The Housing Market Is Completely F*d - Stay Away From These States! | Reventure Consulting

The weakness I see in the different corners of the housing market makes me think the underlying economy maybe is not as healthy as the stock market would suggest. New home construction that's down while the cost of those homes and most everything else these days is up. What does this tell you about the greater US economy? Existing home sales are around 4 million. That's about what they were in 2008-2009 during the worst financial crash in 80 years. The gap between what home buyers need to earn and what they actually make has never been widened. What out of everything that you've seen in the past three months is the most surprising thing. Someone bought a house for 500 it's now 400. You know we were told that that's like not possible who should buy a house and who should not. So for the vast majority of people in the US be very careful if you're buying. The property is fine except it's pretty darn expensive by historical standards. I don't think we're going to see entire markets go down 65%. I think we'll see entire markets go down. That I mean that would be insane. Yeah. Nick thank you so much for coming on the ice coffee hour. Great being here Graham. So I really enjoy your videos. I think you make some really insightful observations about the real estate market, the economy. I watch almost all of your content and I have to say really enjoy it. I am curious though for everyone watching why should they listen to you? Because we bring the data on the US housing market. If you're looking to buy a house or sell a house you need to understand the data on where prices are heading and we have a very bifurcated market right now where some areas are actually crashing and going down 15, 20, 25%. We have other areas are still going up. So if you're a home buyer or a seller investor you need to understand that data before you make the biggest financial decision of your life and myself and my channel Reventure. It's pretty much the only source widely available for real data. Why are you one of the only people providing this data? Is this data other people are ignoring? Is it shielded for some reason? Explain that. Yeah. The data is actually not shielded. It's widely available. Companies like Zillow and Realtor.com provide home price data down to the zip code inventory and days on market down to the zip code. But I think a lot of people in real estate don't have an interest in showing the truth. I kind of call it the real estate mafia. It's a maybe a cabal of Realtors and people who own real estate who want to create this perception that values are going to go up forever and they kind of want to fomo people into buying a house even if it's not totally the right decision. So I think there isn't really the interest in the mainstream real estate industry of providing this data to people. And five or six years ago I learned where all this data was. So I found it. I made it available and then combined it to produce forecasts and where prices are going. And that's essentially changing the game in my opinion for the housing market. Do you have a background in this? Yes. So I have an economics degree from Sienna College in the London School of Economics. And then I worked my first eight years in commercial real estate as an underwriter for a private equity fund that did mortgages on apartment buildings offices around the U.S. So I got my start traveling all around the U.S. funding deals in places like Las Vegas and Phoenix and Houston and Florida and Atlanta. And I started learning the lay of the land of the U.S. real estate market in 2010s. After I left that job I started switching my focus to the residential housing market and found some data on the residential housing market that was widely available and started putting these models together. So really high level for everyone watching who should buy a house and who should not. Well it really comes down to can you afford it right and that's the main problem in today's market. Obviously values boomed during the pandemic. And then mortgage rates went up after the pandemic. So right now the typical mortgage payment to buy a house in the U.S. on average including taxes and insurance is about 2,800 a month. The median income in the U.S. is about 85,000. Meaning if you take the 2,800 and annualize it and divide it by 85,000 income, it's roughly close to 40% of someone's income they would need to spend on their mortgage if they're buying. That's way too high. The conventional wisdom is like what 25% you really don't want to spend much more than 25%. So for the vast majority of people in the U.S. who are at that median income or even above that median income they just can't afford to buy in today's market. And so my advice to them would be very careful if you're buying. Now if you are someone who does have more money you can buy in today's market but you got to be careful not to catch a falling knife. Now I was just in Florida a couple weeks ago and I was finding houses in Florida that were down literally 100 to 150,000 in price from what people bought at in 2023 to 2024. Now that's good if you're a buyer today. It's more affordability but where does that stop? So if you buy today are we going to continue to see those values go down? So that's the thing you got to be careful of. So for young people who feel really discouraged about not being able to buy a house or afford it is their hope in the future. I think it depends on where you live. In a place like Florida there's definitely hope. That market is correcting. There's plenty of inventory for