The Housing Collapse STARTS October 1st

And there is nothing that makes me more upset than real estate agents lying to get sales and actively trying to deceive you or the fact that they might not actually know what they're talking about and they're reposting things online that could create an issue for you. On this episode, we're going to be talking about FHA loans, which are absolutely the new subprime mortgage, and it is a crisis already, and the government is starting to realize this after they've taken over the FHFA and FHA infrastructure, looking at the loans and seeing how much delinquency we have. So, let's dig in into how this could impact you and could we see a massive foreclosure wave this time next year? So again, agents are saying insane things on social media.

And I know the last one was date the date the rate, marry the house, but that only works if home prices go up and rates go down. And that is the exact opposite of what we're seeing. We're seeing rates actually have come up since that slogan went viral and then prices have come down. So people are stuck in their houses.

And so it was a stupid slogan. We called it out. We actually had an agent leave our company over it. Uh because I said, "Hey, I like this is why and the math behind it." And they just didn't care.

And they just want to say these silly slogans and lenders did it too and they're guilty. But now here's the new one that's cir circulating. The headlines say foreclosures are up. They're up about nationwide about 11%.

Filings are up but the truth the media doesn't explain. So this is funny. They're trying to get to truths but they don't understand the the market at all. So here's the list of foreclosures and it looks like they're skipping a few years.

So, it's actually just pulled data from the peaks to the bottoms. And you can see that year-to- date 2025, 21,000 foreclosures. Of course, there's low number of foreclosures because there's been loan loss mitigation workout programs for FHA and VA, the most risky uh types of borrowing since, you know, 2020. All these programs were put in place where we haven't had many, if any, foreclosures come through the system.

So, the government's completely manipulating the situation. So when you look at this chart, sure it might make sense uh in the beginning when you're initially looking at it, but it's not for the reason you think and it's not because the housing market is healthy. It's actually because the government has been manipulating the housing market. And there's something seriously wrong with agents who aren't paying attention to FHA and VA, which are absolutely the riskiest borrowing types because there's the least amount of skin in the game.

FHA, you can put down 3.5% to buy a home. VA 0% down. And there's also down payment assistance of programs on top of that to pay for your closing cost. So, you know, they in some cases there's actually, you know, like 100% or 105% of financing on these properties at the at the peak or just beyond the peak of real estate prices, which I believe the peak was October 2022.

So, let's dig into what I responded with. So, you know, FHA, like I love the post, but we haven't had loan loss mitigation programs for FHA VA since 2020. So they stepped in uh to stop the large major majority of foreclosures on the two riskiest loan types over the last 5 years. FHA, this is the big thing you need to know is changing their workouts.

So there are no more workouts on these loan loss mitigation programs starting September 30th. That is this month. So you're likely if the government does nothing, you are going to see a wave of foreclosures starting mid next year, probably Q2 next year. We're going to see a massive amount of foreclosures come through.

And here in Jacksonville specifically, I've done the math and looked at the origination for FHA. Just FHA alone just over the last 3 to four years could add up to 6,000 more for you know active listings on the market based on today's delinquency rate. And that I mean that's insane. That's about a 50% increase in the amount of supply of inventory just from FHA if something isn't done.

So, the last release, I believe the estimate was 15.3% of FHA loans are 90 plus days delinquent as of February 2025. I know that they stopped reporting a lot of that data. I don't know if it was because we're not sure why that exactly is. It might just be because, you know, Doge came in there and fired some people that were reporting it or the data was so bad they just can't release it because it would create an entire crisis, which is probably my expectation at this point.

You know, the only reason for the government not to release data is to hide something, and I actually have a healthy distrust of the government as I get older every single year with the things that they do with manipulating our markets and basically lying to us on what they're going to do. So, I guess that's just a part of getting older and watching it all play out. But look, FHA absolutely is the new subprime to be able to get these loans. You can have a 8 580 credit score, very low credit score, and then actually they actually have some workarounds around that.

You only need 3.5% down payment. You can combine it with a DPA, which is a down payment assistance programs here in Jacksonville. We have programs where you can get up to $35,000 from the local government for a down payment assistance program for in the form of a second mortgage that you can put on the property at the time of purchasing. So, not only do you get the three, you only have to put 3.5% down, but you can actually fund those closing costs in the down payment assistance with a second loan, which is insanely risky.

