The Zach Foust Show
We break down housing, growing wealth gaps, and the economy in a simple, meaningful way.
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The Zach Foust Show
What Made Housing so EXPENSIVE? | ZFS 90
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Before Covid I got sandwich makers into homes. Deli workers. Campus security guards. Single airmen fresh out of basic training. Sub thousand dollar mortgages every week here in Delaware. That world is completely gone and I want to walk you through exactly why.
In this episode Sean, Joe and I break down the real causes of the housing crisis from the ground up. Median home prices. Rental increases since 2015. The $4 trillion the Federal Reserve printed in 2020 and where that money actually went. The Cantillon effect and why banks, governments and asset holders always win when money gets printed. And the one graph that shows a first time home buyer today needs to make $93,000 a year just to qualify.
We also read the actual Dallas Federal Reserve document that went viral this week. Not the New York Post headline. Not Caroline Leavitt's tweet. The actual document. And what it says is very different from what went viral. Immigration can explain about 30% of the total growth in home prices in metro areas. Not 30% of home prices. 30% of the increase. Which works out to roughly 6.8% of total home price growth. That is a very different number and nobody is telling you that.
We close with a real conversation about what Gen Z is supposed to do in this economy and what a silver lining actually looks like when the system is this stacked against you.
What made housing so expensive? What actually caused this rise in housing prices? Not just buying a house, renting a house too. Are people really out here buying in this extremely expensive market? If so, who is it? I'd like to know their name. I'd like to know their their status, their educational status. Are they are is is somehow are people making way more money? Is the house in and of itself worth a lot more money? Or is this just as simple as they say? Is it just supply and demand? And if it is, where is all the supply at? Because we need affordable housing. And where's the demand coming from? This is a very debated topic. Some will say it's immigration, some will go just straight to bankers. Where are the actual stats? So that's what we aim to do today.
SPEAKER_03Is this where is this? Who's this man? Oh. Oh.
SPEAKER_05Well, you know what? This is actually great. I think he's gonna be fantastic because I think he knows why housing is so expensive. This is great, Sean. Thank you for bringing him up on the screen. I don't want to introduce him quite yet, so let's bring him back off. He's a little shy. He's a little shy. I don't want to talk about him right now. He has a little bit of a double chin, but this is also an artist rendition. Maybe the artist wasn't that good in the 1700s. Welcome into the Zach Faust Show podcast here on YouTube, Spotify, and Apple, where we aim to tackle the economy and all things affecting you within it as the spine of it, the working class. My name is Zachary Faust. Producing today, we have Mr. Sean Wright. As always. Sean, can you say hi? And one thing do you think is cool about sports?
SPEAKER_02Hey guys.
SPEAKER_05What? I just want to see if you had something ready.
SPEAKER_02Okay. Uh, one cool thing about sports is how talented all these athletic individuals are. I think there's, especially with like the World Cup, these people can run for like I don't know.
SPEAKER_05Joe I don't know, man. And and unmote our boy Joe's Mike, Joe Baird on the mic, say what's up. As soon as you're done laughing at the response.
SPEAKER_02I don't feel good.
SPEAKER_05So let's get back into the topic matter. Not on athletic men in the World Cup, even though the United States was absolutely embarrassed by a bunch of very athletic Belgian men. What is actually causing this problem in pricing? Many people are stating that rentals in their area have gone up 50, 40, like 70% in just the last four years. Is that true, A? And if it is, what's causing it? Why are we in this flux where we feel we can't move out of moms? This is a this is a huge moment right now. Cause let me let me paint a quick picture of what 2020 looked like. Right? Because that's where I want to focus our conversation around. Before COVID, the amount of people, the amount of absolute imbeciles, real single young imbeciles was my target demographic. I, as a real estate agent here in Delaware, loft team, we've been in business now 10 years, got to work in this pre-COVID world. It was, it seems like Nirvana compared to today. Because I could I could literally find someone who had no college experience, no degree to their name. Okay, they're working at a deli. They're working at a deli making sandwiches for other people who order them on a tablet. They type in on the tablet, I want this sandwich. He makes the sandwich. I got that guy a home before COVID. Multiple times, by the way. Single airman in the military, right? Just getting into plumbing. I remember there was this one guy, he was a he uh he he directed all the phone calls for a local campus security. Like, what? What? These people were buying houses, renting, leaving mom's house before COVID. Now let's look at after COVID. What does after COVID look like? What do you think has changed? Give me a quick uh quick just in your thought process. What has changed in the housing market between now and COVID? Well, now everything is not just housing loss, it's significantly more expensive. And we're gonna get into that, but first let's let's let's look at what the prices actually were. Sean, can you bring up the median home price? So, right there, can you put your cursor on the gray bar? Right there, right there. So this is the median sales price of houses in the United States sold. Not listed, because of course you can negotiate and all that. Sold. At its lowest, 317,000 right there in COVID. But let's even go back a little bit further. Let's go back to let's say 2016, go all the way back. Did we ever get into the twos? Do we ever get into the oh 299? Oh, look at that. 299,000 just 10 years ago. 29k was the median home, guys. In 2016, I bought my first home as an acre across from a nice field where the wind would push in from the field, and it was right across from the Air Force Base. We could watch the planes take off, big C-5, C-17s flying over. A little annoying at night, little annoying at night, but really nice. And I bought that house for $145,000. $165k all in. That house today is worth $350. Easy. Maybe $375, if not more. Let's look at also what's going on in rates. Because people can't afford mortgages. Well, we can see before COVID, we sat in this three-ish, four-ish peaked into the fives in 2018. But Sean, real quick, what do you notice happening from 2018 in through 2020?
SPEAKER_02Looks like 2019-ish, yeah. Yeah, it starts peaking up here. And then once you get close to 2020, it starts dipping down.
SPEAKER_05So would you say that rates were high or low before COVID?
SPEAKER_02Uh, I guess technically, I mean, right here it was lower.
SPEAKER_05Yeah. Lower in terms of the 2000s, and pretty much all the 2000s were low historically. So, yeah. By all accounts, low rates before COVID. And this is one thing that people kind of leave off the table. Because as we see, as we pass through COVID, we start printing money, which we'll get into, rates lower, and people are getting 2 and 3% mortgage rates easily for multiple years. Multiple, multiple years. So today, we see those rates are now fours, fives, six and a half as we record this. So mortgage rates are also a problem. The home prices are higher. Okay? That's a clear and obvious fact. Something happened in or around that 2020 span. Rates, we can also see something clearly happened, something was clearly opportune at the very least, to be able to buy a home during this period as opposed to say now. Let's look at the rentals though. Let's not leave renters out. Let's not leave renters out. Are you paying more? Let's pull, let's look at 20 like 19. What's the average rental in 2019? $1,149. Prior year before that was $1109. Prior year before that was $1,068, $1,029 into $994 by 2015. And these are media, or this is the middle ground. It's the average. None of these are close. We're talking about Alabama. These look like really expensive. It's all dependent upon your area. But if we look at those years compared to now, I mean, look at the increases we've seen year over year since 2020. From 2020, the average monthly rental was $11.85. Flash forward a year had gone up to $1,265. Flash forward another year, $1341, $1448, $1,535, $1650. We're now sitting at nearly $1,700 a month as the average rent moving out of moms. Moving out of, God forbid you're in Hoboken. God for freaking bid you're in California or Hoboken, New Jersey. You're there's no chance as a single individual that you're gonna get into a rental and hear me. And this is the part that a lot of boomers will miss. This is the part a lot of boomers will miss. A rental is supposed to be cheap enough that you can start building your life. Okay, it's supposed to be the opportunity to get your degree, leave mom and dad's, get your little rental property, have it three to five years, maybe even ten years. Okay. But the point of it being is renting a small property is supposed to be a stepping stone for something bigger. So why is the one bedroom apartment uh that just got listed in Felton Delaware, one bedroom apartment going for $14.50?
