The Housing Shortage Is a Lie. Here's the Real Collapse Coming

Why are housing prices so high? And how to get them down? Are they coming down on their own? Stop misdiagnosing this as a supply problem.

You misdiagnose the problem, you wind up exacerbating the problem and its symptoms. So, we're going to touch on that with a new guest, a real estate agent housing expert. And And I've been beating this drum forever. This false notion that the reason housing is so expensive is because we don't have enough supply.

I finally want to debunk that because I found someone who's a much bigger expert than me who has been beating this drum online and I want to bring him in to properly diagnose the cause of the housing bubble and the solution. John Brooks, he is a Jacksonville-based real estate agent with a career in finance and investment banking. In 2020, he founded Momentum Realty, a residential real estate brokerage. Also, as of 2024, he runs a private lending firm.

So, I want to get his take on a lot of the credit issues, delinquency issues. You could follow him at John Brooks on Twitter. Very important, high-quality Substack. Think They Question Everything.

Make sure to subscribe there. And he's with us today. Hey John, welcome to Blaze TV for the first time. Thanks for having me on.

This is great. All right, as you heard, so much to talk about, so little time. I want you cuz cuz I've been talking about this forever. I want you to unload on the data.

Why almost everyone in the political realm is wrong and this is not a supply problem. Yeah, there's been this narrative for quite some time about a housing shortage. The truth is that it's just not as It's overemphasized. There's even a report that came out the other day, I believe it from was from JP Morgan that said it's only 1.2 million that we have of a shortage, but it it's not a shortage of homes.

It's a shortage of affordable homes, and there's a huge difference. We have built in inventory levels at price points that the next generation can no longer purchase, and that's why you're starting to see the numbers look really not good for younger people in this country, and they're being priced out of home ownership. There's a various number of reasons for this. The The number one reason why we see inflated housing prices is cuz we've seen falling mortgage interest rates for the last 40 years, and there's studies out there even from the big Wall Street banks.

There's studies showing between 50 to 80% of home price appreciation is simply due to falling mortgage interest rates, and not actually due to demand dynamics. And so, we live in a payment economy. So, if we if the administration or government can bring down mortgage interest rates, then they feel like they're making it more affordable. What that does is it locks people in at a certain price, and they can hold that property for a long period of time.

And then, when the next generation comes in to try to purchase, they're buying at inflated prices historically compared to median wages because wages haven't kept up. So, we have both like two narratives. Number one, we have a an undersupply of affordable housing. So, I'll give you an example.

I grew up in Washington, D.C., and I moved out of that area because it was so expensive to live. I moved to Florida a decade ago. Well, over the last decade, real estate and housing in Florida has more than doubled, and wages have not. Uh wages are up maybe 30% in that same time period.

So, now Florida is no longer an affordable area. And so, we see people who are constantly young people who are escaping from the Northeast because of the NIMBY rules. They're not building more inventory up there. They're trying to find places where the wages are available at a price point for the housing that actually makes sense where they can feel like they're moving ahead every single year.

And it's it's becoming more rare and rare every single year. So, we need rent prices to come down. We need housing prices to come down. But, the government continues to say, "I'm going to benefit the current owners.

I'm going to make policies or talk about policies to benefit the current owners rather than giving the next generation opportunity to buy in at a decent price." And so, we're starting to see structural decline in the marketplace. Less people are getting married, less people are having kids, less people are forming households. People are doubling up and living in the same the house the houses together. And they're trying to find ways to get their shelter costs in an affordable price point versus their wages.

And unfortunately, wages we see are not doing so well in the employment market. Despite the data coming out today, I don't believe it. It'll probably be revised down just like all the other revisions. So, you just have to be careful with this data because we're constantly being manipulated by the media to believe one thing when we just just really believe what our eyes can see.

