Fed Cuts Won't Save Housing: Crash Fears Rising

The media told you that cutting interest rates would cause the housing market to boom back. That's what we're seeing across the board. But this narrative couldn't be further from the truth. Let's dig into why that is and what is happening in real estate despite the last rate cut and the expectation of more rate cuts coming up.

So look, the Fed cuts have done a good job in propping up the stock market, scaring people into gold because they think that the government is going to try to outgrow our debt cycle. And the Fed is also still poised to cut rates in our next cycle here in October. But worries o are continuing to mount over the US data. Of course, the US government is shut down, but we will see our jobs report come out this Friday and potentially some inflation reports come down the line if the government reopens.

However, we're starting to see a lot of fear come into the marketplace because the government data is appears to be somewhat manipulated with the BLS changing hands and they're changing the methodology of some of their reporting. So, look at what happened after the last rate cut. Yes, we did see the rates come down recently, you know, all the way from 4.4 to o under 4% here on the 10-year Treasury. The reason why we quote the 10-year Treasury is because that the duration of mortgage back securities, mortgages, is often not the full 30 years.

It's usually around 10 years. And that's why the 10-year Treasury and the mortgage rates are tied together very closely. Uh but just because the rates have been dropping does not translate into more buyers buying. Why?

Because we're in this massive affordability crisis. And we'll dig into the details in this video with the charts to back it up of what we are seeing here on the ground and in the data as it pops up. So look, the Fed is on edge right now. The Fed officials discussed the risk of a housing market collapse at the meeting to cut interest rates and this is exactly what happened in 2008.

And cutting the rates down to zero did not obviously save the housing market. It just makes it more affordable for people to buy in if they are able to actually qualify and buy in. What actually needs to happen is the prices need to come down to a level where it's finally sustainable for the next wave of buyers to enter the market. So we are in a complete unsustainable market condition right now and the Fed is already discussing some sort of bailout for the housing uh market and it's kind of crazy that they think that this is going to work.

Actually, I think what would actually work is if the Fed didn't step in and buy more than$ two trillion dollars of mortgage back securities and just let interest rates be where they may. So that way the market can be a real market that's not intervened and causing all these unintended consequences like wild speculation that has driven up prices for so long. And the Fed official is divided and they see another two interest rates cuts by the end of this year. I do not believe that that will impact housing very much and it actually sometimes can actually cause rates to go up if they think if the bond market thinks that inflation will start moving um upward that could be a huge issue.

But it is great for the stock market. Stocks obviously love lower rates and the dot plot that's coming out the showing that the Fed is actually starting to to be divided across the board. Uh and the Fed is also concerned specifically about the labor market which I believe is the true reason why we are starting to see interest rates move down on a significant level is because of bad news that the labor market is weakening and obviously the labor market if you don't have a job you can't buy a house so it's not a great thing uh for the housing market and altogether so let's dig into what's happening actually on the ground right so mortgage applications yes we had this brief brief uh spike in mortgage applications mortgage application is just that does not mean that you're going to be approved for a mortgage. It just means you're doing an inquiry and trying to see if you can actually apply to be approved for a mortgage.

We saw a short spike in those in those applications as we saw the rates come down and however that again we're having a lot of issues with qualifying people and the people who are getting qualified are seeing what their monthly payments are and they're not buying. Okay, so this is like from the data it looks like great like applications are going up but when you dig into the data it's actually really bad. We're showing that we're just scraping the bottom of the barrel with FHA and VA buyers for the most part part. They have really horrible credit, usually in the 550s, 60s.

You got to work with them to get above 580. That's the standard to be able to get an FHA loan. And they have to pay a ton of insurance premium and things like this to get this type of loan. And it's difficult for them.

And they also usually aren't approved for that high of a level of house because their income's not there. So, we're seeing a lot of issues on these mortgage applications coming through. Yes, it's a great sign. We're see the demand is there for housing.

We think so and we think there'll continue to be demand for housing. But it's not a demand issue. It's an affordability issue. So just because you have people who want to buy doesn't mean they can actually buy from a financial standpoint.