SPEAKER_03Why is that? What why are flats going for $2,000?
SPEAKER_05I mean, comment in your area what rent is going for in your area, or are you paying rent? It's probably more than the $16.98 listed. As we know on this show, a lot of the numbers we talked about are misconstrued or fake. Maybe this one isn't. I don't know. High property management, we'll look into it. But this all comes down to Gen Z, and that's who we're going to be focusing on today. So let's look at what is the actual difference between, say, let's just say someone before COVID versus someone now paying on a home. If we were to look at this graph real quick, I want us to scroll down to our table. This is comparing 2010 to 2026. Look at all of those different expenses. You have housing costing you 951 a month, grocery, 325 a month, healthcare, 175 a month, and on and on. And we base this off a single adult renter, one car. Single adult renter, one car between the ages of 25 and 34. So we're even dipping a little into millennial here. Young millennial. If you compare the prices that were being paid in 2010 to 2026, let's just look at housing real quick and we'll see.
SPEAKER_03All the way on the right, the inflation since just 2010 in just shelter. Living under a roof that has water, maybe?
SPEAKER_05A kitchen, possibly, maybe just a fridge. Just to have a shelter, regardless of where it is, how expensive it is, what location you're buying it in, a hundred and two percent more expensive than just 16 years ago. And I know 2010 doesn't sound like 16 years ago. It is. I know that's sick, but 2010 was 16 years ago. 102% increase. The Federal Reserve would tell you it's only 54%, by the way. So what's that mean? So let's get into the Federal Reserve. That's where I want us to focus our next bout because this is where we get to the supply-demand. Okay. Where is the supply of all of this money coming from? How do people have enough money to afford these homes, this rent, higher health care, higher child care, higher, all these different things? How are people surviving? Oh, while the Gen Z demographic right now, a large part of them feel like they cannot move out of mom's. Like, tell me honestly, how do you think you're gonna move out of your mom's place right now? How is Gen Z expected to get out of their parents' place? Everything is expensive from healthcare to housing, that nobody's getting married. Only 12% of them are getting married. They used to be 50% just a decade ago. Food is way more expensive. They can't even feed themselves. They're living on protein powder. They have they have a they have a no-bedroom apartment that's still $1,500 a month, and they're supposed to somehow save at a job that's not even paying much more than they're what they were paying them eight years ago. Like people were making good money, good money eight years ago. And if you told them what they were making now, they'd probably be like, Yeah, I'm probably gonna be set. $80,000? Yeah, that sounds good. 60,000. Oh, I'm rocking. 100K. All those numbers seem like wishwash now. It's like you're still part of the lower working class. Get to work. You're gonna get 100k. I don't care. You can't go on vacation. Get out of here. You can't buy a house. Get out of here, 100k. What's that? 80k. You're broke. You're broke. You're having to think about your life in a broke lifestyle, making 80k, 60k. I used to sell homes to people who made sandwiches. They made $32,000, $36,000 a year. You got a $920 mortgage. I pumped out so many sub-thousand dollar mortgages here in Delaware. It's sick. So let's get into where the supply and demand argument comes in, because this is the big crux of it, okay? Prices can only go high when two things happen. Prices can only go high when two things happen. We have to, A, we have to have a lot of demand. The demand in this case are home buyers. We have to have a lot of people buying homes. If we don't have a lot of people buying homes, there's not a lot of demand. And if there's not a lot of demand, there's not a lot of people putting in offers on properties, going out and doing showings, looking for a next investment opportunity. There's none of that. Okay, so we have to have demand to support any market. The farmers market, the uh house housing market. We'll stick there. In order to support the housing market, we have to have demand. Now the argument is where does that demand come from? Well, let's pull back the argument ever so slightly, okay? Because in order for prices to go up, we have to have high demand. We simultaneously have to have lower supply, or at least constant supply. Where's all the money for these jobs and for these IRAs to keep flooding up and for all these stocks to keep skyrocketing up and for all these assets to keep squeezing up? Because let's let's not leave anything off the table here. All of the Gen X and boomers out there who flex their net worth, it's just because they were alive. They just were alive and did their job. That is it. And that's why they think you're lazy, by the way. That's why they think you're lazy. Because they got to just work a normal job, live in a normal house in a normal little town, and that normal little town bustled their house, it's worth 8x, and the job they work at had a retirement account. And so now they're a millionaire. And they're like, well, why don't you do that? Why don't you just go become a millionaire? Well, you don't just not have a job. You just must not have a job. Just FYI, 46% of homeless people have a full-time or looking for full-time work job. 46%. It's a pretty significant number. In America right now, a job does not equal shelter. Honestly, it hasn't in a while, and it's become more and more difficult. What's one reason for it? Asset accumulation. Assets have been accumulated by investors and others alike at scale, all while money has been printed. Let's go into this graph real fast. This is our beautiful Jerome Powell graph on money printing. Say hello to the Canva. If we look, if we look at QE4 right on 2020, perfect. These are assets held by the Federal Reserve. If you're unfamiliar with the Federal Reserve, they are a central bank. They have the ability to print money. And after COVID happened, they printed money. How much money, Zach? They printed $4 trillion. You thought the Iran War was expensive. They printed $4 trillion. Where does that money go? Hold on for that. Hold on to that question. Where does the money go? Hold on to that question. I promise you. Hold on to it. So a mass amount of money is printed into the system. What does this do? It sent, let's go back to the median sales price. It sent home prices skyrocketing. Why? Because rich people buy assets. And when there's more money in the system, rich people have more money. And when rich people have more money, they again buy more assets and then they get more money and they buy more assets and they get more money and they buy more assets and then they get some more money. And after that, they'll think about it and then probably buy some more assets. And there's only a finite amount of assets, especially real estate. It's built on dirt. We cannot AI dirt. We can't print dirt. Dirt's dirt. We can't do anything to create more American dirt. I guess unless we take on Canada's or 51st state, then maybe we have more dirt.
SPEAKER_04I don't think it's gonna happen.
SPEAKER_05Money got printed simultaneously, home prices skyrocketed because assets spiked. Guys, that's the main issue here. Investors putting money into the market, regular everyday people putting money into housing, boomers going to get their retirement home to live in Florida and wasp off the rest of their life. That's the problem here. They got more money, they use more money to buy more real estate, and real estate's a finite asset. That finite asset continues to go up in price because there's not more supply of it, because we're not building enough, there's not more dirt available, and now Gen Z gets to look at a more expensive asset. Is that the full story? Let's keep going. Because the Dallas Federal Reserve, all right, next one, next one, real quick.
SPEAKER_04Perfect.
SPEAKER_05The Dallas Federal Reserve put out this article. Thanks, Sean. Linking early Biden immigration surge to 30% of home price rising rises. Is that a weirdly written sentence, Sean?
SPEAKER_03Am I am I having a stroke reading that? Links. Home price rises. That's a weirdly, it's weirdly worded.
