The Housing Market Is Cracking. And They Finally Admitted It

The media's been lying to you for a long time, but now they're changing their narrative finally after 6 months of putting out content. They are starting to see an actual shift in the housing market. It's undeniable and even big players are starting to come out and say, "Yeah, we see it, too." It's surprising because the media is paid by lenders and builders and everybody else to continue to push the narrative that there's a housing shortage that never really existed and now we're completely overbuilt. Here's one.

This is a great example. Governor of Florida, Ron DeSantis, looking at this US home price chart from 1890 to 2025 and it just shows the price growth that we've had in housing across the United States and he says, "Yeah, that is not sustainable and it's not merely a supply issue as inventory has grown in a lot of places. Inventory is skyrocketing across the country, especially in Florida and Texas Florida where Ron DeSantis is the governor and now he's acknowledging that this situation is unsustainable and I'm sure that the builders are going to be begging the government for some sort of bailout starting next year as their inventory continues to stack up and they acknowledge the issue that frankly they caused themselves by having a zero interest rate policy for a long period of time that encouraged massive amount of speculation to happen in the housing market driving prices up to unsustainable levels that has cost the next generation the ability to get in on home ownership and it is really, really bad and every time the government steps in to try to manipulate the market, it creates an unintended consequence that shows up 10, 20 years later and in this case it happened in a very short period of time within 5 years from 2020 going to the zero interest rate policy to pushing prices up here in Florida more than 50% across the board in just a handful of years and the people who bought in '22, '23 and '24 are now underwater after considering their closing costs in a lot of situations. So, it's an unsustainable bubble.

It is starting to fall back to earth. Keep in mind it takes time for real estate to adjust back to where the normal level would be based on the new interest rates and affordability. So, this could be a decline that will last two to three to four years already from the decline starting in October of 2022. Here's another article that came out from local news station here in Jacksonville, News for Jax.

Northeast Florida's housing market continued its gradual cool down in September as sales activity slowed and higher inventory levels compared to a year ago, according to the Nat Northeast Florida Association of Realtors. This is great, right? The media is starting to acknowledge, "Hey, the market is changing." Frankly, we're still seeing on national websites like HousingWire, they're still pushing the narrative that there's we're going to go on this 25-year continued bull run in housing. I don't see how prices can go any higher.

Do you? I'd love to hear from you. Do you think we have a price problem on housing and on rental units or do you think that we should just continue to push asset prices up to an even more unsustainable level? We are already at the highest level of unsustainable affordability type crisis ever.

Do you think it's a good idea that we should continue to make it even harder for young Americans and every age group to save their money and actually live for shelter. And so, this is concerning. And frankly, the Federal Reserve is starting to freak out. So, look at this.

This came out the other week. Fed officials discussed risk of housing market collapse at recent meeting to cut interest rates. The housing market is one of the most important markets because it has a multiplier effect. When somebody buys a house, they go out and buy appliances for it.

They make upgrades to it. They hire a bunch of different contractors. They make it their own. It employs a lot of people, mortgage brokers, real estate agents, title companies, insurance companies.

There's so many things that go into housing that housing starting to slow will slow the economy over time and the Fed officials are starting to see that, "Hey, there is a risk that the housing market is changing really quickly and because they're concerned, are they going to continue to bail out the housing market?" is the ultimate question that, you know, we are really concerned about because if they bail it out, basically they're deciding, "Hey, I'm going to bail out the people who already own housing for the at the detriment of the new people who want to get in and buy housing." So, they have to choose who they want to bail out and I don't think that they should do any bailout at all. Would love to hear what you think. Should they bail out the builders and should they bail out the people who already own assets or should they let them actually revert back to the mean? I'm not talking about a full-blown crisis.

Just get the prices back to something that's actually sustainable. Now, new construction lots are just sitting. This is a great chart from Reventure. If you don't follow Reventure, you should.

They're great over there, Nick and his team. New single-family homes for sale that are not started. So, these are lots. You can see the number of lots have just skyrocketed that are available for sale.

This is the builders basically prepping for the next cycle. They're already above the Great Financial Crisis level number of lots and our population growth has increased by about 20% over this time period, but the builders have basically come to a halt in terms of buying lots and starting to develop them because demand is basically fallen through due to the affordability crisis. And builders are using now massive incentives because of that affordability crisis. So, you can see here home builders percentage of total inventory.