No, so I think that's important because if anything, the long-term trend with supply will be for the buyer over time if we allow it to happen because like you said, and this is kind of sad, but it is what it is, US household formation is at a nine-year low. Um people aren't getting married, aren't starting families. Most homes are owned by the baby boomers, which was such a large generation, and they're going to be dying off over time. Birth rates have collapsed.

So, you put it together, it's not going to be a problem of of supply outside of a couple places in New York and California, but most of the country, there's enough supply. Okay, so then if there's enough supply, then what really is causing the bubble? You mentioned obviously the artificially low interest rates that you know, oh yeah, you could have for zero interest, I mean I'm exaggerating a little bit, 30-year mortgage, I mean this whole business of debt. Oh, all right, well then it, you know, it it's it's spiked up the price.

Trump wants to go back to that era. Says, all right, so then let's just make mortgages more affordable. Well, so so I want you to discuss the interest rates first and then we'll get to the speculation. Interest rates are down almost 100 basis points from the high.

But home sales have not yet really budged. Yeah, it's true. And you know, just to explain the speculation and what actually happened in the confusion for it being a demand, you know, natural demand. What what actually happened was we had a demand shock in regional areas like the Sunbelt during the COVID years.

And this made people think, well, we have a supply problem. Well, no, we just fast-forwarded five years of buying within two years of time. The builders went crazy cuz they said, "Wow, this demand is fantastic. Let's continue to build.

We can build it and sell it. We can sell them before even build them." So it seemed like this was a healthy thing, but in reality there were a lot of speculators that were buying. There were a lot of people who were buying four, five, six, seven, eight homes to have as rentals. We had the institutional buyers, which I know we have this ban on institutional buyers.

So that's not actually what it was. I know this because I used to work at an investment bank that funded these institutional buyers and I was the sole analyst for those desks. Banning Fannie and Freddie loans for institutional buyers doesn't even make any sense. That's not how they get their financing.

So it's just a con job from the administration picture. >> Because and cuz he legally couldn't do without Congress anyway, so he could only do it through Freddie Freddie and Fannie, which is not really where the institutional buyers go. Also, it didn't apply to, you know, built to rent, which is the much bigger portion. >> Yeah, these what happens is they go to a Wall Street bank and these institutional investors, they buy these properties on a warehouse line and then once that warehouse line gets to a significant aggregate mass, they trunch them out, go to the raging rating agencies and then securitize them and sell them.

At no point are they working with Freddy and Fannie in a significant way to be able to get financing or sell these. It's done through warehouse lines at banks. So, obviously, everything the administration is doing is designed is built along the premise, which which again, both parties spew this. I I haven't seen anyone not I I literally, you're the first person I've seen, you and Melody, who who say what I'm saying, that it's not a supply problem.

But, what are the consequences of misdiagnosing it? And let's say passing, you know, they're working on a bill now to subsidize and encourage through zoning, through a bunch of subsidies both at the builder level and maybe at the renter and buyer level to build and buy more homes. What's the consequence of that? You know, I think some of it is good and some of it is bad.

I don't like the subsidies to the builders. It's basically just a handout to them from the government and that's that's not good. I do like the deregulation. We have way too many regulation.

There's certain areas around Florida where the impact fees are just insane and it becomes very difficult to build and it's it's hard to justify those impact fees especially one idea I had is like if you build in the in sell in the specific price point, wave some of these impact fees and and kind of incentivize the builders in that regard. Don't just give them money. >> Yeah. I just think that's like a very bad strategy cuz it was the classic bipartisan thing.

