Impact of Trump’s Policies On Homebuilding, MBS Supply & A Story of Bodegas Hermanos Peci?a: A Legacy of Tradition and Excellence
Nestled in the heart of Rioja Alta, Bodegas Hermanos Peci?a stands as a testament to tradition, passion, and meticulous craftsmanship. Founded in 1992 by Pedro Peci?a Crespo alongside his three children, the winery has grown from humble beginnings into one of Rioja’s most respected producers.
Pedro, a legend in the region, brought decades of experience as the vineyard manager of La Rioja Alta, one of the area’s most historic estates. His unparalleled knowledge of Rioja’s diverse microclimates and terroirs enabled him to craft a vision for wines that combine authenticity, elegance, and structure.
The Early Years and Growth
The journey began in a small winery in San Vicente de la Sonsierra, where the family initially focused on “cosechero” wines. By 1997, the winery expanded with the inauguration of a new bodega, allowing the production of white wines and aged reds such as Crianzas, Reservas, and Gran Reservas. Over the years, the estate grew to encompass 50 hectares of vineyards and cutting-edge facilities, including:
- A capacity to process 1,000,000 kilograms of grapes annually.
- 4,500 American oak barrels housed in three cellars.
- Aging spaces for up to 500,000 bottles.
- Unique gravity-fed winemaking systems designed in-house to preserve the purity of the grapes.
From the construction of employee housing and agricultural storage facilities in 2006 to the development of social and aging spaces in 2011, the Peci?a family has continually invested in innovation while honoring traditional Rioja practices.
A Rich Terroir in Rioja Alta?
The estate’s vineyards are located in the Sonsierra region, an area famed for its centuries-old winemaking traditions. The unique terroir benefits from the confluence of the Atlantic and Mediterranean climates, creating a microclimate ideal for growing exceptional grapes. The calcareous-clay soil, rich in limestone, contributes glycerin extract to the wines, enhancing their texture and volume while maintaining balanced acidity.?
With altitudes ranging from 475 to 600 meters, the vineyards enjoy diverse growing conditions. This natural variation allows for a phased harvest, beginning in early October and lasting up to 25 days, as grapes from lower elevations ripen earlier than those from higher plots. The grapes are handpicked in 15-kilogram tubs to prevent damage and premature fermentation. They are then carefully sorted to ensure only the highest quality fruit reaches the winery.
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A Portfolio of Exceptional Vineyards
The Peci?a family’s vineyards span multiple plots, each contributing unique characteristics to their wines:
- Finca Iscorta: A 50-year-old vineyard with Tempranillo, Garnacha, and Viura vines, producing intensely concentrated fruit.
- El Codo: A stunning hillside plot known for its stony soils and perfect sun exposure, yielding grapes with deep color and structure.
- Salinillas: Situated at 600 meters, this vineyard produces high-acidity fruit, ensuring freshness in the wines.
- La Veguilla: A young vineyard near the Ebro River, known for its floral aromas and vibrant acidity, perfect for youthful wines.
- Llano: A plateau at 500 meters with clay-limestone soils, producing low-yield, high-quality grapes ideal for aging.?
Each plot is farmed sustainably, with harvests and vinification carried out parcel by parcel to highlight the distinct character of the terroir.
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Traditional Winemaking Meets Innovation
At Bodegas Hermanos Peci?a, winemaking is a meticulous and reverent process. The estate exclusively uses American oak barrels, most of which are well-seasoned to ensure the wines are never overpowered by wood. Fermentation begins spontaneously with indigenous yeasts, and wines are moved using gravity-fed systems to prevent agitation and preserve their delicate structure.?
One of the winery’s defining practices is its traditional racking, or trasiego, performed every six months. This manual process involves transferring wine from barrel to barrel by gravity, separating it from lees while naturally clarifying it. This method allows the wine to breathe and develop complexity, contributing to its velvety texture and long aging potential.?
Aging exceeds the requirements set by Rioja DOCa, with Gran Reservas spending at least four years in barrels and additional years in bottles before release. This dedication to extended aging ensures that wines are both ready to drink upon release and capable of evolving beautifully in the cellar.
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The Magic of the 2014 Gran Reserva
The 2014 Gran Reserva exemplifies the Peci?a family’s commitment to excellence. Sourced from their finest vineyards, this wine spent 48 months in American oak and an additional five years in bottle. The result is a masterpiece of depth, complexity, and balance.?
On the nose, it reveals layers of dark berry fruit—blackberries, raspberries, and cherries—complemented by notes of tobacco, leather, and baking spices. The palate is silky and harmonious, with fine-grained tannins and a vibrant acidity that supports its richness. This Gran Reserva is perfect for enjoying now but promises to evolve gracefully for decades.