They represent a massive amount of inventory. They have 26.8% of the inventory currently for sale in the United States is this builders inventory. These are mostly starter homes. The average historically has been about 15% and this is just an indication that we are completely overbuilt.

So, again, there was this narrative of a housing shortage. It was never true. I don't know why the media kept pushing it. Well, I do.

I All right, let's be honest. They get paid to push this narrative to get people to convince them to buy a house because we're running out of houses. Meanwhile, they're building to to the maximum amount possible because of the low interest rates that they had. So, it was a business move and a PR strategy to convince all the Americans that we had the shortage that we really didn't have.

New home prices are dropping cheaper than existing homes. So, this is this is part of what's pushing new sale new new home prices and new sales up because they're dropping the prices. They're giving incentives. They're buying the interest rate down, you know, all the way down to 3%.

Now, listen, if you are a buyer, this is a problem. You're going to have to stay in that house for a very long time because if interest rates remain between the 6 to 8% range and you have a 3% rate, when you go to sell that house, your new buyer will have to pay whatever that new rate is at that time and more than likely than not your it's going to be higher than 3%. So, they're going to have to decl decrease the price that they pay you on that house, all right? So, it's better if you are negotiating, reach out to me please before you buy.

You need to not only negotiate the interest rate you get on a monthly payment, you also need to negotiate on price and do it very significantly. I'm happy to put you in touch with the top agent in your market. We're in Florida, but we have friends and top agents across the country that we can get you in touch with. If you even want to do an analysis on your house and for me to share some information with you, give you some perspective on your area, I'm happy to.

My information is down below and look, this is this is incredible. 22% decline in sales price and I feel bad because we have agents reach out to us every single day at our company and other companies with sellers who are underwater, right? They purchased the house in 2022 and 2023 at these pandemic pandemic peak prices and now they have to move for some reason and they're trying to sell and the prices have basically just fallen through the floor. They're underwater $100,000 and they have to compete with the other new construction in the area.

So, they have to resort to short sales and what's bad is they need to get out before it continues to decline cuz we see this trend continuing to move down into the future so we get back to where the reality is of most prices. So, and they're unable to rent them because there's there's so many rentals hitting the market all at once because when sellers can't sell and get the price that they want, they turn them into rentals. So, now we're seeing tons of rentals pop up and now rental prices are down, you know, 10 to 15 to 20% in some areas across Florida already. Now, look, here's Powell, Fed chair Powell trying to change the narratives and this is funny because this is these are quotes from him.

Powell on MBS purchases. These are mortgage-backed security purchases. So, when the Fed goes in, they buy the mortgage-backed securities in the Open Market Committee and they basically try to bring down interest rates for mortgage back for securities by providing liquidity to them. So, we would certainly not engage in mortgage-backed security purchases as a way of addressing uh mar mortgage rates or housing directly.

That's not what we do. It's a complete lie. Of course, that's what they did. That's what they tried to do during the Great Financial Crisis.

Absolutely, that's what they they tried to do is to try to save the housing market by bringing the rates down and bringing demand back. It was too late. Didn't work. There's too many too much supply already.

We do have, as I mentioned, a very large amount of mortgage-backed securities. So, he's like talking out both both sides of his mouth here, but absolutely, you could definitely see the Fed step in and start buying mortgage-backed securities or stop letting them run off and just stay stay stable at where they are. So, let's dig into where they are right now. So, the Fed currently holds $2.4 trillion of mortgage-backed securities.

So, will they step in and just continue to let these roll off or will they step in and try to stabilize here? Obviously, I don't think they should be buying any, you know, mortgage-backed securities at all to manipulate the interest rate for housing because that's part of the reason why we got into this mess in the first place. Be better for it all to roll off and for the government to get out of our business, but they're already starting to talk about what can we do to prevent this housing market from, you know, really correcting very hard because frankly, there's a lot of boomers out there who are going to start retiring. The majority of their wealth is in this real estate and if If have some sort of stock market crash at the same time or correction at the same time as the real estate dropping, they're not going to have money to be able to survive into their golden years.

So, there is a lot of uh concern about the timing of of all of this with this aging baby boomer population and the government needs to figure out what they're going to do about it. Here's where all of the mortgage-backed securities are currently being held, right? So, there's the Fed holding 2.4, there's agency MBS, there's 9.1, uh 2.9 on commercial bank and 1.4 for foreign MBS holdings. So, you can see who's been purchasing, but you can see there's been a lot of purchases in manipulation, you know, pushing uh pushing interest rates lower, right?

