Mike Hathorne: The Great Housing Reversal

Austin Tunnell

Well, Mike, it's a pleasure to talk to you again. We got dinner a few months ago in Wheeler district as you were moving and heading to Arkansas. And it's great to have you on the podcast and be talking to you.

Mike Hathorne

Hey, thank you for the invitation. I'm ecstatic to be able to have this time with you.

Austin Tunnell

Well, can't even remember how we met with, think it was on social media, but I remember you posting about your book that you had written the great housing reversal and it caught my attention. And, I purchased it and, want to talk to you about the book a little bit today and, and also what you're up to now. but, maybe to give people a little bit of reference for just who you are. could you give a little bit of background?

Mike Hathorne

Absolutely, you bet. professionally, I've been in the real estate and development business since the mid 90s. And my, my path to, you know, writing a book, which I never would have thought I was capable of doing was, was really chasing an understanding of development patterns. And I was able to visit the Kentlands in Gaithersburg, Maryland, saw a newer development that didn't look or behave like anything I had experience with. And so I had to figure out what makes this different? How are they able to do this? And it put me on this trajectory of doing a number of things. going back to school for a master's degree to try and understand the regulatory environment that made the Kentlands possible. Writing development codes for developers, working for developers, working for large landholders. at every step, it was trying to kind of further this mission. which concluded in this book of understanding where we are today versus where we should be, because I saw a disconnect. And just because of who I am, I had to understand why. And part of understanding why, which feeds in also to who I am, is going down rabbit holes of studying statistics and socioeconomic trends and... You know, I see something in one place and I have to understand the, the repercussions of this versus that. And I'm just, I'm just a weird dude that way. but you know, where it, you know, where it finally lands is, is trying to understand what it is that we're doing as it pertains to housing versus what it is that we need. you know, there's.

Mike Hathorne

all this talk and there has been for quite some time about, you know, there's a housing shortage in the United States. And I'm of the opinion it's not as much a housing shortage as it is a housing mismatch. And, wow, segue.

Austin Tunnell

that's perfect. This was my first question. Like that, literally that you phrase this thing that because it's so popular, like it's, it's in mainstream media. It's on social media housing shortage and you frame it as a lack of adaption or housing misalignment. And then I think that's kind of the part of the inspiration for your book, the great housing reversal. Can you walk us through like, what is the reversal? You know, what, what, what I, what exactly has reversed?

Mike Hathorne

Yeah.

Mike Hathorne

Yeah. So the reversal basically is, this crux position of understanding housing types, the housing types that are in the marketplace and how those housing types either, either match or mismatch with household types. And because when you look at, when you look at the trajectory of housing in the United States, going back to the end of world war two, All the systems that were put in place were to favor the development of housing for two parent households with children. You know, kind of the suburban, you know, the suburban home. And over time, that housing or that household type has become a minority. It's no longer the majority demographically in this country. It's It's actually a minority. The majority in terms of household type are one and two person households. And if you look at what that type of household needs in terms of housing, it's not a single family home in a suburban neighborhood. So that's where the mismatch aligns. So here's a quick fact point. geeking out with statistics. So most of this stuff comes from studying US census data. One and two person households in the United States as of 2022 made up 64 % of households, 64%. Now, when you look at housing, 54.3 % of US housing are single unit homes with three or more bedrooms.

Mike Hathorne

I mean, that's the quickest way of demonstrating that mismatch. It goes much deeper than that, but it's really understanding the relationship between household type and housing types, and in terms of what the needs are on the household side versus what's being produced on the housing side.

Austin Tunnell

The statistic you quoted about the 64 % of, know, across America, one or two person households that that's actually statistic I've used quite a bit, even in kind of like our, whether I'm doing speaking or even in our investor decks about kind of our thesis for what we're doing in development. And to add to that, I say 77%, I could be wrong, but you know, 64 % is one to two. And I think like 77 % or 76 % is one to three person households, meaning

Mike Hathorne

Yeah.

Austin Tunnell

Less than a quarter of households in the U S are more than three people. And as you're saying, went over 53 % of house in the U S or three bedroom kind of suburban units. That's, that's pretty crazy. But one of the things that, that really helped me understand further what those demographics are. Cause I kind of say that as a, as a broad statistic that I knew, but you actually broke that down in your book a little bit more for me, that I didn't know particularly around.

Mike Hathorne

Yeah.

Austin Tunnell

You know, and I knew boomers were retiring and you know, there's millennials and, and, uh, uh, Gen Xers and things like that. But can you actually go into a little bit more detail about these specific demographics and the fastest growing demographics right now? Cause I think that even helps to put it further in perspective.

Mike Hathorne

Well, one of the things that I try to do is I try to, I try to point out that there's, there's three simultaneous trends that are occurring in the United States that are disruptors to the housing market. Any one of them is a disruptor by itself, but when you take all three together, it's, it's like, holy cow, you know, this is what's going on. And it's, it's as if the, the development world is sticking their head in the sand. and ignoring this. the first is that fertility rates are historic lows in this country. Do you understand total fertility rates? I'm getting really geeky.