SPEAKER_05Maybe it's not, maybe I'm stupid. Economist Daniel J. Wilson and I'm not gonna try at the Federal Reserve Bank of Dallas analyzed, there was just a lot of syllables, analyzed court and government data, finding that about 7 million unauthorized workers drove roughly 30% of home price growth and 20% of rental increase in average metro areas. A 1% increase in these workers relative to local jobs lifted, home prices by 2.2%, and rents by 1.4% amid limited housing supply. The study notes job gains without native wage drops. Wait, what? This is so oddly written. The study notes job gains without native wage drops, but highlights per capita income dips, fueling debate as conservatives cited to back deportations. Let's see a little bit of that. Let's scroll down. We have JD Vance giving his take on it. Let's keep on going. There's plenty of these. There's plenty of these. Eric Daughter here. Keep on going. Keep on going. Keep on going. So let's just stop right here. So this is the new this is the main article that's been fueling on X. And I Sean, I don't think I've been sent this article more than I don't think I've been sent an article more than any other article ever. I think this is the most sent-to-me article ever. I think I've gotten it at least a hundred plus times. Just on Instagram, too. Shout out you guys, making sure that we're keeping up to date on things. I love when you're holding us accountable and making sure that we can keep our nose to the ground. Especially this. This is the coupe de gras. This is Federal Reserve. Housing. We talk about this. Immigration. Reading from the New York Post headline here. Immigration surge triggered 30% rise in home prices. Whoa. That pretty much just takes the entire front end of the podcast and throws it into the fire. Take everything I just said out of it. Biden's illegal immigration surge triggered 30, 30% rise in home prices. Whoa! Sean, give me just can you give me a thought?
SPEAKER_03When you read that, how do you read that?
SPEAKER_05How do you read that?
SPEAKER_02Sounds like, hey, let's blame the small, the small group of people as opposed to like the trillionaires that are causing the problem.
SPEAKER_05Well, there's only one trillionaire, Sean. You can't say trillionaires yet. Sorry. You can't say trillionaires yet.
SPEAKER_02One trillionaire and friends.
SPEAKER_05You can't say trillionaires yet. Trillionaire and friends. Now, there was a problem that emerged under Biden's administration, and it was immigration. And there was, in large part, a large failure. There are a lot of people that are in the country that came during that time period that did not go through the proper discourse, did not go through the proper uh chains of command, did not go through the process, some of whom are violent, some of whom are whatever. Like you can throw up our names and we can find stories. An immigrant did that, an immigrant did this. Did they cause housing prices to go up? Is the main point here. And if we're going to use them as the scapegoat, are we labeling them properly? Because I don't ever see the rich get used as a scapegoat. I don't ever see the Zionist billionaire corporation owner get labeled as the scapegoat. So forgive me when I see a scapegoat being perpetuated. I mean, just scroll down real fast, scroll. There's so many. Just when I see the scapegoat narrative just being blasted every direction. The same exact message. They're causing a 30% increase in own price. You should be angry. And by the way, you should be angry that the American dream is being ripped out from under you. You have every right to be angry about that. You should be. You should be. And I was just talking about before the podcast, I think we're a lot past talking on these issues. There's a lot of things that we can be talking about that showcase the obvious fact the American dream is being ripped out economically from under the Gen Z generation. And I can't stand to see scapegoats get utilized when there's a larger conglomerate of a problem that is avoidable. But it's not because it's greed.
SPEAKER_03That's the other side of this that I'm always asking. And I'm just always curious about where's the money?
SPEAKER_05Let's follow the money. Where are we gonna find more money? Or people that want more money, or people that want more power, or people that want more affirmation. Where am I gonna find them?
SPEAKER_03What are they doing? So of course, I read the article. The moment I read the article, I read the actual Federal Reserve document.
SPEAKER_05And here it is. The impacts of unauthorized immigration on U.S. labor and housing markets. New evidence from administrative microdata. So a couple things that can be brought up immediately is this is a document that has been created by the Dallas Federal Reserve Bank. They put a warning in it stating it is not a federal document by any means. It is not actual national housing prices, A. So we'll start there. It's metro areas. Now, is that where a lot of the hubbub is? A lot of the job creation is? Absolutely. But I just want to be clear about the facts of this document. It's metro data. The second is that it's only encompassing uh the time frame of early 2021 to early 2024. Later in the document, it'll say March. So March will assume March 2021 to March 2024. I don't know why they just led with that and said early. Seems like a weird thing. Why are we gonna be specific? Be specific. It confuses me when you're not. And they're looking at unauthorized immigrant workflows. So you're gonna see this uh UIWF come up in this document a lot if you happen to read it. Which by the way, I know a lot of you won't. I know a lot of you aren't nerds. You have everything to do in your life except for read a Federal Reserve document. You hardly have enough time to pay for your rent. I get it. So I read it for you.
SPEAKER_03Let's go down, I think, to page eight. Scrolling on down.
SPEAKER_05Scrolling on down. Oh wait, was it there? Was it page four? Was that off? I think it was page four.
SPEAKER_03Yeah.
SPEAKER_05We'll figure it out. Oh, so maybe it's page eight by PDF, page five by actual document.
SPEAKER_03There it is. Just all over the place with our numbers. Alright, I'll zoom in there on that paragraph.
SPEAKER_05So in this document, it says they are looking at unauthorized immigration flow into the country, specifically metro areas. Though this is the Dallas Federal Reserve, I have nothing uh to look at in this document that says they're only looking at Texas. Because I did get that. Like, what if they're only looking at Texas? Obviously, they have an immigration problem. No, I believe this is an actual national document based off what it's talking about in here. It does not just say anything about Dallas metro area or, you know, anything like that. If we go about halfway through, it says the impacts on rents is slightly smaller for single-family units and slightly larger for multifamily units. And these magnitudes are found similar based on the legal immigration, but you're back in 95. Okay. A back of the envelope calculation suggests that the undocumented immigrant flow can explain about 30% of the total growth in house prices and 20% of the total growth in rents over the boom period for the average local market. All right. I want to break this sentence down a little bit. Couple things to unpack. UIWF, if you're watching on TV, you're watching on your phone, that's the undocumented immigrant flow. A back of the envelope calculation. What does that mean? It means this document is not peer reviewed. The Federal Reserve is not stating this is even of their full views. Like the New York Federal Reserve said this is not like a Federal Reserve document yet. This is just for the Dallas Federal Reserve. A back of the envelope calculation, it's a jot. It's a jot. It's an estimation based off the information that they already have. So is this science? Is this real mathematician work going on right here, right now? Not yet. It's a preliminary document. And the Fed even said that in this document. It's preliminary. It's not official. A back of the envelope calculation suggests undocumented immigrant flow can explain about 30% of the total growth in house prices. Now wait a minute. Go back to the Twitter post. Go up real quick a little bit, just to that New York Post right there. What does that say? Biden's illegal immigration surge. This is the New York Post, went so viral on Twitter. So viral on Twitter. Biden's illegal immigration surge triggered 30% rise in home prices. Now back to the Fed document. Undocumented immigrant workflow can explain about 30% of the total growth in house prices. Do you see the difference in that wording, Sean? I know you haven't seen this yet. Do you see the difference in those two's wording? Clearly differently written, right? We're not saying in this because in this document, here's the way I'm reading it. Here's the way I'm reading it. A back of the envelope calculation suggests the undocumented immigrant workflow can explain about 30% of the total problem. 30% of the total problem, Joe.
SPEAKER_06Yeah, pull the pull the it's up for quick math too. I meant on the stream. So it says unauthorized immigrant worker flows equal to 1% of local areas initial employment. That means for every one in a hundred new employees who are unauthorized immigrants, increase local house prices by 2.2%, 1.4%. So the back of the envelope calculation is saying that that is equivalent to 30% of the total growth. Which means really quick, rough number 2.2 30%. That means a hundred percent of the growth in their calculation is about six point six.
