabeth Warren, unlikely bedfellows, are now sponsoring a bill to lower housing regulation and to get more homes built. It passed through the banking committee on a unanimous vote. It's something that I think the president could really get behind. I had hoped when he started his term, that because he's a builder, he could be the builder in chief or the developer in chief. Mostly he has not addressed this issue. Kelman: David. Are you trying to get me in trouble? I do not think— Frum: He's a name licenser. He's not a builder. When was the last time Donald Trump built anything? Like, 1980? Glenn Kelman: I think he has an enthusiasm for construction. Frum: Yes. Yes. Kelman: Regardless of his bona fides— Frum: He draws—those are his favorite doodles. Kelman: Yes. (Laughs.) Frum: He draws skylines. (Laughs.) Kelman: They are his favorite doodles. Frum: And writes his name on— (Laughs.) Kelman: It's the White House right now. He wants to build another room in the White House. I know it's going to have this Louis Coutures kind of vibe, but, nonetheless— Frum: Louis Coutures at Las Vegas. But okay, we're not going down the politics path. I just want to hear more hope for the young. Because even if the day of the 2.75 percent mortgage is not returning soon—and that was a trap, by the way. The way you got 2.75 percent was by saying, I'm signing up for five years, and then letting the interest rate reset, which is not advice that anybody should, any young person who doesn't have a lot of other resources should be following. You want the length of your loan to be the length of time you're going to own the home. The depression generation knew that. But anyway, 2.75 money, or even 3.25—we're not going to see that in the mortgage market so soon, even if the overnight rates come down. So, what's the hope for the young? What's the hope for the young? Kelman: I think the hope for the young is that mayors have been losing their jobs over housing. If you look in Seattle, Los Angeles, San Francisco, there has been so much rage over the high cost of housing that it has really shifted the politics. There have been a bunch of state bills in California that failed five years ago that made it easier to build housing, made it easier to build accessory dwelling units, lifted parking requirements, and other things that dwindled the supply of housing in California. And now that state has gotten religion about trying to get builders back to increase the supply of housing. So I think there's just a new political movement. It is a bipartisan issue on the left and the right. At the local level, especially, there has just been this religion that we have to make it easier to build houses and increase the supply of homes. We are probably 4 million, 5 million units short of where we need to be, just given the demographics. Frum: Yeah. Well, if we were having this discussion 10 years ago, 2015, what we would've said is, The outlook for housing is exciting because the autonomous vehicle is almost here. And when it gets here, people won't need to have their own individual parking places anymore because these autonomous vehicles will be rolling around the city. It'll be robot Uber for everybody, at least in any major place that's got any population density. You'll press the button for the robot Uber, it'll be there in eight minutes, and you will not need a parking space and that will cut $40,000 or $50,000 off the price of a condo. What has happened to that hope? Kelman: Mania. So, the classic realtor move when you can't afford to live in the city is to look in the suburbs and then to look in the exurbs, so people's commutes just get longer and longer and longer. And at some point the rubber band always breaks, where people just aren't willing to live in New Jersey and commute into Manhattan. But now because of Zoom and maybe because of autonomous vehicles, at some point we are going to see people who are more tolerant of longer commutes. We have certainly had these conversations with customers and been surprised. There are people living in Sacramento who commute into San Francisco, and that's because they're only coming to work a couple of days a week. But it's also because the cost of housing is just insane in San Francisco. And I think there's probably a broader trend here, which is that it used to be that the politics of housing were toxic in San Francisco, New York, LA, and Seattle. But if you went to Indiana or Chicago or Florida, there it was still possible to work a middle-class job and get a starter home. So the American dream died in different places at different rates until the pandemic, and then all of a sudden you saw LA's housing problem come to Indiana, where people showed up with Monopoly money from LA saying, I don't care if the house is $300,000 or $500,000; it's easy for me to afford. And so I think now the housing crisis isn't just a local political issue; it's a national political issue, and it did, I think, contribute to some of the economic anxiety that was nationwide. Previously, I think you felt like if you were living in San Francisco, your kids had to go to Harvard and then to Yale and major in computer science and get a job at Google and become a VP if they had any hope of buying a house in the same city they were raised in. Now I think that anxiety has spread to other parts of the country, and that's why I think there's a broader consensus that we need to do something about housing in America. We need to build more housing. We need to deregulate a little bit. Frum: Well, from your vantage point, as the intermediary between buyers and sellers—if I said, Okay, we got the governors of the states here, with their notepads open, ready to take dictation, what are the top two, three, even four steps you'd recommend to make it easier to buy, build housing, and make housing cheaper? Kelman: Almost all zoning laws. So zoning. Frum: Be specific. What would you change? Kelman: Well—and this is an issue where I