sale. The buyer demands pretty low right now. It's a true buyer's market in Florida. It still feels expensive there but it's getting better. A place like Vegas where we are right now that's also starting to get better. Values in Vegas are down about 3% year over year. Not huge by any means but an improvement. There's a lot of supply on the market. I'm finding listings in Vegas down 50 to 100,000 from their previous sale price. Generally if you're in the Sunbelt Boom areas that's where there's the best buyers market right now. There's those Sunbelt Boom areas that surge during the pandemic. They're all kind of going through a little bit of a slowdown. Those people from California, those people from New York they might still be coming but it's often not as much as it was in 2021 while the builders built all these homes and while the investors bought all these homes and often investors are now selling. I would say the Sunbelt is the best place to buy in terms of more affordability. Actually though the area of the U.S. where prices are going up the most and it's still a crazy seller's market is like rust belt towns. Syracuse New York is number one in home value growth. Why is that? Syracuse Hartford, Chicago, Buffalo. These markets are actually where it's the hardest time to buy and I think there's two reasons. One, they just don't build in the Midwest in Northeast. The builders after the last crash abandoned the Northeast in Midwest. There's almost no construction in those areas. There just isn't that new supply coming on the market that there is in Vegas or Nashville or Tampa. At the same time, I think there's a little bit of a reverse migration trend. Not saying that those areas are like booming but I think some people who maybe moved to the Sunbelt might be moving back home. People who moved in the 2010s during the pandemic to say Nashville, maybe they're moving back to Chicago. I'm starting to just see more and more of that and the data is starting to support that too. What I find interesting is that you described your job now as basically just flying to a bunch of different locations in the United States and just walking on streets and looking at real estate. Like with your own two eyes like actually in the field and that's all you do. You just fly from Florida to Chicago to Las Vegas to New York to like see with your own eyes. What out of the past? Everything you've seen in the past three months is the most surprising thing. I have to say the scale of the declines in Florida. I actually moved to Florida about two years ago to start to cover the initial stages of that downturn in person. I moved to St. Petersburg and I could see it starting. But when I just visited there in the last couple weeks, I was shocked at how much the values are dropping on certain listings like six figured declines. Someone bought a house for 500. It's now 400. We were told that that's like not possible. We were told that in this cycle that wouldn't happen and the scale of the declines in Florida is getting really big. Another surprising thing is Austin, Texas. That's a market that was maybe the biggest pandemic boom town. I actually lived in Austin in 2020 and 2021. Not only do I fly around, I moved to all these cities as well and I saw that bubble in Austin. Austin now values are down 30% market-wide since the peak. Brans are down 20%. So you do have some markets that actually have gotten a lot more affordable way more than people think. But then I would also say the resilience of the Northeast. I was just in Philadelphia and that markets on fire. See that doesn't make any sense because everyone says that Philadelphia is now not a great place to live and everyone says that everyone is moving to Florida and Austin. It's that kind of great answer. It is. So I almost think there's a lag. You know it's like real estate slow. It's so slow. Very slow. Yeah, as I'm sure you know, Grant. Real estate is so slow and the way that the market moves is slow and the way the price is adjusted at least on the downward side is usually slow. And I think the narrative is slow to kind of get out there. And I think, I mean, if I've put my little 10-foil conspiracy hat on, you know, I think that real estate mafia I described before, like I think they try to keep the narrative of like people moving to Florida. People moving to Texas. People moving to Tennessee because they need to pump up local realtors. Yeah, but I'm seeing it firsthand. Like a lot of people in California are telling me like, "Hey man, I'm thinking about moving it. It's Vegas, Texas, or Florida." And it seems like it's one of the three. They're going to pick one. And so they are actually moving there. Certainly. I mean, those are the three states plus Tennessee with no state income tax, right? And that's the big thing in the big draw. I think for sure that migration is still happening. It's not like it's now negative or not happening. It's that the scale is lower. And we, you know, we were talking before. Maybe there's a difference to between the hot, like the luxury market, right? People coming from California with millions and millions of dollars. versus people coming from California with like a W2 of 200 grand. I think the people coming from California to Vegas with the W2 of 200 grand, that's fallen off precipitously. And you're seeing that in the home sales in Vegas. Vegas home sales are lower than 0809 right now. But you still have these crazy luxury condo projects with $5 to $10 million or $20 million dollar price tags that are selling. And of course, if California does a wealth tax, you're obviously a lot of the billionaires certainly