SPEAKER_05Oh, they go on to say that in the document.
SPEAKER_06Seven percent?
SPEAKER_05It's twenty. So the actual number is it around twenty point eight percent in total that they're measuring in the cost of their housing. Yeah. And that that 30% number of total housing price would equivalate to about 6.8%, like you're saying.
SPEAKER_06Yeah.
SPEAKER_056.8%.
SPEAKER_06So that's what it is. They were correct. The New York Post says 30%. Correct. The max number based on a rough rounded to the nearest 10, not even the nearest five, would make it that.
SPEAKER_05About 6.8. We could even call it seven. Let's just call it seven. But if it's seven, let's call it seven. I hate the political bullshit of perpetuating headlines around easy to understand facts. We gotta read, y'all. We gotta read. And these click hoars, little click cunts out here that just want to make sure their engagement's high, all they want is their engagement. So they're gonna push a headline that, of course, you're just gonna read the headline. I get it. You're we don't have time to read every document. Trust and believe, I know that. And it's pretty much my job to read these things at this point. There's so much to keep up with. The muzzle velocity is insane. So for these, these these accounts out here to mislead the public, seemingly in unison. And I'm not saying it's some paid propaganda blah, but I think that everybody, when they get the opportunity to take a piece of their identity, whether it is red or whether it is blue, and you have something that backs it, and you have a lot of people talking about it, that you're gonna do the same thing because it makes you feel better. It makes it makes you and your identity that is attached to politics feel more validated. And there's good and there's bad to that. But when it's utilized just for pure egotistical, like non-nuanced takes on this, that are belittling uh a group of people that can be associated with the problem, can be a part of the problem. I'm not saying they're not a part of the problem, but they're not 30% of it. They're not 30% of it. And this is also during the quote unquote boom period. I I why wasn't this study started in 2020? Maybe maybe someone with a statistics degree can say, Zach, you know, when you have an anchored variable like that, you want a three-year time span. Anything more, it gets diluted. I get it. Maybe. But can we pull back the median sales price graph real quick? I see significant home price growth from quarter one, 2020. Or yeah, quarter two, sure. I guess that is technically when COVID hit quarter two. When it hit the markets. I I see significant home price growth in that time period too. Why aren't we also including that? And again, that might have some something to do with their historical data references, or maybe they wanted a nice clean three years. I do not know. I do not know. But this gigantic jump that happened is keeping people from living in America. It's keeping them from living a normal everyday life without having to worry about the future of everything economically. And I just, I don't like when we're not using facts. I hate when we're not using here. You know another one, another fact I don't like. I don't like when people say BlackRock's buying up all the homes. They're not. BlackRock doesn't own real estate. It's black stone. It's the other black manner. Look, look, this is a black rock. This is a black rock. It act actually, this might be a stone. Do we know the difference between a stone and a rock? Do we know that what's the difference between a stone and a rock? I think that's a stone. This is a stone. This is a black stone. Joe has confirmed this is a black stone. This is a black stone. This owns all the real estate right here.
SPEAKER_02They own uh Jersey Mics, right?
SPEAKER_05They do. Blackstone does own Jersey Mics. And those companies do leveraged buyouts where they're buying 10, 11, 12 companies at a time. They'll leverage their assets, they'll just absolutely gut wrench a couple of them. We saw it happen with Toys R Us, we saw it happen with Joanne's Fabrics. You know, maybe it's gonna happen to Jersey Mics. I don't know. But their whole goal is profit. Their whole goal is profit. And they do own some real estate for sure, but it is like about 1.2% of the sales that happen. Is that too much? 100%. They shouldn't have any. Should they be forced to divest all of them back to the market and cure our affordability house, our affordable housing crisis? 100%. If we forced private equity and anybody who owns more than 200 properties to throw all of their markets or all of their homes that are above, like, let's say 200, we'll make it really cozy over 200, throw it back onto the market within the next five years. Solved. Solved. Do the boomers lose some home value? Yes. But if you hind all of your net worth off of your shelter, you're not a good investor anyway. So you should have diversified. Let's go into this, which is another moment you might have like I just had against the click whores of the internet. Am I allowed to say whores on YouTube? Am I not allowed to say whores? Well, yeah, I guess. But I said it quick, so maybe the algorithm wouldn't catch it. Let's see what one of my favorite people on the planet, Caroline Levitt, representative of the Gen Z uh movement, honestly. Well, you might you might know her from her past marriages, but let's let's bring her up real quick.
SPEAKER_01Some of these kids, and I call them kids because they're in their 20s. Yeah. And they've never had real jobs, and they're complaining things are expensive. Yes, things are expensive when you don't have a real job. Right. Do you think that's getting traction? Complaining.
SPEAKER_00Unfortunately, I do, because this generation, my generation, I hate to say it, Gen Z and those younger than me have been raised with just silver spoons in their mouths, just getting everything handed to them. That's not the values this country was built on. It was built on meritocracy and hard work, police your spoon.
SPEAKER_05And you have a 60-year-old real estate developer in your mouth. That's that's that's the silver spoon? That's the silver spoon. You go and marry a 60-year-old multimillionaire real estate developer, and then get to get on the news and tell everybody that's under the age of her 28 that they have a silver spoon in their mouth? All these people that are riding DoorDash trying to just make ends meet for their family, they're they have a silver spoon in their mouth, and they love Russia. If they're not finding a nice, just a nice 60-year-old, he doesn't have to be a multimillionaire. Maybe he's only been a millionaire once. You have a kid with him, you have a shotgun wedding, and boom, all of your economic problems are solved. Financially, you're set, right? Right. This is the lead, this is who we should be listening to for Gen Z perspective. Someone who really has a real grasp of what Gen Z is feeling right now. I think this is a perfect person. Let's let's keep on her take. I want to hear more.
SPEAKER_00From your bootstraps and achieving the American dream. And we need to protect it with all we got. Is it laziness a little bit?
SPEAKER_01Is it is it because the professor said country's corrupt, it's evil, and we just need to shake them down and pen money out.
SPEAKER_00It's laziness and it's the liberal indoctrination. You bring up a great point about our education system. However, I will say, silver lining, so many parents that I talk to across the country are homeschooling, are turning to private education, are turning to the public.
SPEAKER_05Pause real quick. Joe, you brought up a great point about this when you were listening to it earlier. Joe said, what an awful flex to say that people are leaving your nationally provided educational system. Because it's bad. Because it's that bad.
SPEAKER_06And while your people control Congress, the White House, the Supreme Court, you're in charge. Fix it, guys. And people are leaving it, and now we're showing that off.
SPEAKER_05This should be clear. This is the woman we should be listening to. She understands this is the White House press secretary for gosh darn it. She's she knows what we're talking about here. Let's keep it going.
SPEAKER_00Christian schools across the country because they don't want their children being taught these communist and liberal ideas slaves. You know what?
SPEAKER_05Hey, you know, in second grade, I got pulled out of public school. My mom, we were here in Felton, Delaware, Lake Forest School District, kindergarten, first, second grade. Just got to Delaware out of pre-K. Miss some of my pre-K friends down in Wichita Falls, Texas. What's going on? Wouldn't that be crazy if actually somebody was like, yeah, I was pre-K with you. And I remember my mom sitting me down and saying, Look, we have this Christian school. It's Calvary Christian Academy. It's in Dover. We're gonna send you. We um your grades are fine. We know you have lots of friends, it's all good. We just we really want to make sure you don't become a communist. These communist indoctrination, they're teaching you about Russia and school. We don't want that. We need to put you in the Christian school. I remember that conversation with my mom. I remember sitting on the couch and hearing, you're becoming a little communist. You need to be sent to a Christian school right now. I remember that. I remember that. I just want to make make that very clear. What she's saying here is spot on. Let's keep it going. She has a great uh great suggestion, by the way, for travel at the end of this for those looking to fill out their travel schedules. Great one here.