Despite being a relatively young winery, Bodegas Hermanos Peci?a has firmly established itself as a guardian of Rioja’s winemaking heritage. Pedro Peci?a’s dedication to preserving traditional techniques, combined with his focus on sustainable viticulture and innovative practices, ensures that the wines are a true reflection of their terroir.?
The Gran Reserva and other wines from the estate showcase the timeless appeal of Rioja—wines that are both accessible and capable of remarkable longevity. As Pedro himself might say, "The soul of our wines lies in the soil and the hands that nurture it." Whether enjoyed today or years from now, Bodegas Hermanos Peci?a’s wines offer an unparalleled journey into the heart of Rioja.
2014 Hermanos Peci?a, Rioja Gran Reserva
Rioja, Spain 2014
Impact of Trump’s Policies On Homebuilding & MBS Supply
* From the moment President Donald Trump took the oath of office for his second term, his administration wasted no time rolling out a slew of initiatives aimed at reshaping various sectors of the economy. Among the over 200 executive orders signed on his first day, many have far-reaching implications for homebuilders, a critical industry for addressing the housing supply crunch.
* These moves signal a renewed focus on housing, but they also raise questions about how the proposed policies might impact construction costs, labor availability, and material pricing in the months and years ahead.
A Housing Priority, But With Caveats
* The National Association of Homebuilders was quick to applaud the administration’s emphasis on housing. The hope is that easing federal rules could lower costs and spur a surge in home construction. Yet the optimism is tempered by the complex web of challenges homebuilders already face, as the rising cost of borrowing, sourcing materials, and securing labor means home construction remains an increasingly challenging proposition.
* While regulatory relief may help in the long term, builders continue to grapple with high interest rates, supply chain disruptions, and expensive materials. To be sure, at first glance, Trump’s housing-related executive orders suggest a desire to loosen federal regulations. Yet, much of the red tape that hampers housing construction stems from zoning laws, which are controlled at the local level.
* To be fair, while the Federal influence over these local policies is limited, it is far from being non-existent, as the Federal government can direct these policies (with various levels of success) by offering financial incentives tied to transportation or community development grants.
* And while Trump’s orders do seem to direct federal agencies to explore ways to streamline construction, the real power lies with local government, which could limit the tangible impact on housing supply.
Immigration: A Double-Edged Sword for Builders
* One of Trump’s most publicized initiatives involves a tough stance on immigration. While his latest order focuses on the southern border, future policies could include mass deportations of undocumented immigrants already in the U.S. For the construction industry, this raises significant concerns. Currently, over 32% of construction workers are immigrants, with that number climbing to over 50% in specialized trades such as roofing and drywall installation.
* We obviously have no tangible information regarding the use of undocumented immigrants in the construction business, yet plenty of anecdotal evidence, especially in TX and AZ suggest that their share is non-trivial as well.
* Needless to say that the construction industry has been struggling with labor shortages since COVID, and while the situation has been gradually improving, should immigration restrictions tighten further, builders could find it even harder and more costly to recruit workers. The geographic focus of immigration crackdowns will also matter. If raids target urban areas with less new construction, like New York or Chicago, the impact might be less acute, yet, regions like Los Angeles, which is still reeling from wildfire devastation and relies heavily on immigrant labor, could experience a significant shortage.
The Looming Tariff Threat
* Trump’s persistent rhetoric regarding tariffs on imports from Canada, Mexico, and China poses a more immediate challenge for builders. Lumber, steel, and electronics (essentials in home construction) are all at risk of becoming more expensive if new tariffs are implemented. In 2018, tariffs on Canadian lumber alone added an estimated $9,000 to the price of building a single-family home (note that is ~3,400 in Melania Meme coins).
* And the increase in material costs directly impacts home affordability, with builders passing these additional costs onto buyers, making homeownership even less attainable. While Trump’s initial proposal of a 25% tariff on Canadian and Mexican goods has yet to take effect, it signals a continuation of the trade policies that have plagued builders in recent years.
* Even creative supply chain adaptations are unlikely to provide quick relief. Transitioning to domestic suppliers for materials like lumber and steel is a long-term process and unlikely to offset the immediate price hikes from tariffs. For electronics, where domestic production is minimal, the impact of disrupted imports could be even more severe.
As usual.. Thanks for drinking and thinking with me...
Sincerely Yours,
Kirill A Krylov, CFA, PhD
Excellent breakdown of the specific impacts of policy on the construction industry. A lot has been said on this but not a lot of connections to how it could play out in distinct scenarios. Thanks for this analysis!