So, in order to get the deregulation, they gave the Elizabeth Warren subsidy stuff. So, you get a crap sandwich. All that stuff just gets misused and misallocated and I think there's a lot of room for abuse whenever you just hand out money versus hey if you build and produce in this result in this area I will wave this fee at the end of it or I'll reimburse for the fee after you know not at the beginning I'm just going to give you money to to go build this I'm not a really big fan of of those type of movements. So at the end of the day we have right now in Jacksonville we were one of the we're like near ground zero right Southern Florida is is ground zero for sure there's prices that are down you know 30% already in our area we're down about 15% rents are down about 20% this is a great thing because the builders overbuilt and we don't need any more subsidies at this point we just need to let the prices come down and let the market be free stop trying to manipulate this market any further and by the way I'm not sure the administration really can if you hear what they're saying and what they're actually doing it's completely irrelevant right they're they're saying okay let's do portable mortgages let's do 50 year mortgages let's do assumable mortgages let's buy 200 billion of MBS on Freddy Fannie let's do QE on Freddy Fannie's balance sheet instead of on the Fed's balance sheet like this it's really small potatoes it's all just talking points ahead of midterms to get points with the with the voters but the reality is none of this stuff will get implemented and help and so I think a lot of this stuff at this point is just talk I don't think it's actually going to help the housing market I think what's happening in Florida because we had so much speculation from the builders from the investors we're going to be hit the hardest in terms of magnitude you see the same thing in Austin Texas you see the thing same thing in Raleigh North Carolina First up first down.

>> Yes and then it will spread and so a lot of people will say well no no no it can't happen in my area well you know my experience being top real estate agent owning a top real estate company sentiment drives everything and and employment market drives everything. So, I'll give you an example here in Florida, right? So, we had this migration spike that was incredible from 2020 to 2022. That migration is now down.

Net domestic migration is now down 93%. Uh and so, we have a very old aging baby boomer population on top of that, and household formation is low, and birth rates are low in Florida. So, you can see like this perfect storm. We're overbuilt for multifamily as well.

So, now, you know, you have cheaper rentals. These are luxury apartments. There's people dancing in this in the street saying, "Hey, 3 months free rent." We have all of this demand that evaporated, including international immigration is to Florida is down 70%. So, this is true for Florida, and I think this will spread over time to other areas across the country.

There are some markets that are steady Eddie, right? No matter what happens, they just kind of just drift along, and they're not really impacted by these outs these these forces, but the majority of real estate in the United States is sold and transacted in the Sunbelt. You know, this area is prevalent to boom-bust periods and speculation, and we just had a boom. Of course, after you have a 68% increase in price within a few years, you basically have a decade plus of appreciation within a few years.

Of course, you're going to have a decline of 10 to 20% after that. And the government at this point, they're out of tricks to play to keep this propped up. I don't think they're going to be able to actually have a material impact in propping up the market, no matter how much they talk. So, that's good news, actually.

You're saying you're you're here to predict you're saying that we are going to see a collapse in prices by hook or by crook. So, my question is, why is it taking so long? Why is it so stubborn? We've already been on several years where the housing prices are so much higher than the median income.

How is it like aren't sellers inevitably some some are discretionary, but inevitably some have to sell. How have they stubbornly held on to their price points and whatever was driving that, why do you think that's about to crack? Yeah, I mean real estate's an illiquid asset class. It's a slow moving market.

It's not like stocks where once everybody realizes that they're overvalued, you can see a 30% correction in a month. That's just not never going to happen in real estate. When you look back at 2008, we didn't get to the bottom until 2012, right? So, you know, it takes five or four to five years for this stuff to transition.

Right now, we're in like the early stages of decline. We are past peak prices. Transactions have stalled so significantly. We're below 2019 levels by 25% here in Florida, which is nuts, right?

So, 2019 particularly was not a great year. So, we're we're mean reverting at this time and it can take five to 10 years for these narratives to play out. The issue that I see is that these are structural issues that I don't think will be resolved where we're going to see some sort of government coming in saving prices start going back up anytime soon. I think that there's structural issues with immigration, with domestic migration, with the supply that we have, with the wages that are not going so well, with the job losses, and the consumer frankly is completely maxed out.

When you are that real estate is priced at the next marginal buyer. So, you have to ask yourself, who is the next buyer that's going to be able to buy at today's prices and at today's interest rate? There's just not a lot of them out there. There's stats out there that show that 80% of the people who could buy bought already.