Austin Tunnell

It's okay. I think this podcast is really to understand some things. I've always just to say, you know, I can't remember what the fertility rate is. I know it dropped below two and so it's kind of below replacement rate or something like that, but that's kind of my top level knowledge.

Mike Hathorne

Yeah, so total fertility rate is about the ratio of birth to death. And replacement level is 2.1. That's the magic number. At 2.1, you are just above the line of growing as opposed to non-growth. In 1960, the total fertility rate in the United States was 3.7. In 2024, it was 1.6.

Austin Tunnell

Wow. So it's literally more than halved in 50 years.

Mike Hathorne

Yeah. And it hit the replacement level 2.1 in 1990. So it has just been dropping like a stone. In a CDC report that I found, it said that in 2017, 48 of the US states were below replacement level. And only two states were above it in 2017.

Austin Tunnell

Wow.

Austin Tunnell

Was Oklahoma one of them? Utah. Yeah, totally. That makes sense.

Mike Hathorne

Utah no Utah and South Dakota. All right Okay, it it it gets it gets worse though As of today both South Dakota and Utah are below the replacement level Statewide now there's you know, clearly there's going to be counties and states that are that are above but a state as a whole

Austin Tunnell

interesting.

Mike Hathorne

There isn't a state in the United States that is above the replacement level of a total fertility rate. The next is marriage rates. Marriage rates continue to decline and that has an impact from a household standpoint because now you're starting to cross over in terms of just how many people are in a household. In 2022, married couples without children were at 29.4 % of all households, which is down from 71 % in 1970. Okay?

Austin Tunnell

These are pretty dramatic.

Mike Hathorne

Yeah, married couple households with children under 18 17.3 % Today down from 40 % in 1970 So, you know you all of these things are starting to paint the picture paint, know inside the lines of you know that big statement of Housing type and household type they do not match now. Here's the detail on the on the household type. One and two person households have risen, I mentioned this earlier, they've risen to 64 % from 46 % in 1970. The third is that the population is aging and I I paid close attention to that in the book because they're the they're the housing that the you know, the baby boomers are the ones that control the front end of How the housing was housing system was put together and Now they're gonna control the back end So here's an interesting crossover statistic. Let's see. By 2034, there will be more Americans over 65 than under 18.

Mike Hathorne

So today, those numbers, there's 61.2 million people that are 65 and older versus 73.1 million that are under 18. In 2034, there'll be 77 million that are 65 and over versus 76.5 million under 18. So I mean, the market is gonna be reshaped again on the backside. So we have to be cognizant of that in terms of what they want, what they need. And ironically, what they both want and need is not what they produced at the front end. Yet we've got to deal with that. And that's what I discussed in terms of the great housing short sale. Let's see, I think what we also need to understand as it pertains to the housing is understand how we're set up today. So we have 145.3 million housing units in the United States according to the US Census. 88.8 million of those are single family detached homes. Our zoning, the way that our zoning is set up today, understanding that the precursor of the housing being built, you can look at the zoning to say, what is the zoning telling us about what is allowed? A Brookings Institute study report that I found said, that roughly 75 % of all residential land in the United States is zoned exclusively for single family detached housing.

Austin Tunnell

Which is crazy to not that these laws get created and everything just flows down from there from what a few people from a law that happened 50 years ago, 70 years ago, and then no one questions it. It's just pretty crazy.

Mike Hathorne

Well, I mean, in defense of where we are, the way things were set up actually matched up very well with what the needs were. But what has not happened is things have not stayed in touch with how things have shifted and changed over time. We've continued to do the same thing because we've built this commoditized system for delivering housing. without recognition of who we should be building housing for.

Austin Tunnell

I like how you say that because we do do it very efficiently. I think this is one of the things that stuck out to me in the book was this idea of what you just said, even like what we were doing actually did make sense in many ways. And we could say, Hey, well, you could still do the suburbs better, blah, blah, blah. But I mean, generally speaking, you know, Hey, there was a good argument for that, but now there is no longer a good argument for that. And this sense of inevitability that I got from reading the book where, you know, I've

Mike Hathorne

No, but we're still doing it.

Austin Tunnell

I recognize some of these statistics. So I kind of have a very broad perspective where I'm like, Hey, I know there's, you know, a bit of a mismatch, but I also land on the heavy of human experience side. And how do we build neighborhoods that are life giving and intergenerational and all of these things from human experience. what reading this book, like it's like two things there's, there's a, there's a cultural people first argument, but then there's also just like the, inevitability and the economic argument, even the Business argument. You know, I wish like when I was reading your book, I'm like, I want to put this book in front of every developer, builder and policy maker I know. And one of the reasons I want to put in front of them is, is it's cause it's like what 80, 80 something pages, 90 pages. You can read it in a few hours. It's not longer than it needs to be, but, it makes the case just so clearly. Like I kept, I have so many underlines cause you're throwing so many statistics, but it's not like reading statistics where it's like mind numbing. It's, it's framed within an argument.

Mike Hathorne

It's an- Yeah.

