Dream Finders Homes Chairman and CEO Patrick Zalupski joins Yahoo Finance Live to discuss housing market demands, interest rate hikes, and how homebuyers are responding to mortgage rate hikes.

Video Transcript

ADAM SHAPIRO: Let's bring into the stream Dream Finders Homes chairman and CEO Patrick Zalupski. And it's good to have you here. Your stock went public a year ago. You are trading higher today. And you are in-- what markets are you building in? I saw Denver, I think Jacksonville, Orlando, and Washington DC. Where else?

PATRICK ZALUPSKI: Hi, thanks for having me, Adam. That's correct. We're in the predominantly the southeast in the markets you identified as well as Texas. We completed a large acquisition in the four major Texas markets last year. And so that positions us well in one of the largest housing markets in the country.

EMILY MCCORMICK: Patrick, this is Emily here. Dream Finders Homes, of course, your company is one that creates, builds, and sells homes in these high growth markets. Can you tell us about where you're seeing some of the most demand and how these trends have changed over the course of the past 12 months?

PATRICK ZALUPSKI: I mean, we're seeing steady demand across all of our markets now. As you guys identified, we're in what we believe to be high growth southeastern markets, including Texas and Colorado. But it's been steady. We continue to remain bullish on housing. We think the cost inflation and some of the sort of tempered buying has been maybe a positive for homebuilding just to slow down the rapid appreciation we saw in the second quarter and third quarter of 2021.

So we're looking for a nice steady market where we can continue to take market share. And we sort of see that as the outlook over the next several years.

ADAM SHAPIRO: Remove the shade from the eyes of those of us who don't know your industry as well, especially when you look at millennials who might be household formation. Which is going to be the bigger impact on them? Is it the price of the new home? Because we know that lumber prices, commodity prices going up? Or is it the interest rate? Because when you get to be someone who's Gen X, 3 and 1/2% interest is still in my mind, wow. Because we were alive during those 15% interest rates.

PATRICK ZALUPSKI: That's right. To your point, rates are still historically low. I think it all factors in. Everything is a cost input. And it's sort of the output is what kind a buyer afford. And so if rates go up, then maybe there's some adjustments in the buyer's decision where they have to be in maybe a few less upgrades in their home, a few less bells and whistles, or they have to be in a different community than they were expecting. Maybe they have to go a little further out to get a more affordable price versus an infill location.

So all those variables go into the equation. And that's where Dream Finders we think has really strived to be successful where we want to provide value no matter what what the circumstances are. So our goal the other day is just to provide great value to our customers. And so if rates are going up, we have to take that into effect. Or if costs are going up, we have to take that into effect. So it could mean a smaller home, or as I said, you may have to drive a little further out to maybe a little less desirable location.

EMILY MCCORMICK: For those who are considering perhaps building their own home rather than purchasing an existing home, what do you think the main factors are that some buyers should be considering when making that decision? And where have you seen people really falling in terms of whether to build their own home or purchase one that's already existing over the past year, just given the current market environment?

PATRICK ZALUPSKI: Sure. Well clearly, the resale market is significantly larger than the new construction. It's probably 80% to 85% of all homes sold every year are resale versus new construction. So we're a smaller segment of that. But if there's a customer out there that wants to design it the way they want to have it, they want to pick out the options they want, we'll offer a high degree of customization, structural options, air quality systems. So there's a lot of benefits in technology that exists now in new construction that you just won't be able to achieve through a resale home in a lot of cases.

So those are the benefits that we want to tout. But we believe in home ownership. So whether it's new construction or a resale, we like to see a robust housing market. And we want to grow the overall pie.

EMILY MCCORMICK: All right, we'll leave it there for now. Patrick Zalupski is Dream Finders Homes chairman and CEO. And we thank you so much for your time.