So, now like the remaining people out there are just, you know, they want to buy, but they're priced out from affordability, so they're just waiting for prices to come down for that other 20%. >> And don't they have to necessarily come down to meet them? Because if I'm a seller and a group of sellers, I'm trying to sell a house and the people that I guess are a little bit older and were able to accumulate wealth before the collapse of our society, so they don't need a house cuz they have one. The ones that do are out of money.

So, at some point, aren't we going to have to see like a significant collapse? So, I did the math through my investment banking models, and my prediction from the peak, which in Jacksonville was October 2022, was a drop of 31 to 42%. Now, in the Great Financial Crisis, it dropped 40%. This is based on the math of what a backstop would be for an investor to try to come in and purchase the property, make the financials make sense.

That's how whack we are on the math, right? Because I'm a math person, so I'm just saying, "Hey, why would a buyer go and buy a house when they could rent it for a thousand dollars less per month?" It doesn't really make sense. So, that's the thing. I want you to talk about rental because that was a big thing during COVID.

You know, rental spiked and then housing spiked, and now you're saying, it seems like you believe that the canary in the coal mine that shows we're going to go over the cliff and housing prices are going to collapse on their own is the rental. So, Redfin just came out with a report that Americans need about a 111,000 to afford a typical US home. Yeah. That's 46% higher than the 76,000 needed for the average rental.

So, that's a big, big gap there. Explain what we're seeing in the rental market and how that's a harbinger for housing prices. Well, I can only talk about the Sunbelt cuz that's the area that I'm in and I study. And And the reality is that we're we're overbuilt for multifamily.

We're overbuilt for single-family. We also have these build-to-rent portfolios cuz there's entire communities that builders weren't able to sell and they just stalled out on and they sold them as package deals to these institutional buyers that as for build-to-rent product, right? So, they just have an entire community, they're all rentals. And this is great.

This supply added to the market, we're having a supply increase while we have a demand decrease. And that's why we're seeing things move rapidly. And rapidly for real estate is a year, okay? So, just to be clear on that.

Things in real estate move slowly even in Florida. This isn't again an overnight thing. What happens is you have a little bit more listings, a little bit more listings, a little bit more listings every single month. And then you have a little bit more less demand, less demand, less demand.

And then over a five-year period, you have this gut, you know, of supply. And that's basically what we're seeing right now. And so, when you see the rents come down, automatically this changes the calculus for investors. And 30% of the purchases in Florida are investors.

So, now that they're saying, "Well, now I can't buy that house. I have to buy it way lower because the rents could be dropping another 10% next year." So, then they just sit on the sidelines and all of it stacks up until the seller becomes realistic on the price. So much so that it becomes, you know, a deal again at today's mortgage rates. Now, I don't think mortgage mortgage rates could come down if we see huge issues in the labor market.

We I just I don't know. I'm guessing just as much as anybody, but it does not look healthy out there. The wages the wage growth is stalling. AI is an absolute real thing.

People are becoming more productive. You can have one person do the work of five people. We're seeing this in the real estate industry as well. You don't need to hire in-person staff anymore.

You can hire a a assistant overseas or you can hire AI and then put them together and they're just as effective or more effective than people in in the United States. And there's cost savings there. And so I think the companies will benefit from the AI movement, but the employees will not. And so I think if there's less jobs out there, if you don't have a job, you can't buy a house in most circumstances unless you're paying cash.

And the investors are backing off. So there's really on the demand side when we look through all the variables, we're not seeing any green lights to say, "Hey, things are going to get better anytime soon." So, what about foreclosures? That's That's another big part of how a market heals and prices come down. More housing comes to the market cheaper.

Foreclosures are starting to go up. You know, the Biden administration really held it back with a lot of their policies allowing people to delay payments, miss payments beyond 90 days again and again and again. So, that's starting to come to to to to rise. Foreclosures are rising.