SPEAKER_00Has advocated so strongly for school choice across the country. We want kids to be taught to love our country. They should. It is the greatest country in the history of the world.
SPEAKER_01All right. I say, you know, if they misbehave, just make all these young kids join the army. Right? Shape them up. I almost had to.
SPEAKER_00Send them to Cuba. Send them to Iran. They'll want to come back recently.
SPEAKER_05Send them to Iran. She she put the Toby Keith accent on it.
SPEAKER_03Send them to Iran. Yeah. That's fine. An honor. Like it's also just another cultural flip.
SPEAKER_06You mean North Korea? No, South Korea. Oh, South Korea. South Korea. All able-bodied men have to serve in South Korea. South Korea was cool.
SPEAKER_05Is South Korea not cool? I also think it's funny. Oh, then it's an honor. Oh, you're saying we have to punish our Americans. He's like, we have to serve in the honor.
SPEAKER_02Got it.
SPEAKER_06South Koreans are like, yes, that's what we do here. We love this.
SPEAKER_02We love our country. He's one of those guys that's like, yeah, let's send him to the army. I almost did. Like you almost did. You almost did. Why do you feel like you even need to say?
SPEAKER_05Like, I joined the military because I did want to serve the country. Like I did want to do it. It wasn't a punishment. It wasn't a punishment.
SPEAKER_06I'll stand corrected. It was a hasty generalization. I'm sure there's plenty of South Koreans who don't want to join the army, but I knew two of them who did, and they were like, it is what it is. Have to do it for my country. Hey. I'm the one that gets cancelled, not you. I will say too, I don't like Zach stooping to their level and just driving in ad hominem attacks on what's her name? Caroline Levitt. I've heard it too much. Because it's so easy to besmirch her based on her track record of ruining a position in the White House and deliberately lying and being really bad as a politician and failing in her campaign. I should be less harsh. There's so much more firepower against her credibility.
SPEAKER_05I mean, she was the face that helped us walk us through the fact that we weren't going to get the Epstein files and we were stupid if we wanted them. I mean, she really talked us down off that ledge. I think she should get more credit. You're right. Why is she still involved? Yeah, based on her. Because she's really good at her job. Look, she just took a 90-second clip and made sure to confirm to anybody over the age of 57 watching that they are right and that young people suck. They're all becoming communists, and you need to get off your phone, even though you're gonna scroll it and watch AI reels until midnight tonight. Because that's just what boomers do. She's doing a great job.
SPEAKER_02Yeah, it's just like I don't know. Like she's not in the I don't know. Like, what is she doing now now that she's not in the position she was?
SPEAKER_05No, oh, you're getting too you're getting two blonde females confused, sir. That is not Pam Bondi. That is Caroline Levitt. She is still the White House press secretary. Pam Bondi was really from the position.
SPEAKER_02Sorry.
SPEAKER_06And Pam Bondi is still like kind of quasi part of the administration. Deshaun doesn't feel good today. His point he's not working good. I'm sorry.
SPEAKER_02Guys, what the fuck is wrong with my throat?
SPEAKER_05Stop doing that. Please stop. Okay. Um, let's let's get into our next topic. Uh, just finishing this out. Where is all the money going? Where is all the housing going? Guys, I can tell you from being in real estate for 10 years, I watched COVID happen. I watched the American dream slowly become more accessible for just a blink. For just a blink. From the end of 2019 to 2021. Are there any people who worked in real estate during that time that can get in the comments? I it's like it's retro now. They can talk about how crazy that housing market was. You needed a heartbeat again. And people had plenty of it. People had plenty of heartbeat because you needed to make like $42,000 a year to afford the median home in America. Dual income, no problem. 2% mortgage rate, zero problem. That 400k home that's out there right now is worth 270.
SPEAKER_03No problem. And it was gone. And now we're here. And it's completely different.
SPEAKER_05And those same Caroline Levitt's will convince you, oh, it's because you're a communist. You gotta go to Iran. I'm sorry, Iran. If we pull up this John Burns documentation, though, we'll see. Interestingly enough, the accumulation of investment properties by real estate investors has really been cranking up. Uh wow, since 2002. Looks like we're at about a 10% share at this point. And as this document goes all the way to quarter one of 2024, see it's only gone up. To the point where now, by the way, in 2025, you may not know this. One out of three homes that hit the housing market were purchased by an investor. One of three.
SPEAKER_03Not one of thirty. Not one of thir of thirteen.
SPEAKER_05One of three. Look at three houses that have a for sale sign in front of them, and one of them is going to be purchased by somebody with plans to profit. We were craving more recent data though, so we found another sheet. Let's go the next time, real quick. We need a we needed an update, and the update wasn't great. The update wasn't great. Now, I'll I'll caveat. I'll devil's advocate myself. So it could be great because it's starting to come down, but even the come down is higher than it's ever been. Uh, currently sitting at a 29% investor share, as we have the data from June of last year, we could see that investor shares peaked to 32% of total purchasing. We're by investors. Not anybody else. Like, look at just uh what was that? February of 2020 over here on the left. Look at where was that at? February of 2020. That's March. There we go. I just want it right before COVID. Right before COVID. 18%. 18%. And it was peaking. And it looked like it was going through a little peak right there. 18%. Now we're at 30. We've nearly doubled. More, maybe more like 60%. I don't know what the exact number is. Increase. In investors buying properties with plans to profit. The problem is not the marginalized person that is easy to scapegoat. I get they're easy to scapegoat. And I'm not, again, I want to be very clear about my stance on this. I do think there's a big problem that happened with in illegal immigration. I do think there's a big problem that's happened with inflation. And I think the two 100% have to do with one another. When you have a large supply influx of supply of workers, that's going to suppress wages. And when you have suppressed wages, you have people that can't afford things. And I get that. I'm here. I'm with you. Or maybe I'm not. That's fine. That's fine. The facts of the matter are we have a gigantic shift happening since COVID of investors buying up more and more and more and more and more and more and more. Which, if you wanted to know for the price of housing, if that's good, it's not.
SPEAKER_03What's also not good is where else the money is going.
SPEAKER_05Because we can talk about real estate being bought up for investment, but we're not building enough homes. We do not have enough affordable supply. Now we can go into zoning, big problems there. We can go into local regulatory costs. Gotcha. We can have that debate for hours, right? We can have that debate for hours. Federal, local connections, infrastructure costs. Like I'm there. Let's do it. But the one thing we can't look past is the homes that are being built are not affordable. Okay. They're big, they're loud, they got five bedrooms, and your grandma wants to live in there for the rest of her life, so she can scroll Facebook Reels. And the builders who are building those profit or those uh Freudian slip, the builders who are building those properties are profiting. In fact, a study out of the National Association of Home Builders from 2025 edition of the cost of doing business day or the cost of doing business study. Gosh, who is subscribed to the cost of doing business study magazine? Reveals significant trends in the financial performance of builders. Not the amount of homes they're building, by the way. Just to be very clear before we go into this, we're not talking about the amount of homes they're building. That could solve a lot of problems. We're not talking about the types of homes they're building. They're not building modular, tiny home, prefab. They're not getting into like decked-out tree houses that we can mortgage yet, or even a tent with a septic system attached to it. None of that. We're still building cardboard cutout DR Horton Ryan Home, K Hall, Vamian homes. Okay. Those builders, on average, those single-family home builders reported higher gross and net profit margins in 2023 than in 2020. Interesting. Their average 8.7% net profit margin was the highest in more than three decades. And they wanted to tell you the cost of building was just higher.