So, the more bonds that they buy, the lower the interest rates will be. So, it it's it's a really hard thing for the Fed to manipulate, but they do try to manipulate it wherever it's is possible. And estimates show that actual real interest rates for mortgages without these type of purchases and manipulation by the government, they could be over 10%. Now, imagine if we had a market with 10% rates right now.

I mean, you would have prices down 30, 40, 50% already already if that happened. And that would be a very good thing for the next generation uh to be able to get into this just even have a shelter. Because right now, 40% 40% of uh people's paychecks are going to pay for shelter costs for a mortgage or for rent in after taxes and everything. I feel for the younger generation where, you know, how are they supposed to save when that amount of money is going into uh their shelter costs?

And this is just the the proof behind the pudding. This is US home ownership rate by birth decade. So, you can see the 2000s where they're at, you know, they're by uh current age of individual, the home ownership rate is really low. It's the lowest it's been out of any of the the decades.

You can see the 1990s are starting to actually already trend off because people in their 20s, 30s, and even early 40s have a really hard time being able to purchase a home on the wages that they have. And so, the home ownership rate is falling. Uh the older generations, obviously, they got there and they were able to get this home ownership. And you actually see this little pivot upwards from the 1960s because right now what's happening is that the boomers are basically trading houses trading houses with other boomers.

They're the ones who are actually driving the real estate market today. They have a house that's oversized, they're selling it, they're downsizing it into a to another house, uh potentially new construction, something that would less and less and smaller, potentially closer to family. That's in a lot of cases. But they they are trading their houses back and forth.

The median age of a home buyer in the United States is 58 years old. And they could be a boomer, it's about 61 years plus, um but it's close just about there. But here you can just see straight up on this chart that the young families are priced out. People are it's too expensive to buy a house, it's too expensive to have kids, they're loaded up with student loans, they have credit cards, they're living YOLO life.

So, it's not just the fact that the circumstances are much more difficult, they're making bad decisions, too. And guys, if you're listening to this and you're in that younger generation, please live on less of your income. Try to double up, you know, that's what we did. I I lived with roommates, you know, I stayed in my mom's basement.

I tried anything I could to try to save money to buy my first house. But look, right now it's actually cheaper. I'll tell you, it's cheaper to rent in many circumstances than it is to buy. And if you buy now, you're close to buying at one of the worst times in history.

The worst time in history to buy was actually 2022, 2023. Right now, you could be buying into a falling knife unless the government comes in and bails us out. I think, you know, this isn't financial advice, do what you want. But, you know, if I was a young person today, I would try to rent and double up with people to try to save as much money and wait for prices to come down over the next 3 to 4 years and find a good entry point uh to be able to get in on home ownership.

And look, there's been a lot of arguments that the market's going to keep up, luxury sales will continue forever. This comes from Redfin, it says August lulls sales of luxury homes dropped to their lowest August levels in more than 10 years. So, obviously, luxury homes are getting hit, too. People who have cash and are purchasing, they're pulling back from their luxury purchases.

And I think this is really important indication because the luxury folks, the top 20% of income earners are driving this market today. And the fact that they're starting to slow down their purchases as well says that we are going to see some distress moving up moving forward. One amazing phenomenon that we're seeing out there, this data comes from Compass, is that there's more withdrawn. So, if a seller can't get the price that they want, they test the market, they put it on for a couple weeks with an agent, and they don't get any showings, they don't get any offers that are reasonable, or they get offers that are way too low that they just won't take, which the buyers, obviously, they need to negotiate really strongly right now.

They just get fed up and they take the property off the market. They don't really care, they have the low interest rate, their holding costs is low, and they're taking their houses off the market. This is a really interesting phenomenon that we have personally been seeing uh on a day-to-day basis. If you're a realtor, you definitely want to put in cancellation fees to cover all the costs that you have.

Now, I know a lot of people hate agents. Like I and I agree, I hate agents, too. I own a brokerage, and you know, I can tell you the body bottom 50% are awful, they do one sale a year and they usually mess them up. That's not who we're talking about here, we're talking about the top 10% who are pros.