Now obviously this translates through, right? You have your applications, then you have your pending sales. Pending sales are dropping. I mean the pending sales for this year and we're experiencing seasonality here in Jacksonville are down 25% from last year's pending sales.

So things are getting worse every single year. And our closed sales are 25% below 2019 levels. So, we're seeing pre-boom years type of levels already here in Florida. And it's getting worse every single month.

And that's again because of this affordability crisis. It's not just about demand and if people want to buy, it's can they buy and can they buy at the prices where they're at right now. And will the Fed stepping in help that? Absolutely not.

They're just going to push the can down the road. So, of course, all right, so we have our applications, then we have our pending sales, then you have your actual closed sales across the board. Now, we have record low closed sales across the board. We're actually in a worse situation than we were uh since the great financial crisis.

We're right here 4.05 uh 9. We had 4 million, almost as worse, I should say. However, you know, we have 20% more population than we did previously, at least in states like Florida. So, it's very incredible that we are at a lower level of of home sales.

Now, this is a this comes from the reventure and this is across the United States. But here's what's actually happening on the ground. Sales are stalling. We're grind grinding along the bottom.

People who own homes and are trying to upgrade or downgrade. They are having a really hard time because at the new interest rates and the new prices that they have to pay from when they purchased their house originally, it no longer makes sense for them to actually upsize or downsize or in some cases even relocate to family. So, we have this little lockin effect that's driving consumers to just stay put in their house longer than they have previously. Previously, it would be 8 to 10 years.

Now, we're seeing 10 to 12 years that people are staying in their house because of this lock in effect. They got that low rate. They refinanced in 2020 2021 and they're staying in that house. This is also a problem because 70% of people who sell their house then go out and buy.

So that's what's reducing the number of sales that are processing through this type of market. And you can see sales, you know, it's dropped significantly, 6 million to 4 million within a very short period of time. And of course, that's the year that we saw the interest rates from the Federal Reserve in March 2022 start to move up. And then we saw the impact.

The peak market was in October of 2022, six months later after we saw the rates go up. So, look, if you're a buyer in today's market, you have tons of leverage. You're able to negotiate with the seller. You have tons of options.

There's tons of new construction, especially in new construction. Be sure not to just in uh focus on the interest rate and get your payment to where it needs to be, but get that price beaten up, too. You need to reach out to a top agent. If you need a top agent, reach out to me.

I can put you in touch with a top agent in your market. I'm happy to assist. And if you're a seller, the clock is ticking, okay? There's more inventory coming on every single month in most markets.

And it's getting worse. The economic conditions are getting worse. There's a disconnect between Wall Street and Main Street. And frankly, Main Street is what drives housing is the majority of buyers are these retail buyers, the next generation who's trying to get in.

And they are waiting for prices to fall so they can get in at a level that just won't destroy the rest of their life. Basically in terms of paying the majority of their income to their mortgage payment which right now it's about 40% of their mortgage payment of their wages go to their mortgage payment which is really really difficult and if you're an agent look your business changed overnight you need to start changing the way that you do things at momentum realy our company here in Jacksonville we're also in Georgia as well as in Florida we talk about this every single day you have to match the intensity of the market you cannot just sit there and get run over you need to do things differently than what you were doing before. And we have all the conversations and all the questions to get to the root issue of why your business isn't growing in a very, very quick pace. So, if you want to reach out and you're an agent looking for help, shoot me an email.

I can drop my information below. But look, new homes are stacking up. So, despite all the incentives that these home sellers are doing, and you can see this is for the US South region, and we're already worse than the great financial crisis. We've we are completely overbuilt.

I mean, this chart basically puts it right out there. Um, and this is from Refinitiv, the US Census Bureau as of July 2025. I mean, it's skyrocketed. The number of new homes for sale in the South are just stacking up.

They're we're throwing incentives at people to get them into houses and they're slashing prices. And this is causing, you know, new sales to occur while the existing homeowners have to compete with the new uh the new construction. And so, it's slowing the existing home sales, which we saw on the previous chart. Now, if you're a seller, you want to look at this chart very closely, too.

But sellers are taking their house off the market. So, they'll list it on the market and then they'll withdraw it off the market after a month or two if they're unable to get the price that they want on that house. This is report comes from Compass and it's showing 42.3% of new listings are being withdrawn uh from a percentage point are being withdrawn already this year in September. So, you know, they're much higher than prior years and it's continuing to move up.