And by the way, just an interesting fact here. 46% of first-time buyers actually use FHA. Now, let's look at what actually happened last time around on the subprime market in non FHA loans, not government loans. The private market loans, approximately 25 to 30% of those loans went delinquent in 2009.

So, it's not hard to believe if we're already at 15.3% and the crisis hasn't even started and prices have barely come down in a lot of areas and it's coming. This wave of inventory and seller frustration and buyers not being able to afford. This is just the beginning. And you know it's the beginning because the first indication is the number of sales slows down.

That is the first indication of a market that is going to have decline in price is the number of units transacting back and forth. So there's no reason to think that we could not get to these levels in the FHA market. Um and the FHA just so you understand is it ensures mortgages especially for these firsttime home buyers, lowinccome and lower credit borrowers. And this is to help you know prop up the market and have these first-time buy home buyers be able to get into the market.

This was a lot of the market. This actually spiked in 2008 2009 because this these were the type of programs that led to people being able to purchase in these hard times and continue to move the market. So total delinquency in peak 2009 was about 9 to 10% of loans and then the total delinquency including the foreclosures was about 15 to 17%. In Florida specifically it is a lot worse.

Okay. So, Florida saw 20% plus FHA delinquency in 2009 2010. And again, the FHA total delinquency just across the United States is about 15.3%. We'll continue to get more data on this and post to our channel.

So, continue to watch and we'll keep you updated as these foreclosures come through. I can tell you on the ground here, I talked to the local short sale attorneys and the foreclosure attorneys and it is spiking. Short sales are spiking. Foreclosures are spiking already.

And we think that between now and next February, every single month, you're going to start seeing prices come down in the Jacksonville area across Florida. And it we think that the Northeast will eventually get hit as well with some um stress hitting the market and prices will come down. Now, here's what you need to know. Again, there's no workouts after September 30th.

There's about 8 million FHA borrowers in the United States today and 21.4% of all loans originated in 2024 were FHA. Just from being on the ground and doing so many sales year after year after year. I can tell you at the end of the cycle, you start to see more and more FHA loans. That is exactly what we're seeing right now.

We're not seeing as many borrowers be able to come in with 20% down with 800 credit scores. We're right now we're seeing two things. We're seeing cash buyers from the Northeast or California come in and purchase and because they can because they have cash, it doesn't matter to them and they're already built their wealth. Or we're seeing dual income folks come in that are just scraping by and just being able to purchase their first property at basically the peak.

And what I what I fear for these people is they're going to get this FHA loan and then they're going to be immediately underwater within a year or two. So, they need to if they want to be in that house, they need to be in that house for years, probably decades, a decade or two for it to really work out for them. But the FHA is suns setting their 2020 era workouts and um homeowners will have to start actually paying their loans again. There's no more just taking the amount that they missed and putting it on the back end of their mortgage and having that accumulate.

Uh that starts again September 30th. So mark that in your calendars. There's going to be a lot more information in the news about this. And if the government doesn't step in, I think it could get uh pretty pretty nasty out there.

So by mid 2026, we will see this foreclosure wave. This is crazy. This is a chart already that uh is in Jacksonville, Florida. All those green dots are active listings.

You know, just four years ago, you couldn't even see like there were like five dots in every area. Now, they're overlapping each other. You can barely see the word Jacksonville here. But, you know, from just FHA alone, there could be add add to these green dots another 6,000 active listings here if nothing changes from here on out until next year.

And just to remind you, you has more housing of inventory than the entire Northeast. It is absolutely skyrocketing here. You can see that we're all the way past, you know, 2017 numbers of housing supply. There's a lot of reasons for this that we can that we can dig into.

So, number one is 68% of consumers live paycheck to paycheck. This is especially true in Florida. The wages have just not kept up with the housing prices and housing prices have just completely skyrocketed um because the government has manipulated mortgage rates by buying mortgage back securities through the Federal Reserve which you know 50 to 80% of housing appreciation is due to falling interest rates and now we're seeing the exact opposite right so if you have a 4% increase in mortgage rate in a short period of time you should see to follow a 40 to 50% decrease in the price to adjust for that payment because we live in a payment economy. Now, the other issue that Florida h has specifically is we have a negative birth rate, which means there's more people dying here uh than are being born.

