Douglas Yearley: Sure. So Mike, if you’d ask me — so if the rate goes from 7.38 to 6.25, these buyers are going to be rolling back in. I honestly would have told you, yes, I don’t know. I don’t think — I don’t know if that’s enough. And they did. And then when you asked me, Doug, in a 2-week period of time when the REITs go from 6.25 to 6.75, what’s that going to do? I tell you the truth. I’d be worried. And it’s not that I’m not worried. You’re right, it’s only 1 week. We’ve had rates go up now for 2 weeks, and we’ve had 2 good weeks with this last week being the better of the 2. Now the prior week was a Super Bowl week which isn’t — historically isn’t quite as strong as the week following the Super Bowl, which is what we’re now in.
So it’s too early to be running around here with a lot of high 5s. I get that. But it is very encouraging that buyers came back out at 6.25. It didn’t take 5.5. It didn’t take 4.99. It certainly didn’t take the old — the good old days of a year ago of 3. That was really encouraging, and it’s even more encouraging with a very short time frame data point that as those rates move from that 6.25 to 6.75 they’re still out. Traffic is really good. Web activity is really good. We have continued to create urgency in the sales center because we are dropping incentives. We are raising prices and the buyers are out. But I’m not going to sit here and tell you that that we’re out of the woods. We understand the volatility to rates. We understand the clouds over the economy.
They haven’t all cleared yet. It’s looking better inflation is coming down. The Fed seems to be doing their job, but their stock markets until the last few weeks have performed well. Our buyers are less impacted by rates for all the reasons we’ve been talking about back to the top total used to talk about it 25 years ago. But we’re encouraged by the recent activity. That’s the best I can tell you, and it’s happening in the plus rate environment. Remember that the 10-year — the spread from the 10-year to the 30 years, 300 points. Historically, it runs in the high So if that spread does tighten to more historical norms, we’re going to be in good shape. And the buyer doesn’t have a mentality of I’m locked into this 6.5 rate for 30 years. Refi happens all the time.
Our buyers are sophisticated. Most of them have owned homes before. Almost all of them have refied in their life. They are now for $2,000, $3,000, $4,000 a they can get out of a higher rate and jump into a low rate, and there’s also that mentality. They want to move on with their lives. They took 8 months off. They’re now seeing some urgency, and they’re back. And I’m not saying rates aren’t important, and they don’t impact affordability, they do. But for our business model, it is not the #1 thing.
Michael Rehaut: Right. No, no, no. I appreciate those comments, Doug. And certainly, a lot of it makes sense, particularly on the refi side. I guess, secondly, just wanted to make sure I heard right from the prior question. the decline in average incentives going from 8 to currently 6.5. I just missed it that was driven by actual outright incentive reductions or the cost of the mortgage rate buydowns being less expensive and more broadly — sorry?
Douglas Yearley: It’s incentives. It’s not a difference buydown rate.