How do you deal with foreclosures rising mixed together with in your part of the country in the Sun Belt, all these people that were forced to buy at high prices that are going to watch the the the the pricing tumble? What happens to those people? And don't you think knowing the Trump administration, as a Democrat administration, they're they're kind of the same, they're going to want to do something to stop that and stop the collapse? I don't know what they can do at this point.

I mean, look, there's going to be vintage years that you purchase that are going to be better than other years, right? Timing is really important just as in any investment and what the price you pay is really important. For housing in Florida, the people who are going to get really hurt and burned are the people who purchased in 2022 through 2025 with high leverage, right? FHA 3.5% down, VA 0% down.

Uh completely leveraged that when they buy that house they're like basically immediately underwater after fees. And then they a lot of them are buying new construction because they're getting the lower interest rate. But then the house down the street because the builder's building phase two, phase three, phase four is now a hundred thousand dollars less. Yep.

And now they're significantly underwater. And I know people say I love real estate cuz I can hold it for 30 years and it pays off. People of Florida don't hold their real estate generally for 30 years, right? Cuz that's what the housing bulls will say, "Oh, always buy, you can hold it for 30." They don't.

You know, right? The stats come out, it's between eight to 12 years in Florida. People move in and out, people have job loss, people have death, people have disease, people are trying to get closer to family, etc. Happens all the time.

And if they're staying in their house for less than five years and it costs 10% round trip to even transact real estate on the buying and the selling costs, they're significantly underwater. And they're not purchasing, you know, it doesn't make sense to purchase that house at this point in the market cycle. So they go to they call us up. I'm just saying this, I'm the owner of a of a very large real estate brokerage here an independent brokerage, and I'm putting out information there because I care about this next generation buying at peak prices.

It does not always make sense to buy real estate depending on your time frame, right? You could get stuck underwater being that person that bought in 2008 loses their job, gets foreclosed on in 2010, 2011. You need to have a clear path and strategy now more than you've ever had if you really want to buy real estate in this market. And also to say, you can negotiate like crazy with these builders, hundreds of thousands of dollars off of the price.

And if you get in touch with me, I can get you in touch with people who actually know what they're doing and can help you navigate the waters so you reduce that risk of massive decline and being underwater when you purchase that house if you do want to buy it in today's market. Again, in contra to what the political class is saying that there is an undersupply problem. You're saying no, because if there was an undersupply problem, then the builders would be able to give it to the highest bidder. We had a migration demand shock.

It was not a supply problem until we had a demand shock. Now, building took 2 years to catch up to that demand shock, and then they did and they thought that demand would continue forever, and then it collapsed, and they kept building because once they start a project, it takes them 2 to 3 years to finish that project. So, they're always 2 to 3 years behind, and that's what we're experiencing right now. And so, even though we have an oversupply right now, there's still more supply coming on.

You can see the cranes all around the city. They're continuing to build. They broke ground. They have the financing place.

They have the contractors in place. They have to go finish that project. So, the last thing you want to do is subsidize more construction at this point. It It literally makes no sense.

And that's even in the here and now. You're talking about the longer-term trends really portend much less demand. Unfortunately, the the birth rates, the family formation, and then the the larger generation dying out. So, none of that makes sense, but So, look, you're you're pretty optimistic depending on how you view it.

I I do think a collapse there are some problems with it for some people, but ultimately, it needs to become more affordable. Let it collapse. You seem to be pretty optimistic that, let's say, unlike healthcare, for example, where government just controls the hell out of it, housing, as much as they manipulate and influence it, at the end of the day, you you feel like they've run out of manipulative tools. But my fear is this.

My question is, let's say Trump got what he Well, what he says he wants, like his rhetoric. Let's say they were able to get interest rates down, the federal funds rate down to below 100 basis points, which is where he wants it. Whatever, you know, less than a point. And did a bunch of QE, which you would expect given I mean the economy is going to be terrible.