think Donald Trump has been on the wrong side of the issue—but some places only allow single-family homes, so they don't allow density. You can't build an apartment building. You can't build a condo building, and that's because rich people like to have less density, fewer cars on the road. There's a certain kind of neighborhood that's a leafy neighborhood. And so in the past you would see Republican homeowners really argue for zoning laws that made it very difficult to build a house. And then on the left, the issue that people really fought for were some kinds of rent controls, which discouraged us from building rental housing. And so the zoning laws that were popular on the right, the rental controls that were popular on the left—both of those need to go. We've already talked about the parking minimums, but mostly it's just the approval times. So if you talk to builders, they will say that it's just so much easier to build a house in Arizona than it is in California even though the housing shortage is so much more severe in California. And if you look at what drove California's boom, Orange County used to be orange groves, and then the city made some unholy alliance with the builder to turn the whole thing into a suburb, and they built houses faster than at any point in America. And I just think, we may not need that rate, but we need something like it if we are to give hope to a new generation of Americans. My broader argument is that I think this will be good, not just for housing, but I do think we need to upgrade the American economy so that it's ready for the 21st century. And if we are going to do that, we need to start saying yes to solar and wind and nuclear power, to high-speed rail, and all sorts of other projects. Liberal cities are going to fail if they can't get stuff done. And the sharp end of that spear has been this YIMBY movement. This 'yes, in my backyard' movement. So I think that's the hope for progressive politics. Frum: I think one of the things that people often lose sight of—we talk about housing building. People don't understand that houses fall apart. We lose housing every year, a certain percentage. It's a physical asset; it deteriorates over time. And so the idea that—and this is the thing that I think the rent controls understand—that the housing is dropping out of the market all the time because it's aged; it's dilapidated. And you either need to tear it down and build something new or you need to invest, in order to upgrade it. But in either case, you don't just build once and then forget. And the owner isn't just clipping coupons. The owner is having to, if you want to maintain that unit, actively reinvest all the time to maintain its quality. And so it's not just build and forget. One of the reasons that you could be able to say, well, we don't have a lot of natural population growth. Immigration is slowing down; why 4 or 5 million units? You see this in big cities. A lot of things are just dropping out of the market. The building falls down. There's a number—I'm going to forget what it is—of the number of apartments in New York that are rent-stabilized and vacant. The building is beneath the city's code, and so it's not allowed to be inhabited, but the landlord can't afford to renovate it because it's rent stable, and that's tens of thousands of units in the city of New York. Now, not everybody has crazy rent-stabilization schemes, but everybody has the problem of housing deterioration, which is not something that I think that a lot of people in the YIMBY argument world—the YIMBY people might get it—but not everyone understands. Or remembers, I should say. People understand it once you explain it. Kelman: One thing that people forget about home-price corrections is that it's not just that the same asset is selling for less money because of the laws of supply and demand; that happens, but if you looked in past corrections like 2008, 2009, and actually walked through the houses, you would see that they were run-down, that nobody had lived in them for six or 12 months, that there had been a foreclosure. So the actual quality of these housing assets across America declined even as the price for the same house also declined. So there were two factors that drove this wealth destruction during the last major price correction, which was in the great financial crisis. And so now, if you look at what the mayor of Detroit has been talking about, there are taxes for investors who own blighted properties. It's sort of a use-it-or-lose-it tax—that you have to invest to make the property really livable or you have to sell it because there's sort of a vacant-property tax that's quite punitive. Frum: And so that forces turnover in the marketplace. Kelman: Yeah. And I think there's a broader issue here. Of course I'm an advocate for turnover in the marketplace because we're a brokerage and we make money every time there's a trade, but to me it's bigger than that. What has made the American experiment so dynamic is this idea that when Flint, Michigan, goes through a downturn because we're just not making as many cars as we used to in America, people eventually move. That is the story of the Okies going to California in a John Steinbeck novel. But if you look at the likelihood that an American will live and die in the same town in which he was born, that has actually increased. David Frum: My Atlantic colleague Yoni Appelbaum has a very important book about this called Stuck. Kelman: Yeah. Frum: I think the figure that Yoni cites is—now, we're an older country than we used to be, on average, so you'd expect a little less movement. If you adjust for age, if you look at people in the equivalent age group, an American is about—if I remember Yoni's book correctly—about half as likely to move at their peak moving years than a comparable American was in the 1980s. We're not talking about pioneer days, we're talking about the 1980s, when there were personal computers and airbags