Austin Tunnell

that, that like, isn't, it, it's also about the human experience and all these things we need to change, but like literally the numbers, the math, the statistics insist on it.

Mike Hathorne

Yeah, it's not about what my personal preferences are. I mean, I do have personal preferences in terms of neighborhood and community and housing. know, fortunately, I mean, and the reason that I chased this stuff was frankly in part because of what I know that I want. as a Gen Xer and my inability in places to be able to get it. I experienced this back, I moved to Phoenix, Arizona in 2000 and naively thought that I would be able to go to Phoenix and find a townhome for my small family. You couldn't find a townhome anywhere. I mean, they just didn't exist. And I was like, I don't understand. I don't understand. So as part of answering these questions, one quick story. mean, the reason this book came to be was me feeling compelled to write my own Jerry Maguire manifesto. because I was working for a home builder that thought they wanted to be a T and D builder. And they hired me to help with that process. And I figured out pretty quickly they hadn't done enough due diligence to understand what was going on relative to this project they were buying into. So I tried to do the due diligence forum and help them to try and help them graphs. that what they had in front of them was an opportunity rather than a burden. Because their business model was based on the old system, the commoditized system of delivering widgets, basically. And so this was a means to say, look, here's what's going on. You need to grasp what is going on in the marketplace.

Mike Hathorne

And if you grasp it and you're willing to make the effort, you are going to be out in front of this and be the ones leading as opposed to following. Cause there's market for both. But the problem is, that the, that the majority of the system is intended to deliver the suburban single family detached home. It is what's leading and, and it's. It's what's causing the misalignment in the system.

Austin Tunnell

You've brought up, you you talk about in your book, I think it's the, the zoning, the cultural, the financial, and, I'm blanking on the fourth one. kind of like issues that are shaping, shaping a certain direction. Can you unpack that, that some, like most people are familiar with, with zoning. I think especially listening to this podcast, but also the financial and cultural, incentives that have pushed us in a certain way over the past 70 years.

Mike Hathorne

Well, I mean, the way that I break it down is, you know, we have to understand that all of this stems from a business model. And so in order to fix it, you've got to, with anything, you have to show that there's an available market for it. That clearly, that's very easy to do. I mean, you can, the National Association of Realtors does consumer surveys that and consistently have shown that the market to do what the book talks about exists. It's there. yeah.

Austin Tunnell

Yeah. A recent one on that. I just interrupt for a second? Cause I was just putting this in something, this exact survey you're talking about from the association of realtors. was 91%. I think it was just this year. Maybe it was just a few months ago, 91 % of Jen Z wants to live in a walkable neighborhood. think it's like 86 % of millennials, which is me. And then, but then what's even more surprising is like even, can't remember what Jen Xers and boomers were, but like They were way over 50 % that are saying responding and service. They want to live in a more walkable connected place and they would be willing to pay more for it.

Mike Hathorne

Yeah.

Mike Hathorne

Yeah. And, you know, so you got to have the market. The market is there within the, within the realm of, of development. And this is, this is something that's important to understand about the development world in terms of business is it is constrained very differently than other sort of markets. You know, The technology industry, they don't have rules that say what kind of software you can develop and how much of it, but that's what occurs within the real estate development industry. We have rules that tell us what we can and can't do and how much of what we can and can't do. So you've got to be able to build it. You've got to have a market for it. You've got to be able to finance it. The financing, in my opinion, is probably the easier of the two to overcome as it pertains to policy and financing. Because the financing, if the market's there, the financing will respond. It does it does take time to adjust though they they do have to go through some growing pains because their their system for for executing mortgages is based similarly to To that to the housing market in terms of looking backwards and it's very easy to finance something if you've got 20 comparables But then when you start to craft a neighborhood where the housing is mixed, you've got mixed use, it's a different animal. So how do you overcome the hurdle, for example, of having comparables in the market in order to lend money? Because their rules say, you've got to justify the lending.

Mike Hathorne

And the justification comes from looking backwards at other homes that have sold that are close to, if not the exact same as the subject property.

Austin Tunnell

It's interesting that real estate works literally almost exactly opposite of say the technology industry or venture capital in that real estate, the financing mechanisms of it and the capital that's driving a lot of it. As you're saying, it's based on comps and that's based on appraisals and things like that. So it's very hard to do something different or new or kind of get out of the box because If you don't have comps of like, here's exactly what this rented for, therefore we can rent it for this. You're not going to, it's very difficult to get it funded. And so it's, it's actually, and I agree that it is totally possible to ship, but it's still quite hard to shift. But it is also a weird mindset because, especially in the U S we just thought of as very like innovative. and I just remember for some reason, the real estate industry reminds me of, I, cause I used to kind of complain about this.

Mike Hathorne

Yeah. Yeah.