And that's usually what they wind up doing. What would What effect would that have? Just continue to destroy the middle class. I mean, what do you What do you want me to say?

Uh first off, I don't think he's going to be able to do it, right? There's 12 members on the FOMC, so even if he gets the chair in that he wants, it doesn't mean that the rest of the people will vote with the chair to to get rates lower. I don't think that he's actually going to be able to do what he says he's going to do. And the last thing we need to do is just devalue our currency even more and increase our money supply at this point in the market cycle.

I think that's what got us in this mess in the first place. So, it's just the extend and pretend strategy to try to get through midterms, try to get through election. And every president does this. I'm not blaming just his party.

It's It's sad on both sides, but this is how they try to consolidate and keep power is to try to push things along as far as possible during their terms. And the consequence of the middle class that continues to get eroded away every single year. And they're loaded up with debt. And so, my question is like at a certain point, there's just not much more you can do.

The consumer is just maxed out with debt. We're seeing record level of repossessions of cars. We're seeing student loan defaults skyrocket. We're seeing credit card defaults skyrocket.

Like, what can you possibly do when people aren't paying back those items? You really expect them to be able to go out They're in there losing jobs. You really expect them to go out there and go make their largest purchase of their life and buy a house? My bet is that even if you got rates lower, they're still loaded up with debt, and it's still a structural demographic problem at the end of the day.

I I mean, look, there's always a principle that if the money ain't there, the seller can't charge it. If the buyer doesn't have The pool of buyers don't have that money, the seller can't charge it unless the government makes it available. So, like with healthcare, the consumer is not the consumer, the government is cuz Medicaid, Medicare, VA, all the state programs, the Obamacare subsidies, but and then you have through work the tax exclusion for the employer. So, no one pays directly or very few people pay directly, so the government just makes it available and that's why the prices go up and up and up.

But, you're saying with housing at the end of the day, now you do have the FHA loans and all that, but the delinquencies, this is a big story this week. You've been talking about it on me and some of them are are approaching GFC levels, levels we haven't seen since the GFC. So, based on everything that I know about economics, what you seem to be saying, if I'm looking to move, in which I actually do want to move away from where I am, what's your window? One to two years?

I mean, you should have a really big collapse. My guess is as good as yours. This is a slow-moving train and there's a lot of factors that you have to keep an eye on. I can tell you my area, I'm not I'm not buying real estate.

You know, I'm hold I will wait until the math makes sense. When the math makes sense and the mean reversion is complete, that is when I'll purchase and I'm I'm going to stick to my fundamentals as a real estate investor cuz I own more than 200 units and I sold them all. I sold every piece of real estate. I saw March 2022, the Federal Reserve raises interest rates, rates go up, asset prices backed by debt go down.

It's just like the nature of the beast. It's just financial gravity. And so, if you simplify it and you look at the fundamentals, despite the government's intervention, the fundamentals no longer make sense. And that gets why I keep pointing to, why would you buy the house when you could rent it for $1,000 less when we're already in an affordability crisis for the next generation?

Who is that next marginal buyer that's going to come in and actually purchase at the price that you have today and it it would but they're >> understand it. But but John, I don't understand how it's gone on for like four years, four or five years already like this. Nobody that age has the money. They They just don't have it.

I'll tell you what's happening. They're getting gifts from their parents for the down payments cuz you we we see it at the open houses, right? So, I'm talking with top people around the country. They walk into a house with their parents.

The parents are providing the down payment. Maybe they're co-signing with them to be able to make it happen so they can get their first house. And and that's how they're doing it. They're not It's not from their own labor.

It's just The parents can either say, "I'm going to have my kid move back in with me cuz it's so insanely unaffordable out there, or I can help them with the down payment to purchase their next house." Wow. No, it's got to be because, you know, I bought my house in 2012 and back then the cost of living you cannot compare to post uh shall we say great reset. You just can't compare. So, I was able to put away money throughout the GFC era.