in cars and— Kelman: (Laughs.) It's not so long ago! We were both alive then. Frum: A lot of channels on TV. Disco was dead already. (Laughs.) And in the 1980s, Americans at the peak years of moving were twice as likely to move as Americans—and housing prices have to be a huge part because once you get a house, you think, and especially when you move from a depressed area to a thriving area, that the housing hit that you have to take to move from Flint to wherever the jobs are today is so terrible that people say, Well, here in Flint I may not have a job, at least I have a roof. Kelman: Yeah, and here's where I really will be teaching my book. Redfin exists to lower the fees paid to a real-estate agent. If you couple the fees paid to an agent with the lender fees and the title and escrow fees, it's about half of your down payment, and so there's this conventional wisdom that you need to live at a house for seven years before you offset those fees and get the appreciation necessary to make it a profitable decision to own a home. And those fees should be half of what they are. If you look at what it costs to trade a stock or what it costs to trade almost any other asset, all markets have become more liquid except the real-estate market. And real-estate liquidity is more important to American society because it determines where we live, where we send our kids to school, who our neighbors are. The demographics of the country are really stuck. Frum: There is a lot of inefficiency in the housing market. And that can be fixed by technology and transparency. Kelman: I think so. It's been a slow road to make real estate more efficient, because it's a cooperative industry. So what that means is that you have one agent representing the seller and another agent representing the buyer. And if you were to replace one of those real-estate agents with some kind of chatbot, I think the other would take offense. And so nobody wants a disruptive real-estate agent, because you worry that somehow you'll lose access to the club, and it still is a club that's running the U.S. housing market, that gates access to the most exclusive listings in the best neighborhoods. And so I think people are very risk averse. Homebuyers are very risk averse about working with different types of real-estate agents. And I am not one who thinks that the real-estate agent will be automated out of existence—I tried to do that when I first got into this business—but I do think that technology can make the process much more efficient. Redfin has proved that in part. We charge half the fee. Our agents are three times more productive, but we still only have about 1 percent market share, and that's because people are skittish—skittish about working with a different kind of real-estate agent. Frum: Yeah. As we wind this up, I want to deal with an argument that you hear a lot if you like the work of Derek Thompson and Ezra Klein. You've seen them caught up to this argument with people who want to personalize the problems in the real-estate market and say, The problem here is not zoning laws. The problem is not interest rates. The problem is that builders are greedy. They're wicked people, and they're colluding in wicked ways to make housing less available to others. And this is ultimately a cause for moral reform rather than technical reform. I've put that in a kind of unsympathetic way because it's pretty obvious I don't think much of the argument, but let's hear from someone who's there and knows. Is there any possible truth to the argument that what is going on here is some kind of conspiracy by home builders to oppress America? Kelman: (Laughs.) I don't think so. I mean, I've been to home-builder conferences and it's a bunch of guys wearing cowboy boots. Most of them are Republicans. But they are trying to make money, and the way that they make money is by building more houses, and they are very much in favor of trying to build as many houses as they can. So I think there's some hostility to rent controls because it makes it harder to build properties for rent. But mostly these are people who are very pro-immigration. These are people who are very pro-housing. They got their clock cleaned in 2007 because they were building a massive number of units at very low price points with very skinny margins. And you just have to have a little bit of sympathy for them. They're making a bet 18 to 36 months in advance of the demand. They have to buy the land; they have to get all the materials; they have to get the labor and build the house—and to stick their neck out that far, they have to believe that they're going to be able to get the project done. And so when they encounter political resistance to that, they simply build somewhere else. That's why there's been so much construction in Florida and Texas and less in some progressive states. And so I do think, you know, the Derek Thompson, Ezra Klein argument that we should judge liberal governance by its ability to actually get things done and the simplest way to lower housing prices is to bring those builders back—there's no conspiracy here. They're just trying to figure out where they can build properties. Frum: Let me finish by asking you a little bit about change in the—if we think of the house as a technology, it's an especially conservative technology. Human life changes rapidly, but people still want dining rooms or think they do, even though they don't eat in dining rooms anymore. They want a lawn, even as it becomes ever more unaffordable and difficult to maintain and even as they move to climates where lawns don't make sense. A lawn in Arizona—tough problem. We talked about the possible elimination—of how the autonomous car might liberate us from the need to have a parking spot for every high-rise unit. If there are autonomous cars and you don't need to own your own car, you don't need the parking spot. Are there other places where the technology of the house, as we know it, could