And this is actually moving quicker. So, about 22% of people are boomers or older. And it's sad to say it, but I mean, these people are passing away. And about 70% of those homes will be sold off when they go to their heirs.

Migration is down about 80% from the peak in 2023. And that's a huge problem because if we don't have migration, we have a negative birth rate, who's going to be moving here? It it just doesn't add up. What, you know, how are we going to sell houses?

Where's the household formation? Where's the demographics that are going to support this housing market? Rental prices are already falling. We're seeing just like multif family completely overbuilt.

These brand new apartment buildings that are, you know, have people flipping signs on the side of the street saying 3 months free rent. They're begging people to come rent uh their units and and to fill them up for the banks uh before they default. And we're already at the lower number of unit sales than the great financial crisis. And the population has increased about 20% since the great financial crisis.

So that's really bad. Um prices are dropping. We're seeing about a 10 to 15% drop in many areas around town. And the builders continue to build all these houses that they have to basically finish their communities and the affordability crisis is in full swing.

The ultimate problem is again uh the wages are not there to support the payments required to purchase a property at $400 $500,000 which is the median price point is $400,000 locally and also it's cheaper to rent than to buy. In a lot of situations, you can rent for $500, $600 less and get free months rent in some of these beautiful new apartment buildings just for moving in and signing a 15-month lease. So, the home builders are still building because they must finish their projects once they start them. So, we're seeing brand new single family rental communities.

What the builders are doing is they're freaking out and actually firesing them to single family rental aggregators and it's just an entire community of single family homes that are just being bought to rent. My fear there is that we just have we already have an over supply of rentals right now. You would be surprised at how many rentals have come on the market. When a seller gets frustrated and they can't sell their house, they instantly just turn it around and turn it into a rental.

That's their first option. When they can't get the rent amount that they want, then they start looking at the price again and saying, "Oh, should I try to should I actually try to sell it now for a price that is actually reasonable?" But look, is the answer more government intervention to prevent the damage caused by the government intervention? That's what the federal that's what Scott Bessant seems to think and he's in the Trump administration is they're looking to figure out how do we support this housing market that's deteriorating quickly that's about 18% of GDP and could really impact the administration in the midterms next year. How do we prop everything up so we can continue to keep control?

This isn't a criticism of the administration. Both administrations play politics and try to do whatever they can economically to stay in power. The number one factor for people to get votes is a is a healthy economy. Unfortunately, I don't think that's going to be the case here.

Next year is looking to be really, really rough and going into the end of the year, we think that prices will come down and I don't think that government intervention is the right way to go. So, the question is, do you see foreclosures in your area? Are you seeing short sales? We'd love to see you drop in the comments what you're seeing on the ground.

We're seeing tons of active listings come on the market and then come off the market when they can't get the price that they want and then come back on the market. It's just this whipsaw effect. We expect to see this going into the end of the year until the sellers really start to realize, okay, wow, I do need to reduce the price and I understand why. Then secondly, tell me what you think about this.

The property tax insurance repairs are just crushing homeowners and investors basically as well. I mean, they, you know, tax has gone up almost double. Insurance is up 72% um over the last 5 years. Repair costs are up more than 50%.

Are you getting crushed on this in your home that you're living in right now? And is this another case again just to go and rent uh property and it would be cheaper than to have these additional costs out there? And it sucks. Uh but this is the way it is right now.

I don't think more government intervention is the solution to the housing market. I think we need prices simply to just come down and let the market be a free market for some period of time. The Fed still holds $2.1 trillion of mortgage back securities on its balance sheet. If they didn't have those on their balance sheet, interest rates would actually be about a percent or two higher, which is crazy to think about.

So, the market is still manipulated at this time, and we expect it probably to continue to be manipulated. And it's possible that the government does step in and create some sort of additional FHA workout program, which will just make the situation worse and kick the can down the road. I hope this doesn't happen. It's not good for the market.

We need the market to just reset and find other solutions for affordable housing. Uh follow for more details, drop a comment below, and if you want to send me an email because you need a top agent in your market, go ahead and do so. My email is listed below in the description. Look forward to listening to you and uh seeing your comments.

Talk you in.