Austin Tunnell

I spent two years in the Peace Corps in Uganda from like in 2013. And you you, you, you, look at the culture and, you start appreciating things about that culture, things about America. But one of the things I recognized there was, uh, entrepreneurship was not really encouraged. You know, if someone were to get wealthy within the family, like there would be envy between there, all of these kinds of like barriers. But another strange thing was there were these little tortillas they would make, like they would call them chipati little tortillas and they would line them up, in a market or on a bus stop or whatever. And there would be so much opportunity to do something different, but they would just look and say, that guy's making money, making chipati. I'm going to literally put a stove right next, literally right next to them, make the same chipotti. And then there was like 50 of them, you know, versus like you just differentiate. There's actually a lot of opportunity. It's hard in real estate in the U S because unlike venture capital, you're not going to 100 times your money. You know, VCs kind of like are used to taking risks and 90 of them fail. And then a couple of them, you know, skyrocket, but at the same time, It seems like there needs to be some real adjustments and there is a real business case as you're saying, and money to be made, though I do think it is tied a little bit to a longer term view than, let's build something. We know what the leases are going to be, or at least say we know, and we're going to exit in five years, especially when you are doing something new because you are setting comps. And then because your place making, you know, there's this, almost like the MVP of minimum viable place and starting off is really, really, really hard when you're placemaking, when you're just building suburban houses, it's kind of like, whatever, you got a street, who cares? know, but you know, placemaking things are just a little bit tighter, more complex. And so you need to be able to grow it large enough to kind of feel like a place. And my example is even Wheeler district where I live and where we met for dinner when I was building here a few years ago and it was just starting.

Mike Hathorne

Yeah.

Mike Hathorne

Yeah.

Austin Tunnell

I didn't want to live here yet. We were building here and I had just come from Carlton landing and it was being built. I was like, I don't want to live in a construction zone when there's like two streets, you know, but literally three years later, it's now 2026 and there's 300 homes and another few and apartments in this wonderful little like neighborhood center with multiple restaurants and coffee shops and stuff. And it feels amazing to live here now. And even though it's only 30 something acres into 150 acre development, I don't feel like I'm in a construction zone. Like it's hit that MVP.

Mike Hathorne

Yeah.

Austin Tunnell

And so like from a developer perspective, it takes in my mind a little bit longer mindset to say, Hey, we're going to have to like, you know, we might have to sell some things to have some houses, but how can we hold onto some commercial longer term where the rents aren't necessarily going to make sense day one, but five years from now, seven years from now, 10 years from now. I don't know. It's just a different way of thinking. I think a little bit is that, is that your experience or do you agree or disagree or see it differently?

Mike Hathorne

Yeah. Absolutely. No, no. Yeah, my experience mirrors that. And because it takes more time, it takes more attention, you've got to be somebody that's willing to curate something as opposed to just spitting out widgets. Not everybody's going to do it. And frankly, that's that also contributes to being part of the problem on the market side of things. You know, you would, you would, when you, when you look at the need and I don't, I don't, I don't talk about this in the book because it wasn't, it wasn't part of the argument I was trying to make. But when you look at, let's say, let's say there weren't constraints. and things could free flow, could make corrections pretty quickly. But as you understand, when you're in the development business, the feedback loops are extremely long. They're not short and quick. And to deliver what the market actually needs is gonna take time as the market continues to shift. And, but when somebody is able to deliver because of a lack of supply, demand is high and it, creates a premium that, forces a lot of people out of the opportunity to plug in, uh, who, know, that we're, we're trying to meet needs for people that can't plug in because, because of that constraint in supply and demand. Um,

Mike Hathorne

You know, it's gonna, I don't know how to solve that problem because I mean, all I'm trying to do is say, look, people, there is a huge opportunity here. Let's, you know, if we can attack it together, get more people on the ground, produce more, more supply to meet the demand, then we can start to balance, balance the scales. And some of the problems of affordability that that exist when you're looking at the millennials in Gen Z who are trying to break into the housing market. And their opportunities to do so are very constrained, not just because there isn't housing to meet their needs, it's that anything that might meet their needs is out of their ability to acquire. So this is a... It's a pretty complex problem that we're trying to solve, hopefully folks will understand that there is a mountain of opportunity and it's supported by facts. It's not something that's, like I said, it's not something that it's what Mike wants. It's very supportable from any of a number of sources.

Austin Tunnell

So now that we've kind of laid out a little bit of the math and this inevitability issue that we're talking about of, what has the supply been and it used to match demand, no longer matches demand. What are you seeing in terms of kind of the new demographics? What would be a supply that matches the demographics better? As in, what do people want? Cause you're a researcher, you look at statistics. I'm sure you talk to lots of people. You know, we mentioned the, the walkable neighborhood, but that's kind of a vague term that I mentioned. Like how would you shift supply to meet kind of current demands and also current demands as things continue to shift over the next 50 years.