are going to leave. And maybe the people with hundreds and millions are going to leave. And so I think at that higher end, yes, you're still going to see people move to those no income tax states. But I think for the normal, like the normal person moving, that's dropped off considerably. And it's just, it's part of the migration cycle too. The housing market is like pretty predictable. In the mid-2000s, it was also a surge of this movement, right? And then there was a collapse. And it's funny, if you look at the floor to migration graph, it's crazy, like you see this big spike in 0506. And then you see this big drop. And then you see it recover. And then you see another big spike in 2022. And then you see a big drop. So it's just almost like a generational, like consistent thing. I'm not saying that these sum-belt markets aren't eventually going to recover, they will. But just where we are in the cycle right now is lower migration, more supply, more affordability, and price cuts happening in these areas. So what does this tell you about the greater economy as a whole? Because I mean, you're an expert in real estate. But some of the viewers watching might be wondering, well, I'm not thinking about buying or selling real estate. I'm just kind of content with where I'm at right now. But we know that real estate and the greater US economy are incredibly attached. So what does this tell you about the greater US economy? It's a great question. So housing is about 15% of US GDP when you add up all the individual components. So it does have a massive impact. What concerns me about the economy right now is the weakness in demand on housing. So existing home sales are around 4 million annualized right now according to the NAR. So demand right now is comparable to that period. Now, prices haven't gone down as much as that period, but demand is. At the same time, builders are flashing these warnings that only happen during economic recessions. Builder supply on the market is over nine months of supply. So months of supply is inventory divided by sales. Builder supply is over nine months. Normal is five to six. So that only happens in economic recessions. So you're seeing things that only happen in economic recessions. Collapse in sales. Builder supply through the roof that are happening now. But of course, we haven't seen a legitimate economic recession. The unemployment rate is still 4%. Stock market is still booming. And so part of just of me wonders if housing and the weakness in demand and the weakness in the home building sector is kind of warning us maybe about like what the average American is feeling. And that, I don't know, maybe at some point we will have a labor market recession. Couldn't that just be though that builders overbuilt? Because when you look at average listings on the market, including homes that were built like 20 years ago, it's only about 4.8 months on the market. Sure. So builders overbuilt and that just be an isolated thing by itself. It could be. I mean, certainly the builders overbuilt in Florida and Texas and maybe even here, right? I just came from a home building site here. A townhome development where they sold to someone for $485,000 in 2025. It's now listed for $435, $50,000 loss in a year. You are right. The builders did overbuilt and that doesn't necessarily prove that there's an economic recession coming. However, historically, it always aligned that there was an economic recession. Historically, when the builders overbuilt, there was always a recession that followed. Historically, when demand to buy homes fell this low, there was always a recession that followed. My question is, is this just like maybe the outlier economic cycle where we're not going to see those things predict into a recession or will it eventually happen? So that how should the average person watching right now use the information that you just said to improve their overall finances? That's a great question. I mean, I could just tell you what I'm doing. You know, I have a pretty conservative portfolio. I have mostly my exposure is cash and treasuries and kind of short-term index funds to track short-term treasuries. So, 4 to 5% returns, maybe even higher with where the 10-year yield is going, right? Fed might hike rates. I like the idea for me of preserving my optionality, right? Where if I can earn 4 to 5% on my money and keep my powder dry, I'm looking at the opportunities that I can get into. I actually just purchased a real estate property earlier this year in Atlanta at a massive discount. It sold for around 490,000 in 2023. I bought it for 330,000. It sold for 440 in 2021 as a new build. So I got it at 110,000 discount to 2021 pricing. Those type of deals are happening in real estate right now. It's not happening everywhere. It's not happening on average. But those are the type of things that are starting to happen in the sunbelt market. So for me, especially as my housing focus, I want to preserve my powder, and I want to make offers on properties that I think I can get amazing deals on. That's what I would do. Why is it important to own a house to begin with? Why not just tell people, "Hey, listen, renting is cheaper. You're better off just renting right now." Well, renting might make sense for a house, but if you're running a business, having your own address online is pretty important. Because people are going to look you up before they work with you. Yeah, you could be great at what you do, but if people can't find your business, they might never even give you a chance. Like a website matching business email are basic things, but they make a huge difference. Like we get pitches all of the time from Gmail addresses with no company website, and we just pass because we can't tell who's behind them. 