SPEAKER_04We had to raise the cost. This hammer's really expensive. I don't I don't know. I I just work here. I don't I don't know what to tell you. Profits profit. I mean, everyone wants to profit, right? That's that's fine. Those aren't stolen wages or no that's where the money's gone.
SPEAKER_05That that's where a significant amount of the purchase price has gone to. 8.7% net profit. Record! That's an average, by the way. Wonder how some of the top builders did. That's an average. Because D.R. Horton, they recorded the record profits 2022, 2023, I believe 2024. K Hobnanian, Dipulte, now in the cabinet, by the way.
SPEAKER_03Record profits. And record profits are elites taking money from you.
SPEAKER_05However, you would like to slice that pie up to make that make sense. That's what you're gonna come to. You can take any route you'd like. You can take any route you'd like. Record profits is money that is sifted from you to the elites. And it's not coming back. Because when rich people get money, they buy assets. They don't pay people more. What are you talking about? And then the last piece of where the money is going, it is going to build for rent single family homes.
SPEAKER_03If you don't know about this, these are called BTRs.
SPEAKER_05They're starting to build entire communities. In fact, Sean, you know there's one right here, just south of the hospital here in Milford. It's a K Hop Nanny in neighborhood. It's got a big old six-foot fence right on the highway. Next time you drive by it, read the set, read the posters. Leasing starting in blank. Now leasing new rentals. They built the entire community to rent it. They're not selling. And we can see the gigantic increase as I have this graph pulled up from the National Association of Realtors calculation of U.S. Census Survey of Housing Construction data that we are significantly increasing the amount of BTRs that we are pumping out nationally. Build to rents. One check in the box of the people who believe the WEF 2030 rent and be happy.
SPEAKER_03Call it tinfoil, whatever.
SPEAKER_05Conspiracy. Check in your box. Right there. That's good. That's ample evidence. They're building to rent. And the thing is, if we somehow curtailed this by stopping these institutional investors from doing it, well then maybe there's some motive, maybe there's some actual momentum in our direction. Maybe they'll stop doing this. Maybe they'll start building smaller homes if we stop them from doing this BTR thing. In fact, Zach, I remember there's this road to housing bill that if it's signed, Trump gets one of the main things he wanted. He's going to be kicking institutional investors out of real estate. What do you have to say about that? What do you have to say about that? Well, I've read that document.
SPEAKER_03It is about a thousand pages, so it's a skim. It's a skim. Oh, wait, this is a shorter version. This is only 360.
SPEAKER_05I don't know what I read. Maybe it was a different document I'm thinking about. Well, we've read through this document. We've run through it quite a few times. Last podcast, we brought up about 12 different topics that we thought were worth talking about. But I want to bring up, if you want to look this up, you can look up the text of the 21st Century Road to Housing Act. This is page 361, both on physical document and PDF. This is, by the way, a housing bill that has a lot of bipartisan support. Trump is refusing to sign it until we get the Save America Voter ID Act passed. They want that passed first. So he's not signing this. He's not signed. It'll probably pass. It'll probably pass. But right now it's being held hostage. To those build-to-rent neighborhoods, would institutional investors still be able to do this? Yes. So it's pursuant to a build-to-rent program where the large institutional investor purchases constructs or constructs or constructs and retains a newly constructed single-family home to be managed as a rental property, whether as part of a community made up exclusively of renter-occupied single-family homes, or as a community made up of single-family homes that are both owner and renter occupied. What is this sentence about? Well, let's scroll up a little bit and we'll find that these are the people who are exempted from the investor category. So this whole part right here on page 360, this is the Home Ownership for Main Street America Act. The homes for people, not corporations. You've heard the titles, you've heard the headlines, you've heard people talk about it. We're going to kick banks out of housing. And I'm all for it, by the way. But this isn't doing it. Because A, you don't need to just kick them all out. You need to force them to not buy anything. And then you need to force a divestment period of what they've already purchased. Otherwise, no solution is actually going to be had. They're just going to have to get run off with the jewels they already stole. When you find someone robbing the jewels, you take the jewels back. In this case, we found them robbing it, and we said just keep your jewels and stop stealing them.
SPEAKER_03This section is defining who's exempted from that rule.
SPEAKER_05We don't want corporations and large institutional investors buying properties. Yeah, go America, but not everybody. If you own less than 350 houses, you don't really count. You can keep buying. Also, what keeps them from getting a new LLC and doing it anyway? I've still yet to see. Oh, and by the way, build to rent neighborhoods. Those are all good. Keep going. Keep going. That's gonna help. We shouldn't force all that money, all of that decision making behind your giant executive boards to come up with creative ideas to maybe fuel the dying demand. I shouldn't say dying. It's it's just bubbling up demand over the top bubbling demand for young people that just want somewhere to live. They don't want to pay $1,500 for a flat. They want dirt. Why aren't we building tiny homes? Why aren't we looking into modern modulars? Why aren't we fixing our zoning laws? Why aren't we building more vertically? Why aren't we forcing these big companies with big dollars to stop cookie-cutter neighboring us to death instead of actually figuring out a new way to do it? Instead of going through this typical, we're gonna buy 200 to 300 lots and we're gonna build up a neighborhood and we're gonna have a sales center and we're gonna put it in three different phases so we can keep prices going up and we're gonna incentivize them with mortgages and insurance so we can make as much money as possible. Our profits are gonna be amazing. It's gonna be incredible. I love this. What if we threw a monkey wrench in that and made them rethink the whole model? That's not happening, and it's not happening in this because they're exempted. They don't even have to think about it. They don't even have to think about it.
SPEAKER_03Sean?
SPEAKER_05Is there anyone else we wanted to talk to? I forget. Did we have a guest? Didn't we have a guest? You brought him on earlier and then we forgot. There he is. There he is. Brother, so sorry that we left you out. We should have come back to you a little bit sooner. How you doing, friend?
SPEAKER_03I'm doing alright, dude. I'm still here the whole time waiting, man. I was full Sean just breaked forth wall.
SPEAKER_05I was fully ready to carry that bit by myself, and I did not expect that voice at all.
SPEAKER_02My bad.