That's really where I was I got married in in what was it '09 and I was able to put away money. I don't understand how these folks in their 20s are breaking even, much less putting away any money, much less much less putting away enough money to have that much of a down payment and then that much of a monthly payment. It it just it not The math doesn't make sense. So, it's got to go down.

I really hope you're right that the government is out of tricks. I want to land this plane with the final thing. What sort of long-term reforms can we use to change policy to get government the hell out of housing and to stop creating more of these bubbles? We got to vote in better people.

We got to have better candidates. So, you know, we don't have people who represent the next generation. That's for sure. We don't have people who are in there representing the interests of the next generation.

You look at the age of the average person in Congress, the presidents that we've had, they're representing their demographics. They're not representing the demographics of I'm 34 years old. I can tell you everybody that I'm friends with, that I talk with in my age demographic, they're struggling, they're trying to keep things ahead. They're they're saying, "I can't even have more than one kid because daycare is so expensive.

We It's two two working income households and they still can't afford >> Still, yeah. Basic necessities. They're loaded up with credit card debt. And, you know, some of it is >> Well, well, you know what the solution spending happens in both parties.

The solution is to spend even more and subsidize them and create more inflation. To the to the wealthy, right? The top Get Let's do tax breaks for the top 10%. That's what they're doing.

I mean, that's ultimately what happens. >> or also spend more on welfare, which Right. That also doesn't work because you go into debt, create more money supply, more inflation, and all you're doing is raising the amount of subsidy you need because of the unaffordability that you're creating through the subsidies. I mean, at some point we got to get back to a free market.

One more thing before I let you go, I know this is not so much your wheelhouse, but just real briefly, what is going to happen with all the commercial office space Oh, boy. Given that all the macro factors that you say are going to drive down demand for residential? My gosh, when it comes to office space with the revolution of so many people working from home and among other factors, what is going to happen with all these downtowns? We're seeing it here in Jacksonville.

There's just a report that came out the other day, one of the major buildings downtown at Everbank has massive vacancy and the local government is considering subsidizing that downtown. And so, it's like just let this stuff fall and reset and make Let prices make sense because one of the issues that we see with office and retail is when the rates go higher, their mortgage payments go higher, they pass on those costs to the tenants. The tenants aren't making that much money, right? These restaurants and and things like that, their margins are already pretty thin, and so there's no room for people to rent in these locations.

So, they're just shooting themselves in the foot. And this is what happens when you go from zero interest rate policy to trying to get back to a normal normal policy, and it has these second and third type of effect on the market, and that's what we're seeing. And now you see the local governments being like, "I can't have that building be 25% vacant. Let's subsidize them." So, then the taxpayers are bailing out these bad investments uh in to benefit of the investors.

I think that makes a It's unfortunate. It's like the too big to fail thing. It's just This is the wrong way to go. You need to let these investors have accountability and take their losses just like the rest of us.

>> It's almost like God is giving us another opportunity inevitably cuz it's cyclical that we squandered the GFC. We didn't learn our mistakes from what led up to the '06 '08 era housing bubble. We doubled and tripled down on all the governmental, the zero interest rates, the easy money policies, the easy loans, the people making sure people can afford houses afford what they can't afford rather than letting the market come down to what people can afford. That is the central point.

We So, your point is other issues of inflation we're kind of screwed with, but with housing, it is going to come down. Some areas are already coming down. The rents have come down. Let it be.

Let it settle. But, governments always into too big to fail, you're putting out a controversial take that perhaps in this sector, they might be out of luck. What are they going to do? There's nothing left they can do.

I mean, they've done literally everything they can think of. They can go in and do QE and buy mortgage-backed securities and Treasuries. I don't see it. I don't see it.