Mike Hathorne

Well, I'll give you, I'll just give you a real life example, something that I've been working on since my move to Arkansas. I'm working on a project, you know, 230 plus acre master plan that will be traditional neighborhood, human scale, walkable mixed use, mixed residential, because that's... That's what the folks I work with believe in. One of the things that they did out of the chute before we even started getting into the design portion of the project was, they did a demographic market study to understand what the segments in the market within Northwest Arkansas, one... In terms of total, how much of the market in Arkansas would be supportive of this development style and of those that are supportive? What is, guess the, the, the, what are their market segments relative to housing so that the programming of the community can be reflective of what the market will actually bear? Fortunately, we don't have the, we don't necessarily have the zoning issue that we have to fight the zoning. The zoning will allow us, it was already there set up to allow us to deliver what it is that we do. It was a function of looking at the programming and then building that programming into the system for delivery, which also includes a mixed use component. I did hit on that in the book in terms of the idea that that daily needs should be part of the amenity package within a walkable community. And you can speak to this living in Wheeler District. Your opportunity of being able to connect with things that are tied to your household and do it without getting in the car. You can choose whether to get in the car or not.

Mike Hathorne

which is something that most people don't have. That is also part of what it is that we both want and need to deliver in this community. I had the good fortune of living in a community in Arizona called Verado, which is west of Phoenix in a town called Buckeye. And I lived... two blocks from a small grocery store and had the ability of being able to hand my 10 and eight year old daughters at the time some money and say, will you go get us some milk? Will you go get us some bread? mean, how many kids get that opportunity? mean, it's, know, free range kids are something that we need to be thinking about as.

Austin Tunnell

Can't beat that.

Mike Hathorne

in terms of the way that you're talking in terms of delivering dignity within the community building process. We have to account for that. We need to do better. And part of that is kind of above and beyond what the book covers, but it's something that I know you and I share in terms of the stewardship belief that that we both buy into in terms of what we're doing professionally. Yeah, we can do a lot better and we should.

Austin Tunnell

I've another thing that you talked about that, that I think, you know, as we start talking a little bit more about what does it actually look like, you know, I hadn't really thought about this before, but when you're selling a suburban subdivision with monolithic housing, the only thing you really kind of can sell as a feature is luxury and exclusiveness in a lot of ways. But I think you said, I can't remember, you compared, you're like the new connectedness is the new luxury as in, know, historically, like you would see things marketed as luxury, this luxury that I mean, it's just, you'd see luxury in everything. And, that kind of like the new version of that of what people want is connectedness. and, and, and I love that you said, the American housing market has sold an illusion of connection through amenities as in the market maybe has like recognized it a little bit that like people are looking for connectedness.

Mike Hathorne

Yeah.

Austin Tunnell

And so like the five over one apartment buildings, they put in like a common area or a gym, but that's not necessarily actual connection or community.

Mike Hathorne

No, and it's fairly artificial when you think about it. mean, of the importance of the mixed use in a community, for example, in terms of addressing daily needs is to create help in creating a healthy social environment. Having those opportunities of bumping into a neighbor informally, either, even something as simple as picking up your mail. You know, you're in the store grabbing a loaf of bread and you know, hey, Stan, how's it going? You know, how's your, yeah, how's your March Madness bracket going? Yeah.

Austin Tunnell

happens to us all the time. Now that we got community mailbox, little, I call them like little delights, you know, like where the quality of your daily life isn't like the one big thing that maybe you were looking forward to or not. And a lot of days there's nothing to really to look forward to. It's like, you know, Monday through Friday's work. But if you can have lots of little moments during your day, might be a minute, might be five minutes where you have that kind of connection, a little bit of life around you. And that's something I've been thinking about because we were, and you said this, but

Mike Hathorne

Yeah.

Austin Tunnell

Uh, was it Friday? I think it was last Friday. Um, not even Friday. was during the week, Wednesday, my, my wife and I and the kid, was just like, the kids were wild at home. I came home. She looked like exhausted in her eyes and I was exhausted. And it was like, let's just go over to taco nation. And, and so we just, you know, walk with our kids over the kids are outside and we did not actually talk to a lot of times we do, you know, maybe you see someone we didn't talk to a soul, but it was beautiful weather out. And there was literally just people out kids, you know, running around and it was just life. And I literally told my wife, I was like, you know, there's just something life giving about being around life. Like I think it's just hardwired into our DNA. Even if you're an introvert, my wife's an introvert. It's not like we're just, you know, hey, talking to people. We were just hanging out as a family, but life's happening around us. There's vibrancy, there's people there's and then having like kids laughter even. It's just like, there's something about that.

Mike Hathorne

Yeah.

Austin Tunnell

That's, that's really wonderful. And that was the other quote I wrote down was the next generation of residents isn't looking for luxury. They're looking for life. And I mean, I think you're spot on. mean, that's what you're living in right now. I mean, you're in a one bedroom apartment. It's not luxury. and maybe you want something a little bit bigger, but you could go out and find a nicer, bigger house, for the same price maybe, but