SPEAKER_05No, it was beautiful. It was beautiful. It just caught me so off guard. I love it. All right, continue. You must continue in the voice. Richard, I don't think I've introduced you yet. Um, this is Richard Cantillon, correct? Yeah, I'm Richard Cantillon. Richard, Richard, thank you for being with us. You're a French-Irish economist from the early 1700s. Is that right? Yeah, that sounds about right. Beautiful, beautiful. Um, so tell me, you were big into economics, right? Big into it. I think so. Yeah, yeah. You're an economist, I'd hope so. And some of your work actually gets cited as kind of forewarning the French Revolution. You kind of talked about this when the asset holders have too much, you know, people revolt. Didn't you talk about that? Yeah, yeah. That was like my big thing. Yeah. Yeah. It's interesting. So the the you created this thing called the Canteon Effect. You know, without telling Sean or the person behind your voice what exactly that is. Could you explain that for me real quick in depth? Yeah, it's pretty much, you know, the the let's go on to the next page for the canteen effect. Thank you, Richard. Big shout out to Richard. The Canteon effect, though old, is something that we can look at as to why this is happening today, why assets have increased in value so quickly, so fast, why investors are everywhere and asset holders seem to be benefiting beautifully in this nirvana of an economy, while the next up seem to be struggling to get their first at bat. The Canteon effect. So here's what happens. When the Fed creates new money right there at the top, the money goes to a few places first. Cantion argued that anytime, because by the way, the Federal Reserve was not invented by the time Richard was out. I know some of you thinking, how did he know this? Because he said, whenever we add money to the monetary base, whenever we add cur to the currency of the country, whenever you add to it, without adding people or value or anything like that, you just throw money more money in, just printing it. This is what's gonna happen. A the banks get rich. That's the first level. Because they get first access to the money. Second, large corporations and governments benefit. Why? Because now they get to invest and expand. I love this graphic. I hope it wasn't made by AI. It looks like it might have. What do you get? Sean, you have a better eye than me. Do you think this is AI?
SPEAKER_02It looked it kind of does, but it looks better than the usual AI-generated genre.
SPEAKER_05Which is, I guess, a bad thing. That it's getting better. But regardless, level three, and this is where the bulk of Americans who are sitting on the top side of the K are feeling you are sitting in an asset. You have a stock, you have a home, you have a retirement account, you have a business, you have something that is allowing you to expand with the economy as it is growing. You are going up with the tide. You're going up with the tide because you're in a boat. An assets like a boat. Your home is like a boat. And if you want to survive the tide rising of inflation, you got to get in a boat. The boat could be really, really little, it could be like one or two stocks, it could be like whatever you want it to be. But it can't because you can't afford it. Because it's being ripped out from under you. And it's not necessarily because of just immigrants. Okay, not just. Okay, get the word just out of the vocabulary. It's always a mixed bag. Because if we look at the Canteon effect here, and then we also go back to the assets printed graph right there in the middle, a little off to the left, a little more, two more, boom. What did the Federal Reserve do in 2020? They printed a record amount of money. They printed four trillion dollars. And I'm not gonna go into how they printed it or the mechanics of how it was printed or what it means that it was printed or the definition. We've done that on prior pods. Go back to like the first 10 episodes. We just nail that. We hit that out of the park. Love those episodes. I think we did a great job of explaining it, so I'm not gonna do it here again. I just I want us to understand enough of the nuance.
SPEAKER_03Go back to that graph real quick.
SPEAKER_05And it's that when money enters the system, when the monetary base expands, without any value being added to the system, assets inflate, banks get richer, corporations get larger, and governments get the money too. So all of the people that benefit are everyone who's outside of the asset class. And that's who's benefiting off this economy so dramatically. That's the type of person that is absolutely cool with what's going on with inflation because their assets inflate with it. And the opposite of that person is the communist that Caroline Levitt was talking about earlier. The non-asset holder who's struggling to find a job amongst all of the ghost listings and unwinding the AI bubble that's potentially happening as we speak. Whether or not AI will even take that job in the future, whether or not automation is going to influence their job in the future, whether or not there'll be that job in the future. They have degrees. We we did a whole podcast just talking about the four-year degreed individuals. They have a higher unemployment right now. They have a higher unemployment rate. A fresh out-of-college degreed individual in America has a higher unemployment rate than the general population. What does that mean? Does that mean they're communists? I thought the people with degrees were coming out of the liberal colleges. What does that mean? There's so much to unwind, but we can't breeze past the fact that investors are enriching themselves, corporations are growing larger, builders are gringing in record profits, all while assets accumulate and nothing gets done to ensure that we can balance our economy once again, because we are so out of balance right now. We are so out of balance right now. And we could go into the argument of why and who's under control of it and why it's happening. I think we're gonna leave it there. Joe, I feel like there was like 17 thoughts that bubbled up in your head that maybe I'll be able to pull out one of. I sometimes I like setting Joe up to have to say a bunch of stuff and then know that. I was looking at other people doing other stuff the entire time. I was doing other stuff the whole time. Very productive stuff, too. I I think setting us up for the next couple weeks. I think. Big shout out to Joe. Joe keeps my brain like here. Kind of. Joe actually doesn't keep my brain. That's Adrian. Adrian keeps my brain here. You're like the second head. Sometimes we just got two hits.
SPEAKER_06I just try to avoid your brain, two-headed monster, and then organize whatever it throws at me.
SPEAKER_05Sean, can I ask you what your take on the future of the housing market is? And we'll leave it off on this, seeing as you are one of these individuals who are being told by the lovely leftist.
SPEAKER_02I hate it when you ask me stuff like that because I never have like a happy white pill answer.
SPEAKER_05But Sean, stop looking for it. Stop looking for what does not exist.
SPEAKER_06For what exists is within you the entire time. All right, pick me then, because I do have what I think is my happy white pill. I've found myself.
SPEAKER_05Wait, wait, you're not gonna interrupt Sean with your Joe? You're trying to motivate people. Just stop out of it. I want to make people feel like he's barely a real boy. Oh no, let's talk to the guy who's in it. He's in the war. This is a Gen Zer in here. Caroline Levitt told him he's a communist. What did you think? I actually agree with her. He kind of is because he's a volunteer.
SPEAKER_02He's a volunteer firefighter. She's actually really like, she's she's my generation. You know, she knows exactly what she's talking about. You know, we have to stop buying avocado toast. Uh, we gotta stop being lazy. Uh we gotta wear boots to work, apparently, because I guess you gotta pull up. What else can you pull up?
SPEAKER_05Like, like how can you pull up and so if I work as yeah, if I work in like a job where I have to wear sneakers, like kind of yeah, like what do I do?
SPEAKER_02If I if I work in an office and I wear boots, maybe I'll make more money.
SPEAKER_05Yeah, it's instead in your full yeah, full dapper three-piece outfit. I need some military people to the boots. And what's I'm gonna ask you, like, what else am I gonna pull up on?
SPEAKER_02Yeah, literally. Uh I did want to ask you. I want to ask you something real quick.
SPEAKER_05Please, brother.
SPEAKER_02Look at this graph. Yeah, it looks like it's actually starting to just go down a little bit towards the tail end. How do you take that? Does that mean there might be a future where the prices will go down a little bit? Or is this just kind of like you think this will go shoot back up and now you don't have a ball you can read and right, right, right. Like, how do you take this little dip? Is it just like whatever? Is it something maybe something will be better?
SPEAKER_05Like, well, the first thing that we can look at is this is median, not average. So average is gonna get skewed a lot more dramatically. Median's gonna be our best middle home. And the middle home does seem to be coming down a little bit. What I'd what I'd say is on this document, where does it go till when's the last dot plot? Okay, so key one 2026.
SPEAKER_06That should be March, right?
SPEAKER_05That is March. But what this also is not in uh tackling is let's go into the national affordability report. Can you pull up the National Association of Realtors affordability index? The only one thing is the price. Okay, the price is a problem. And why I think the prices are slowly being suppressed, because rates are high. Let's go back to the third tab real fast before we open this. When rates went high, that's when you could start to see that price get pressed.
unknownOkay.