What do they do? They buy Zillow showcase, they do photos, they do videos, they do Facebook boosting, they do open houses. I mean, there's a lot they buy the yard sign, they they pay for all the fees to get your house listed everywhere. You know, we have something called LuxVT at our company.

They pay a ton of money. You don't know all the stuff that has to go on behind the scenes for the agent to actually get your property where it needs to go to get the maximum exposure. So, look, give your agent a break, sign the agreement. I really think that, you know, if you are going to put your house on the market, a cancellation fee is totally reasonable to at least at a minimum have that agent recoup their marketing costs on your property.

I think it's the right thing to do. We're definitely doing that at our company to make sure that our agents are protected. Sometimes it's a risk and the agent doesn't do it because but if the seller is completely unrealistic, I definitely think you need to protect yourself cuz this is a phenomenon that's coming on. And the other issue is it's a lot harder to sell houses right now, right?

So, it's about three to four times harder than it was during the boom years of 2020 to 2022. Roughly one out of seven US home purchases today get canceled. Now, in Jacksonville, it's more like 25%. So, I actually think these numbers are quite light, but it is the highest number for a very long time uh and it's up to 15.1% today.

And this is another reason why, you know, for a realtor, you know, as a buyer, you might go through two or three, you know, contracts and cancel because you find something on inspection you don't like, or you find another house that pops up that you like more. It's a lot of work for the listing agent and buyer agent right now to to be able to get through those transactions. And look, you think you're paying your realtor a lot of money, they have a lot of expenses as well on their end. Uh I get it.

Uh and it's it we have a video that actually breaks down how much agents really make, so we can share that with you and you can go back and look at those videos. It's I think you'd be surprised at what actually happens. Now, look, apartments are going negative. So, not only are home prices starting to come down, we're also seeing rents come down and multifamily rents come down.

And this is a huge change, we're basically going into a regime change here for the housing market and I think for the stock market because it looks like it's getting a little wobbly right now after 38% increase since March, which is just mind-boggling. US apartments notch the weakest Q3 for rents since 2009. Here it is, it's it it's actually negative for uh rents. You know, rents are actually going down on a nationwide basis.

It's starting to show up in the data. Uh conversation I had with Melody Wright last week, you know, she said, "Hey, look, we're going to start seeing a lot of the distress and a lot of this really show up in Q2 of next year." Again, real estate is an illiquid asset, it takes time for these things to play out. Uh and so, look, here's a leading indicator that we're seeing, right? Days on market is leading indicator, inventory growth is leading indicator.

You can see Florida is one of the worst at 88 days on market. You can kind of see where the markets are changing a little bit. And Texas, obviously, has many areas, Louisiana, Georgia even has some areas that the days on markets are starting to move up. It'll continue moving up in the future as more inventory comes on and sellers aren't able to get the price that they want.

And sometimes what they do is they take the house off the market for 31 days to have the day count clock reset, and then they relist it pretending it's a brand new listing with new photos in front of it. It is a good strategy to try to make it seem like it's a new listing, but usually it doesn't work. You really got to you got to reduce the price of that property to get it to move because we're not in a demand problem, we're in an affordability problem. So, if you can get the price to where the market will accept it, it will transact.

And if your house is in phenomenal condition and has some sort of compensating factor, it will transact. So, you know, this although it's an average, you know, of 88 um or median days on market of 88, you know, there are houses that will sell the first day because they're either waterfront, it doesn't come up very often, or it's in some area that there's just not a lot of inventory, but the areas that are the most concerning are the new construction areas where there's a lot of lots available, a lot of inventory available for sale. They're offering incentives, and maybe you're in phase one, phase two. That's where we're probably going to see the most amount of distress with sellers who can't get out because they're underwater.

Keeping in mind it costs 6% to get into a deal um and all the fees, and it costs about 6% to sell as well, 6 to 7% to sell. So, you need to make, you know, 12 to 13% price appreciation just to get out even on the fees. And, you know, prices are falling. So, you know, a lot of folks are in a really hard spot.

That's not true across the country because they didn't have that type of construction, but I will tell you the northeast will be impacted, the whole United States will be impacted. There's a lot of properties that are coming onto the market and with the demographic shifts we're seeing over the next 10 years because people aren't having kids in the sadly 15 million plus baby boomers will pass, there's going to be a lot of houses trading hands and there will be a ton of inventory coming on. And this is what's already happening. Look at this.