Mike Hathorne

Yeah. No, it's nes-

Mike Hathorne

Well, know, you know, taking it to what I'm living with right now, you know, what I feel an obligation to understand what it is that we're doing. It's been a long time since I've been in a space that small. And yet here's an opportunity to live in that type of a space and understand it. But then, recognizing where that space is, it's within a, it's within a traditional neighborhood. I can walk around a block and there's at least a half dozen housing types just on my little loop walk. There's mixed use, there's jobs in the neighborhood, there's a law firm that sits above a coffee shop and a pizzeria. It exists in this little tiny kernel of a neighborhood. that's gonna continue to grow and blossom and become even richer in terms of its experience for the collective whole of the neighborhood. My wife and I talked a lot about what we wanted to do in making this move and where we wanted to live. And we looked and we looked and we could live differently than in a one bedroom apartment very easily, but we would be giving up the other portions of what Johnson Square is. That type of an experience is the exception rather than the rule. And hopefully that will change. I shouldn't say hopefully, I have a lot of hope in terms of Northwest Arkansas. they're doing a lot of things to prime the pump. And so I feel like I've come to a place that's ripe and ready and I'm working for a developer that is extremely well positioned to be part of that movement in terms of making change. I get to participate. I mean, what a huge, huge opportunity.

Austin Tunnell

You talk about how, you know, these, these types of places are even more kind of like resilient and things like that. And something that I had never heard of before. You. Studied, know, you were in Utah for a little bit and you studied some of the LDS wards and communities around. And I think you described it something of like within the communities that were too monolithic in their housing types would not do very well over 20 or 30 year timeframe. But I didn't realize like, you talked about how, how LDS communities work in terms of volunteer and supporting and stuff. I thought that was a really interesting study and taken actually fairly applicable outside of, you know, LDS community stuff. Can you talk a little bit about that?

Mike Hathorne

Yeah, well, I think the important thing to realize with the study is that it's not about religion. It's about what makes a community work. And at the time, being part of that process, part of the research and the study of that, I had availability to the information that allowed me to to look at these LDS wards or congregations in isolation. because along Utah's Wasatch Front, these wards are, they can be basically the size of a neighborhood in a lot of instances. We were able to compare and contrast the relationship of the housing to those that lived in the housing. So it was, it's that housing household type relationship. And from a, a, LDS perspective, part of what they try to do with an LDS ward is they try to balance the, the, the need to both provide welfare and in relation to those that need welfare. The LDS community does a very, very good job of taking care of the folks that live within a ward boundary, regardless of religion. But what happens when the housing is homogenous is you will often have an oversupply of those that have the ability to provide. versus those that need it. And then you'll find the flip side where the ward is made up just almost exclusively of those that need help and assistance, but there's nobody within the ward to be able to give it. And that was part of the argument that I was trying to make at that point in time with the study. part of, like I said at the outset, part of...

Mike Hathorne

the interest and the value in sharing it in the book is to really tie to what it means when you have a diverse range of housing within a neighborhood and the ability to give and receive. Because life happens. I think we all have experiences where someone in the neighborhood might have a particular need, a family member has died or somebody's car breaks down. if you don't have people around you that are maybe in a different position in life to be able to help, or you're in a position to help, I've got a whole slew of examples of this in my own life, as I'm sure you do as well. When culture is homogenous because the housing doesn't provide diversity, you end up with a situation where the neighborhood demographically will, it'll crash because the housing doesn't have the ability, or I shouldn't say the housing. the neighborhood because of the lack of diversity doesn't have the ability to regenerate itself. When the housing is mixed and as life stages change, you have the ability to kind of move up and down and to flow without the need of having to up and leave. If you're in a neighborhood where all the housing is the same, and you have your needs change, either you, you know, there's, you know, maybe a couple kids come into the household or you become an empty nester. What do you do? You have to leave what you otherwise have been in for a long period of time and you have to start over.

Mike Hathorne

So I think there's healthy lessons to understand the value as it pertains to that study. And I'm probably not explaining it as well as I should. But I think it's a very important reflection of what it means after the neighborhood is completely put together. Because once development has occurred, life happens. And it's a function of you know, what level of human benefit are you able to provide by what it is that you've created? That's the stewardship that you and I share.

Austin Tunnell

It's, so interesting just that, you know, the past, I don't know, 70 years in the U S really is so detached from how humans have lived for like all of human history. What you're talking about here, you know, I think people often sometimes think community and like sometimes it's a good word, but then sometimes it sounds a little scary. Like maybe it means commune or something like that, but people supporting each other and it's a little scary or something, but like, and sure, there are actually communities like, like that, that are more commune. type and I actually not that interested in being a part of one of those. I, but I do want to be part of a community. I, this is my first time kind of saying this. I haven't really articulated this before, but I do wonder, and I'm sure there's all, I don't have any data for this, but you know, in society, there's always going to be people that need help that fall through the cracks, all kinds of things at different stages of life. And when we just literally do not have communities because there's just physical barriers to even

Mike Hathorne

Yeah.

Austin Tunnell

having the potential of it. Well, something has to fill the gap and that something tends to be government, you know, and, and I'm not saying there shouldn't be government services that do certain things, but the reason, maybe one of the reasons that government is just incessantly getting bigger and bigger and insisting and spending more money is

Mike Hathorne

Yeah.

Austin Tunnell

No one has even the ability to live in community or take care of another person or get back on their feet, in, in large ways, because it's downstream of the hardware that we built. And then you just can't run very good software off of that. And, and there's all kinds of repercussions that are really hard to, you know, might not be super obvious.