SPEAKER_05Because less people can afford less house. Less people afford less house, less offers, less showings, less price. So that's my main thought. My secondary is if we go to this national affordability index, go to monthly, or actually do quarterly real quick, and then do first time. Thank you. So we have the quarter one data for here too. So we can see the same thing. The starter home price does seem to be dropping slightly, but the main problem is the column third over from the left. The column third over from the left, yeah, from the left. Though coming down, $93,000 a year is what needs to be made for a first time home buyer because interest rates are. High. And of course, we could print money and they could come down. But the problem with that is if we print more money, assets go up. So that's why the Fed's in this position. If they wanted lower rates, they could, but they know what they're going to do to the asset market. They know it. So that's why it doesn't happen. That's why we're kind of in the stalemate, the stagflation feel. Stag. No one wants to make the move that's going to blow things up. It feels like you know, in base, uh, when people get a baseball bat, right? This is how I explain, by the way, the AI investment phenomenon going on right now. The you ever get a baseball bat and someone put their hand on the bottom, and then next hand, and then next hand, and next hand, and you go all the way top, and they would do it like to see who would bat first in a game or something. Whoever's at the top. Yeah. I feel like that's what we're seeing right now in this AI investment is every time we see a new IPO launch like SpaceX, they're just trying to see how high up they can go before it all crashes. Can I cash out and get out of this before it all just goes away? We know it's all gonna go away, but can I cash out beforehand? Is what I think is happening. And in this case, when we see qualifying income on the National Affordability Index at $93,000 for a first time home buyer, this is what used to be a sandwich maker. Do you know any sandwich makers that make $93,000 a year?
SPEAKER_03No.
SPEAKER_05I don't. I need this to get back to sandwich money.
SPEAKER_02So like when you're signing a when you're when you're like talking to a lender, they're looking for this number. Yes, because you can't have anything less than this.
SPEAKER_05No, no, no. You can make less than this. This is median. This is all these data points are median. You can make less than this. It has everything to do, A, with the cost of the home. So if you're buying in a cheaper area, you need less income. What they're looking at is they're gonna take your yearly income, they're gonna divide it by 12, and then they're gonna look at your mortgage. And they're gonna see, based on all the debts that you have and this new mortgage, based off what you make, can you afford to pay this mortgage? So another big reason why this number goes up, a lot of people won't talk about this, is people are also having to spend their money in other places to stay alive and survive, leaving them less remainder income to pay off their mortgage.
SPEAKER_02Right.
SPEAKER_05And so that lender is now gonna require them to make more money because they're paying more for everything else. And when we don't see wages moving up nearly as aggressively, that's where I would say the big problem is. Because yes, home prices are starting to dwindle down, but it's because of high rates. If we get rid of the high rates, that stops. If we keep the high rates, no one can buy. So we're in this frozen juxtaposition of the only person that could really make out of this good is via money printing through asset ownership. Or if you own a bank, or are the government, I guess, according to Richard.
SPEAKER_03Oh man.
SPEAKER_05That wasn't his voice.
SPEAKER_06Yeah, I mean, I know too.
SPEAKER_05Oh, yeah, white pillows, brother. Sorry.
SPEAKER_06The average median salary, I think, is around 52,000 that I lost.
SPEAKER_05You say average median?
SPEAKER_06Yeah, sorry.
SPEAKER_05Yeah, I think you're right. Median for an individual actively working is like 54.
SPEAKER_06Yeah. And so the big pivot is like, you know, my parents grew up in a time where you houses were based on one income households typically. Houses were being built for everyone, and then because of the explosion of the rental market, most rentals are built for roommates to rent out. So the ownership early in life is priced for two people. Yeah. But because of the shift in society to have essentially what I'm trying to say is back then it was a nuclear household. There's a lot of stay-at-home parents, stuff like that. Sure. We had a shift to get women working more than that. Yeah, and in 75 they just allowed it. And then when they did women entered the workforce. Wow, this is great. I don't need these men as much. No, that's probably not what they thought, but that's probably what they should think. Um but basically we've become much more independent. People are having kids later, they're staying single much longer. So the barrier of entry to buy a house is for two people, but two people aren't getting married. So And the stats have proved that.
SPEAKER_05Just 10 years ago, it was 50% of under 30 years the West 12 the economy.
SPEAKER_06And this is my hope. And I just had a conversation with a good friend of mine. He's 24, owns his own business, works part-time. Him and his brother, his brother's also a part-time entrepreneur, but works full-time. And they're looking to buy a house together, just as brothers. Aaron Delaware. And they're like, Yeah, it's a five-year plan. They'll get out of it whenever. One's got a long-term girlfriend, the other one's single. So I think the tight like things getting harder is getting people closer locally.
SPEAKER_05Amen.
SPEAKER_06I love that. I've I'm kind of I've been workshopping these things. I'm a little bit entrepreneurial, but we talk about like merch all the time. And like a little tag phrase I came up with the other day was boycott billionaires, finance your friends, family, and nicer neighborhoods. I think that's a mission. My silver lining is like, it's fucked. Just get out of the fucked part of it. Try to find ways to make the most of a shit sandwich.
SPEAKER_05I get it. And that could mean as as crazy and cool as building a friend community and or getting a family homestead, but that's not cheap. It's not, yeah. Not at all. It takes a lot of work. Or it can just be like, I can say from me and my wife's perspective, like, there was never like a better, probably growing time frame for us than when we were broke.
SPEAKER_01Yeah.
SPEAKER_05Than when we didn't have money and we were scrounging and we couldn't distract ourselves with all the stuff money can do.
SPEAKER_06Like when you were truly a I don't want to say honestly, you were truly a just almost rightless pawn in the imperialistic capital machine that had to produce revenue to have some sustainability in your brother.
SPEAKER_05If I didn't make money, I wasn't worth living. That's right. If I didn't have a business growing with networking abilities, when the machine finally emotionally dominates your being, you find a way to do it. When money and business growth encompass your entire personality, it is very healthy for everything in your body. I'm sure the fight or flight that ran for six years, I will uh I will find out the repercussions of my later life.
SPEAKER_06But the Century 21st act, my silver lining is fight investors purchasing homes, fight them being Bill Durant, try to boycott the And this could be done in our own states. It doesn't have to be done nationally. And like that's what I'm saying. Talk to state. Ban investors in Delaware. Ban investors in Delaware. Ban investors in I think Hawaii did it. They were the Hawaii just did a big ban of some corporate stuff. I don't remember what. Sean, look that up. What was the Hawaii corporate ban? But talk to your state. My silver lining is give up on federal government, the rich own it. Go all in on people who live up the street from you because they should be fearful of you.
SPEAKER_05Oh, did they do what Delaware should have done?
SPEAKER_06Yes.
SPEAKER_05They made it so their corporations can't fund in public elections or can't fund elections? Yep. Dude, huge Delaware can do this, and if Delaware did this, it would change the game. They won't because they'd lose so many companies. But corporations have rules. And what Hawaii did is they changed the rules to say if you're corpor if you have an LLC through us, you cannot invest in politics. Citizens United allow that to basically be unfettered in 2010.
SPEAKER_07Yeah.
SPEAKER_05Delaware could you know what I mean? You mean corporations are out of Delaware if we just said you can't you can't give to super PACs? Do you know how weird it is to be corporated here?
SPEAKER_06So far left on the political spectrum and be like, I'm such an advocate for states' rights.
SPEAKER_05We gotta get out.
SPEAKER_03What is happening?
SPEAKER_05But there's also a really far-red side that wants really small government too. I'm I'm I'm somewhere there too where I don't want big government. I hustle don't want big corporations, big tech. There's a lot of big I don't want. But regardless, we can probably finish that one out. Sean, can you play our song on the way out? Joe made us take us out of the intro. It's Joe's fault. We gotta go hot at the start and have fun at the end. Okay.