change? I mean, do you put any stock on this idea that young people might be attracted to a kind of, like, clubhouse living where you own your bedroom, you own your bathroom, but you don't necessarily own your kitchen or your public spaces? Do any of those technologies hold promise or do you think that's a lot of lifestyle-section talk that people—in the end, people want the house that they grew up in? Glenn Kelman: I do think it's a bunch of baloney. You hear about it every once in a while, and I'm just too old, David. I think that people say that they're open to all sorts of alternative living arrangements, and then they have a couple of kids and they want the same thing that everybody else does. So the change in the floor plan that we've seen has been the second master bedroom because so many people now have their parents helping them raise their kids, helping them buy the house. There's a lot of nepo homebuyers where the parents kicked in half the down payment and they just have an extra bedroom because they spend months of the year with that family helping to raise the kids. So that's maybe the only major change in the floor plan. And then the change in the process is, you should just remember that as we talk about how to bring manufacturing back to America, there is one asset that has to be manufactured in America. It's 20 percent of GDP, and it is the house. There are different parties that have tried to do more of the construction in a factory where the house is built in one place and then shipped very short distances because the shipping is so expensive. But the cost of construction and the speed of construction come down. It's using lasers and all sorts of other computer data and engineering techniques to build actually higher-quality housing, where it's just to a higher degree of precision. There's just so much that we could do if we just made it easier to build houses. I think we could lower the cost. And, of course, the offset on that has just been the labor. It is a real issue that many of the people who build houses in America come from south of the border. And I have wondered—because the new immigration policies—if we are going to see, especially as we talk about AI and worry that men, especially, can't find the kinds of jobs we had 50 years ago, if more traditional Americans, nonimmigrant Americans are going to move into the construction industry. But that is going to be an issue. We'll see how it goes. Frum: Is there an immediate effect of immigration pending that rotation of the labor market? There are sections of the house-building process that, as I read it, are more immigrant driven than others. Like, roofers are more likely to be immigrants, especially illegal immigrants. Drywalling is very much an—and part of that, it should be said and to understand here what's going on, the dangerousness of the roofing job, which is one of the most dangerous jobs in America. And so that tends to be that—and this is where there is maybe a moral story—that you can invest in making the roofing process safer, or you can hire somebody who, if injured, has no right to complain. And a lot of builders are attracted to option B. And by the way, a lot of buyers are voting with their dollars to tell the builder, Don't invest in the cost of making the roofing process safer. Just hire someone who can't complain if he's hurt. Kelman: Yeah, well, I hope that isn't the only solution. I don't know that it's just danger or even low wages or the willingness to do hard work. There are also craft-level jobs that have been staffed by immigrants—so people who make cabinets, people who do electricity. Americans aren't going into trades at the levels that they once did, and I think we should just account, at least for a moment, for the impact that tariffs have on housing. It's not just lumber; it's appliances. It's a wide range of goods that are imported from outside the country to build the house. And so it's just a tough time to be a builder right now because there's so much volatility in the economy and these people are making long-term bets where they buy land years ahead of actually trying to get a sale. And so if your whole supply chain and your labor market have been disrupted, it's just harder and harder to make that bet. Frum: Okay. Here's where I want to end. I want you to think about someone who's 28, 30, 31, who's confident that they're going to keep their job for a little while so they don't have the immediate fear, I'm going to lose my job, which many people have right now. But let's say you don't have that fear, but they don't own a home. What's the outlook for them? Can you say something hopeful to them about their path ahead? And any advice for them about where they should be looking? Kelman: My hope is that for the first time since 2012, home prices are coming down, and I think that trend is going to continue into 2026. And so maybe time is on your side. It also seems likely that rates are going to come down, at least somewhat. And so I don't think there's going to be some revolution that lets you buy a home for half the cost in three years. But I do think that after years and years of home prices going up, at least since 2012, homebuyers are going to get a break. And I'm really glad that you are. Frum: Thank you. Thanks for talking to us, Glenn. We're so grateful to you for your candor and your time. Kelman: Yeah, David, it's good to see you. [ Music ] David Frum: Thanks so much to Glenn Kelman for his fascinating insights into the U.S. housing market. Thanks to all of you for listening and viewing. If you enjoy this program and the content, I hope you'll share it as widely as you can on whatever platform you use. As always, the best way to support the work of this program and of all of us at The Atlantic is by subscribing to The Atlantic. I hope you'll consider doing that. And for now, goodbye and see you again next week. Thank you for watching and listening to the David Frum program.