This is like not only is the media catching on, but you know, everybody who's kind of watching is catching on, too. It says, "I'm not smart about the economy, but this seems bad." It's a picture of Austin with all the listings that are for sale. Now, if you drop the Airbnbs on top of that, you'll just see a sea of of listings. It's it's absolutely insane.

And you can actually see the showcase here that we do that at our company, by the way. If you're a realtor watching this, we offer that at our company. So, uh it's a great tool to get your your property basically showcased through these online portals relative to the other listings available. So, you got a lot of competition, it makes sense to to to do that.

And we do that for listings above $350,000 at our company, which is really cool. But look, listings are skyrocketing in certain markets. It's going more and more that way and the media's catching on. Obviously, Ron DeSantis is catching on, consumers are catching on, and they are understanding this chart right here that look, the prices need to come down so the home ownership rate for the folks born in the 1990s and 2000s can can jump in.

Now, where are we seeing a credit crisis already is in uh Tricolor and First Brands. And so, when you see one cockroach, this is Jamie Dimon uh Business Insider article, there's probably more. When you see one cockroach, there's probably more probably more. That's definitely something that a Floridian would say even though he's up in New York.

Um but he warns of more credit trouble ahead. Now, it's starting to show up specifically in the auto market, which is the Tricolor and First Brands that you know, right? Um auto lenders and double pledging collateral and suppliers and all this type of stuff. But you can see that the repossessions for the car market are starting to skyrocket, right?

So, the last thing that people stop paying is their house, right? They they stop paying their credit cards, they stop paying their car loans. The last thing they stop paying is for their house and that's why we're starting to see distress pick up in the market, but not all the way. Uh it's going to take time again for this to play out, but we are starting to see it down line in terms of credit card delinquencies and repossessions for for cars.

And look, the number of sales are just grinding along the bottom here with the record low home buyer demand to start for the year because of the affordability crisis and because a lot of folks already have these low interest rates, they're not they're locked in. They're not upgrading because the next house that they buy is too expensive on the monthly payment. They're not downgrading for the same reason. They're not relocating to family.

So, folks are just kind of staying where they are who've already purchased and waiting out the market. Although, I don't know if I don't think that's a good strategy. I actually think if you truly need to sell, you should try to do it as soon as possible because again, the long-term data points that we're looking at are all negative. And the consumer sentiment is awful.

This is a consumer sentiment at the worst level since the Great Financial Crisis. This is according to the Michigan survey. So, you I mean, you talk to the average person that has a normal job, 40 to 60 to 70,000 dollars a year, they are struggling. I mean, inflation is just skyrocketing, things aren't really getting better, and they really, you know, their shelter costs are still high.

They are struggling and it doesn't seem like they're getting any help. The the real people who are crushing it are the ones who've been owning stocks. And prices continue to just continue to roll up with the AI development. You know, the job market is starting to weaken, so the consumers are really stressed out.

Now, I'd love to hear what's going on in your market. You know, drop a comment below. Do you think that prices will fall in your area? If so, how much?

And do you what will cause it to stabilize? How how far do you think it'll go until you see the stabilization? And are you also seeing what I'm seeing, which are insane media mar- articles talking about how the market will continue forever? And I'll pull one up and bring it up on another uh YouTube video, but there was one that said, you know, we're about to enter the golden year of real estate.

It's a HousingWire article. I just laughed so hard. I was like, "This is the They're selling you the big lie." I There's no reason for people to come out at this point with the data pointing where it is to try to convince young people to be able to purchase at the peak, you know, a little bit past the peak market. You know, obviously, there's going to be insane deals once in a while and sometimes there are on new construction and but you have to be really savvy.

You need to work with the top of the top agents out there who will actually guide you, not just try to facilitate a transaction, get a commission, but actually know what they're talking about and look out for your your best interest. A lot of people don't know this information, so you need to interview agents to make sure, you know, don't hire your cousin or your friend that sold one house last year out of obligation. This is way too big of a financial decision to just hire some rando um or some relationship that you have without verifying their level of skill so they can guide you in this changing market. Anyway, love you guys.

Thanks for watching. If you need anything, shoot me an email. My information's down below. As always, you can subscribe to my Substack.

It comes out twice per week. You'll get updates on my videos and I talk about things on there that I can't talk about here on YouTube. Thanks so much and see you guys next week.