Mike Hathorne

Yeah. Yeah. mean, that's part of, mean, one of the consequences of isolation is, you you basically have to position government to pick up the slack because, you know, you don't have the ability at the lower end to look up and say, you know, I need help and support. I reference, in my book, I reference a Raj Chetty. study, Raj Chetty is a Harvard professor that does a lot of work to study the idea of economic connectedness. And he did a study using Facebook data, studies 73 million Facebook users to look at their relationships with folks to try and identify the ability of someone at a lower socioeconomic scale to have access to and touch somebody at a higher socioeconomic scale. And one of the outcomes of that study was recognizing that when somebody has that type of a relationship, their ability to earn money over their lifetime increases by as much as 20%.

Austin Tunnell

Yeah.

Mike Hathorne

simply through those connections. And if you aren't able to operate in certain circles and be able to ask somebody for a job reference or be able to find a job through word of mouth or, you know, I... I had a neighbor show up on my front porch one day, said, I heard your washer isn't working. Can I help you fix it? And, you know, having, I had another neighbor, I reference this quite often. I had another neighbor who owned an airplane. He could have lived anywhere in the Salt Lake Valley, which is where I was at the time. And he was three doors down from me in a much larger house than I lived in. But knowing that he had a plane and I wanted to get some, and this was before Google Earth was what it has become. I wanted some very real time aerial photography and asked him if he'd take me up. said, when do you wanna go?

Austin Tunnell

Wow.

Mike Hathorne

I mean, you know, very small things. I mean, that's not a life changing thing, but it's a great example of, you know, I'm a target guy, he's a Nordstrom guy and I had access to him. He wasn't behind a gate. He was three doors down for me.

Austin Tunnell

Right?

Austin Tunnell

Well, I actually do have a life changing thing. I hadn't thought of it until you said this, but literally my first investor, when I was making $12 an hour laying brick had no money. Obviously the spec in 2015, I lived in his garage apart. moved into his garage apartment, had no idea who this guy was. You know, literally just moved into his garage apartment. He was my landlord. He ended up being my first investor that started building culture. Like that cannot happen. If you don't have that kind of mix, mean, I mean, just literally it is so wildly, different and kind of another cool example that I hadn't thought to bring up, but my parents are now they've been 30 minutes away and kind of a larger house. and they're not from Oklahoma, but they moved here when me and my sister moved here, they're moving to Wheeler next month and one of the condo buildings. And I thought they would never live in a condo. Like I was like, they would never do this except, you know, it's only like a six.

Mike Hathorne

No, yeah.

Mike Hathorne

Aw, man.

Austin Tunnell

a unit condo and then it's a single floor because it's hard to do, you know, a home with the master downstairs where you, when you've got smaller lots. And so like, they love the idea and they're like, no more yard maintenance, no more this. And then now it's perfect because I don't want my parents living in my house. I probably don't even want them living in my ADU, but literally a block and a half away. I'm so happy. My wife is so happy. I think they're going to love it. And like, how cool is that? And then my sister is talking about moving here and they would get a little bit bigger of a house than, than we can afford.

Mike Hathorne

Yeah.

Mike Hathorne

Yeah.

Austin Tunnell

And just, can't do that. You know, like if you're trying to cram that together with people that have different needs and just kind of the magic that, you know, it's just, really is, it really is amazing.

Mike Hathorne

no. No.

Mike Hathorne

Yeah, I just posted an article on LinkedIn this morning about that very topic of what we've done in terms of our neighborhoods is not, I'm not saying this very well, but it's not allowing family to connect the way that yours is within the same neighborhood because socioeconomically it would mean it, you know, outside of the Wheeler district, all of you've got to find housing in different pods, as opposed to down the street or around the corner like you like you're, you're gonna have. Yeah.

Austin Tunnell

And 30 minutes away is a long ways. That sounds close and like a lot of cities, like only 30 minutes away. We saw them maybe once a month. You know what I mean? Because we're busy. We got young kids and now I'll see them probably four to five times a week. It's not like dinner at the house every night, but just like out and about, they might take the kids for now. I'll see them out of the, like, and I'm just looking forward to that. And anyway, man, well, and I'd love to end with a little bit of just kind of a

Mike Hathorne

Outer out trip, yeah. Yep.

Mike Hathorne

that's awesome.

Austin Tunnell

I even feel inspired about kind of your story. Like I kind of got to meet you in this transition stage. You just written this book and you know, they're from a point of a little bit of, I don't know, frustration is the right word, but landing where you are around kind of like your tribe. I have a lot of people reach out, not a lot, but I have a number of people reach out fairly regularly and like, how do I, how do I get into this? How do I, you know, be part of this? And, and I think it's really cool that you've kind of like found a tribe that you're just like, my goodness. just, maybe you could just share a little bit about that of like what it feels like to, to kind of find your people, even if it's a little bit later in life and you've kind of had to wander in the desert for a little bit, but it's not like any of that was a waste or something at all, you know, led you to here. And I don't mean it was horrible before now or like that, but maybe just talk about that. Cause I find it just a really cool story.