And I think what we'll see is a bunch of people going into the holidays will, you know, pull their property off the market and we're going to see a ton of new listings come in March of next year once busy season starts. So, they're either doing one thing. They're slashing their prices to get out ahead of every everybody else, which I actually think is the right way to go at this point based on long-term demographic data that we're seeing in the market, or they're just taking a property off the market. So, you have to choose as a seller, are you willing to stay put in that house, or are you willing to cut your losses and get out now and get where you want to be with your life?

But price cuts are coming. You could see here, this is data that comes from Red Fin. Uh median price decline from the peak 2022 by Metro. You can see where the pain is.

It's most of the country. And you you may be surprised to see that even in the Northeast and in the West, but you know, Florida and Texas obviously are the epicenters of the decline. Austin, Texas, and Tampa um and P Point Pagorta and those type of areas that got hit by hurricanes and things like that. But the price cuts are coming.

They're already dropping here. You can see uh in Jacksonville we're down 8%. It shows by this market. However, we're experiencing in some areas, you know, 15 to 20% if they're really if they're located next to new construction.

And if you're in phase one of new construction and you're trying to sell and you bought in 22, 23, 24, I'm sorry, that is the worst situation you could be in because you are competing against the builder on selling the rest of their phase. And that's where we believe we're going to see the majority of the pain moving forward is in those new construction communities that are absolutely just getting crushed because of the because of all the competition. Another thing to look out for if you're a seller is one in seven US home purchases are getting cancelled. Here in Jacksonville, it's actually higher.

It's more about, you know, 20 to 30%. But it says pending US home sales that fell out of contract during the month of August as a percentage of all pending sales. This is the highest since they've recorded it. This is according to Redfin.

We think that cancellations will continue to go up. If look, if you need to get your house on the market, it has to be pristine condition. You might want to do a pre-insspection, make sure everything is good because if the buyer feels like they need to put money into the house, they're going to walk away from it and find another house that they can negotiate on. You might need to be offering closing costs as long as as well as concessions for the real estate agent.

But ultimately, the cancellations are up because every dollar matters more than ever right now in this type of market. And of course, when cancellations are up, the days on market are going up. And this is one of the major indicators that show that the market is slowing. So you can see this buy area.

Obviously, Florida is one of the highest with 88 median days on market. This is the time between the initial listing of the property and the closing date where the date is taken off the market as measured by realtor.com. So you can still see some areas are doing okay. There's some areas that are weakening here.

And we expect the days on market to continue to trend up as more listings come on. In next year we see more listings come on uh right before busy season starts because there's a lot of people who want to sell. There's a lot of people who want to buy. The sellers need to get realistic and bring their price down so that way the buyers can come in and I know the sellers are resistant.

They want as much money as they can for their house. But the reality is the market's changed and there's an affordability crisis. They're just going to have to deal with it and cut their price. Um however, look at this.

There's seven major cities that are now buyer market. So if you're a buyer, you're in control of the the process. Of course, if there's a mint condition house with compensating factors like a water view or something like that or a large lot culde-sac like most people or just some compensating factor in terms of location, you're going to be okay. You're still going to be able to sell your house.

But for the majority of houses that are the cookie cutter houses, you're going to have to cut your price uh as long as it's, you know, comparable to the all the other houses around it. So, look at this. Jacksonville, 6.3 month supply. Most of four of these seven markets are now in Florida where I am.

Miami. You can also see Texas, Austin, Texas, Orlando, New York is pretty interesting. Tampa, and you can see California, Riverside, California. So, we are in a full-fledged buyer market in Florida.

We believe that this is going to spread across the whole United States going into the end of the year. And probably by Q2 of next year, you're going to be able to really see that the majority of the country is now in a buyer market. But you need to recognize every market's completely different. It's going to the areas that are going to be impacted is where there was the most speculation uh the most new construction and uh you know the lack of demand that's continuing to go to those areas and that's likely going to be Florida and Texas moving forward.