They just Also, the interest rates are different now because once the inflation Armageddon came with COVID, that wasn't there in the previous two decades, back then it was a futuristic thing. The The Fed was able to play games and they were able to get away with the low interest rate. You cannot look at people like, "Oh, yeah, see Trump thinks you could set interest rates at zero. Okay, inflation is yay high.

Could you please please give us money and we'll pay you zero interest that won't keep up with inflation?" Like we're going to see, you could do it all you want, but the 10-year Treasury ain't getting back down there. That's going to facilitate the mortgage rates you saw during the two bubbles, this one and the GFC one leading up to the GFC, unless you have some crazy depression. I mean, that's the only way it's going to get it down. And I know there are some friends of mine that are predicting that rates will come down, but in a very very bad way.

So, depends on employment. If employment cracks, but then if employment cracks, people don't buy houses. So, it's it's just, you know, so you like if you think that's going to happen, it's going to There's There's going to be these secondary effects that are going to restrict people from being able to buy anyway. No, look, you you have a very unique take on not just on housing, a lot of finance and and and economy.

Where could people find more your work so they could follow what's going on in housing? Sure, I have a YouTube channel @JohnBrooks and I have an X account. I just started talking about real estate markets in March of this year and surprised that people want to hear about what's actually going on in the ground. So, everything that I'm reporting is not anything cuz I was a bull from 2014 to 2022.

So, I want to be clear on that. I'm not a doomer. I was at a positive outlook. I was buying real estate.

I was making millions of dollars buying and selling and owning real estate, renting real estate. And then in 2022 when this math stopped working, I was like, "This is really messed up." And then in 2025 I decided, "You know what? Let me go public and start talking about what I'm seeing because no one else is talking about what's actually happening on the ground in our marketplace. And so I just They're saying the opposite.

They're stuck on the old paradigm that we we we need to build build there is not enough supply and it's just a very simplistic thought process that doesn't take into account the unique factors that made pricing so expensive. Often that is the case. It's a it's it's a high demand not enough supply. That is not the case here in in in 90 95% of the of the country.

Not in Florida, not in the Sun Belt, right? In the in the Northeast they do have those NIMBY rule it's very hard to build. It's very restrictive and there's limited supply but they have different issue, right? They have old older housing stock, they have older generations, their young people are moving south because it's so expensive.

The wage growth isn't there, the job growth isn't there, right? So every part of the country is very micro, very regional. There's even pockets of Florida that are steady Eddie and completely, you know, like not paying attention to what's going on. The the speculative markets that had the boom will now go through a bust.

Uh the level of that bust depends on many factors and that's why I keep up to date with them and I share them on on my page and when there's good pieces of data, we'll report that too. It's just we haven't I have not seen a positive real estate piece out there for 6 months except by mainstream media who is paid by title companies, builders, realtor associations who spew this BS out there that make you think that we're still in some sort of shortage that we're not because you can just open your eyes and drive down the street and see the for sale signs for yourself. Bingo. Bingo.

And that's the truth we needed. It's not a a bearish view. It's it's a double-edged sword but I think ultimately like you said for the people that need the houses, it is bullish. Let it happen and to me the quicker the better and just reset and stop rebuild from there without the Freddie Fannie Federal Reserve manipulation and let the markets work to where housing is pegged to where what people could afford.

I wish we could undo all that the FHA stuff that led to the 30-year mortgage where they kind of set the tone on that. If we would go back to more of the five, seven year I was like, "Oh, that's terrible. No one can afford it." No, but then if you stop with, "Okay, a 100-year loan for zero interest." Yeah, well then prices will be a trillion dollars. But if you make it more reasonable like, you know, 6% and then five, seven years more like a car, a little bit more maybe 10 years, the house price maybe will be $80,000, $100,000, whatever it will be.

I'd rather an economy built on lower pricing than debt leveraged unaffordability and bubbles. Let's finally do this right, John. Thanks so much for your work. Thanks for joining us.