Mike Hathorne

No!

Mike Hathorne

Well, mean, the transition was, you know, this experience that I was having in Utah with this home builder. and then the process of writing this book and then trying to, trying to determine, okay, well, what, is my next move? Cause this clearly is not working. These guys, these guys don't get it. It's not something that they want to do. It's not something that they're passionate about. I don't want to be a part of what the. what they normally do. So we've got to part ways. Where do I go? So Ward Davis is one of the principals of High Street here in Fayetteville, Arkansas. And I've known Ward for 15 years. We met both as members of the National Town Builders Association. And we've crossed paths over those 15 years a number of times. A mutual friend of the two of us, I'd been working with this mutual friend as a consultant to try and help me convince this home builder of what it was that the opportunity that they had with this project. He came out to Utah and we did this work and as we're doing it, we're commiserating on, okay, well, where's this gonna go, Mike? And great friend of mine's name's Daniel Hintz. He said, Mike, he says, you need to move to Northwest Arkansas. That's what you need to do. And he went through this process of selling Northwest Arkansas to me. Mike is the highest concentration of CNU members in the United States. Mike, you've got developers in the Northwest Arkansas market that are that are already doing it. You know Ward, Ward's doing this. He said, I think Ward might be looking for somebody. He said, I'll ping him when I get back to Northwest Arkansas. So he pings him. Ward calls me. have, you know, it probably, it was probably about a six week on and off again discussion to, you know, almost like dating, speed dating. Is this gonna work?

Mike Hathorne

Are you willing to relocate to Northwest Arkansas? And I really had to explore for myself, am I willing to pack up, move halfway across the country? And honestly, what it came to Austin was the book actually forced me to look into the mirror and say, Mike, what are you willing to do? You've published this book. you've made your point very clear in terms of what you believe in and what the system should be doing. There's a potential opportunity here. Shouldn't you be chasing this sucker? And I'm like, well, yes indeed. I should be chasing this. And I mean, it happened so fast. And... I mean, even stopping in Oklahoma City to have dinner with you, I was on day two of driving to Fayetteville and we're just going, what is going on here? This is crazy. And I came alone with just a car full of stuff and move into a one bedroom apartment with a mattress and two bar stools. was what I started with. Austin Tunnell (01:00:56.128) Yeah. Austin Tunnell (01:01:05.227) Yeah. Austin Tunnell (01:01:12.68) I love it. It's just an adventure. know what I mean? But well. Mike Hathorne (01:01:16.933) But this is a very right place. Shameless plug, CNU 34 is gonna be in Northwest Arkansas in May, May 12th through the 16th. And I'm excited because it is really gonna shed a light on what is happening here and the example that is being set and what can be learned. from what has already been going on to kind of set the table for future growth in Northwest Arkansas. It's pretty exciting. Austin Tunnell (01:01:56.161) Well, that's great. I'm excited for you. It's been great to talk to you. How can people, you know, find your book? I got mine off Amazon. Is that the best place? And you sent me a copy. So I have two books actually. I'll give one to someone that, that needs it. how can people follow you as well? Mike Hathorne (01:02:04.943) That it's well, it's, yeah, the book is I self published the book. So you can only get it on Amazon. you know, the publishing a book is a whole separate topic, but, anyways, it's, it's only on Amazon. I'm, I'm on LinkedIn. I'm on sub stack. Those are the places I I've consistently tried to continue to write to For my own benefit as much as sharing it with anybody else. It's it's trying to further Further my own education and knowledge of things jumping down rabbit holes Seeing some video and chasing it and trying to understand it using using the book as a lens to test to say, you know, the book says this, you know, this other thing says that. If I look at them together, what does it say? So I'm very active in both arenas, LinkedIn and Substack, to continue to write. And I do flirt with the idea of another book to talk about how do you deliver the great housing reversal. Austin Tunnell (01:03:29.526) Yeah. I'd love to see it. Mike Hathorne (01:03:32.847) There's a lot that would have to go into that too, but I got a lot on my plate right now, so that's probably a ways off. Austin Tunnell (01:03:40.384) Yeah. Yeah. Well, Mike, look forward to visiting and visiting again, especially coming to Arkansas. I'll have to reach out and I just got to get there and see it because it just sounds incredible. I know people there. know you there. so, well, thanks so much for coming on and best of luck with your 230 acre project and the transition and, and, and all of that. Mike Hathorne (01:03:50.02) Yeah. Mike Hathorne (01:04:00.089) Hey. Yeah. Thank you for the platform. for the discussion, I love talking about this stuff and I love talking about with others that are equally as passionate about these things. So thank you. Austin Tunnell (01:04:20.147) All right, Mike, bye. Mike Hathorne (01:04:22.661) Take care. Austin Tunnell (01:04:24.909) All right. We'll consider that done. was just, forgot to say at the beginning of the podcast, I'll click stop and it'll count down to five and then we can keep talking for a second. Mike Hathorne (01:04:32.529) Yeah.