Now here's the real reason why the Fed can't save you. So I mean the consumer is not feeling good. This is consumer sentiment at the worst level since the great financial crisis levels. Uh this is the Michigan survey for sentiment and it's one of the worst levels that we've seen and we're not even in a technical recession at this point.

Obviously the common person isn't in a recession but if you own stocks and equities you're you're absolutely crushing it but this the consumer does not feel good overall when they don't feel good and they don't have the sentiment they're not going to go out and make the largest purchase of their of their life. They're loaded up with debt. The US consumer has never had this much uh credit card debt. This is revolving consumer credit owned and securitized debt.

So we are at record levels of debt that the consumer has and it's mostly concentrated in the bottom 60% of folks. So you know when we're talking about this, we're talking about the entire country, but when you kind of look at it, there's like the top 5% that owns the majority of the assets and the bottom 60%, you know, the working class. They're struggling. They're struggling really hard.

I feel for them. I feel really bad. And if they're trying to buy a house right now at the peak of the market, you know, I would almost consider telling them, you know, wait, rent it, rent, and wait it out just to see how things play out because you do not want to be underwater on your house buying a house in a falling market. And credit card delinquencies tick higher.

So, not only do they load up with credit card debt, but they're not paying it. So, they have delinquencies. Their interest rates on those credit cards are are insane. This comes from Bloom Bloomberg.

US credit card delinquency balancees continue to tick higher. We expect this to continue to move forward. Obviously, you can see what's happening in the car market that's imploding and people aren't paying their car payments. Even though we're having the same issue in the auto market, like the it just surpassed $50,000 for a new car.

I mean, these numbers are insane. You're not It's really hard to afford a car when you have to pay $1,000 a month in your in your payment on your car and it's a seven-year term instead of a fiveyear term. They just keep delaying it and collecting more interest. It's brutal out there if you're a consumer and you're not in the top.

So, look, here's what I want to share with you guys, right? If you're a buyer, I would encourage you to be careful and be patient. You need to work with the best of the best in this market. There's obviously going to be opportunities in every market.

So, I'm not saying don't start shopping. Keep an eye on it, but you need to run your numbers. You need to get with a top lender as well to be able to figure out what you can actually afford, put down a good amount of money into the house. Uh the people I'm fearful for are usually the FHA buyers and the VA buyers that put a little bit down and they can go underwater really quickly, right?

Because you're paying 6% usually to get into the house and when you need to sell, you're paying another 6%. So you need to get more than 12 appreciation in your house just to break even. So you need to stay in that house, you know, for 5 to seven years. So that's my advice to buyers.

Really be careful and be patient. You need to negotiate this market unless you have the wealth. If you have the wealth, go for it. If you're going to stay for it long term, it's another conversation.

But for the majority of people, that that's good advice in my opinion. This is not financial advice. Just take take what you may. Sellers, I would evaluate longterm.

Do you want to stay in that house for the long haul or do you want to make a move? And do you have the equity to actually make that move? A lot of this just comes down to being a math equation. Uh you can send me what you have going on if you would like.

I'm happy to take a look at it. Uh the decision is yours, of course. And agents, we're seeing a divide right now. So the top agents are moving up more and more.

And then the lower the bottom 50 to 60 agents, they're going down. So we're seeing a divide. The top agents are taking more share. The bottom agents are kind of just going to get second jobs.

Uh which happens, you know, every time there's some sort of correction that's happening in the market. And we're in a correction right now. I think we're headed for a crash. A crash is over 30% correction from the peak that started in October of 2022.

I think over the next 3 to four years, we will be in a technical crash of down 30% more. Um, but look, the agents who are thriving, get around them. Uh, double down on the activities that are working. Stop falling for the shiny objects that a lot of these brokerages offer.

We know that it it comes down to lead generation and it's just daily conversations. So, let us know what you see on the ground. I'd love to hear from you. If you're a buyer, seller, or agent, what do you see happening in your market?

Let us know. As always, you can like, comment, and subscribe. Uh my email is below, and you can go to my Substack and you can find out when these uh videos come out. And when they do come out, you'll be the first to know.

And I talk about things on my Substack that I can't talk about here on YouTube. Love you guys. Thanks for watching and I'll see you next