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And like I said, you don't even have to buy anything from them, which is crazy. That link is down below. Enjoy. You're better off just renting right now." I think most people still have an internal desire to own a home. I think there are things about owning a home that confer a value that renting simply doesn't. Stability, space, security. Especially if someone, say, wants to raise a family or has a family, right? Like, those things are valuable. And I think people like the idea of, in the long run, just having a place that they can call their own. And I think something like 80% and 90% of Americans kind of agree with that statement. However, the math does not make sense right now. I mean, for the average person, 2800 a month mortgage payment, including taxes and insurance. Typical rent is 1900. So the typical mortgage is what, 40% more than the typical rent? If I'm a first-time buyer, why would I buy? You know, I wouldn't blame anyone for not buying in this market, given how high the prices are and where the mortgage rates are. But I think most people still in their heart want to own a home. They just want to do it at terms that are like, reasonable, right? Where I don't have to, like, literally mortgage my future. Where I don't have to take on a payment that's like making me feel uncomfortable, making me feel house poor. So I think people still want that. And I want that too, right? Resolving why I bought that house. But I'm only going to buy if it's on the terms that I feel are reasonable. And if the property I feel like especially is a good value. If it's not, for me, what's the point? So one of the things that we've seen mortgage rates have increased substantially since 2021. Why have it prices come down accordingly? Two reasons. One is that the resale inventory on a national basis is still not high enough to bring down prices. So right now, there's around 1.1 million resale listings. There's around 1.2 prior to the pandemic. So we're only like, nationally, we're only back to getting close to back to pre-pandemic supply. In '08, '09, resale inventory went to like 3 million. So when you get that level of resale inventory, you can get a 25% national price crash. We're not at that point yet. In some markets, we are like the ones I described, which is why values are dropping. But nationally, we just haven't seen enough supply. The reason is, second point, the owners with the 3% mortgage rates or the 4% mortgage rates. They do a very interesting subtle calculation in their head when they think about selling their house. And they look at the market and they're saying like, oh, okay, maybe it's 700,000 to sell my house based on the market. But they'll list it like 770, right? Maybe they saw their neighbor four years ago get that price. And they'll be kind of hesitant to cut because they look at their mortgage payment at the 3%, and they're like, oh, my payment on this is like only 262700. If I were to buy the same house today with a 6.5% rate, my payment would be 4,400. So they say to themselves, why would I actually sell this house? And there's almost like a- present value calculation. Like if you have maybe 25 years left on your mortgage and you have a 3% rate, maybe you have 300,000 of interest left in that hypothetical example. If you were to buy at a 6.5% mortgage rate, you have 800,000 of interest. So there's just a huge present value to not selling your house because of that low mortgage rate. So I think those two things in combination are kind of keeping the market from adjusting faster than they would otherwise. That was the exact calculation that I ran when I was thinking about buying a new house. I bought my house for around $600,000. And I realized if I wanted to buy that exact same house at that exact same price and the only different variable was the interest rate, I would be paying like 80% more. 80% more, 'cause I got 2.8%, and now it's like 6.26.3%. - Higher than that, now. - Then it would be more than 87 more. - I think it'd be crazy. - I could be paying twice the amount per month just because of the rates, has nothing to do with the home prices. So that makes a lot of people not able to afford, you know, basic solar homes. Yeah, it also just doesn't make sense to sell. - Yeah, what's fascinating is you think about what the seller is feeling and what the buyer is feeling. So the seller, if they bought for 600,000 with a 2.8% mortgage, and the back of their mind, they might actually think their house is worth 800 and 900 grand. 'Cause that's the present value of the mortgage rate discount. But think about the buyer. The buyer's saying, wait, rates are one from three to six and a half. I can't afford a 4,400 payment. I can only afford 25. So they're saying to the seller, you need to discount that house, 150. So the buyer thinks that house is worth 450. You might think that house is worth 800. That gap explains the housing market right now. You have buyers on one hand with a completely legitimate financial constraint on affording, and then you have sellers with a completely legitimate financial incentive to hold. And we can get a whole conversation of how messed up this is, how the Fed printing all that money and suppressing interest rates for that long kind of created this scenario. It created a short-term boom in real estate, but now we're in like a four-year home sale depression that might last longer due to the fact that so many people have these rates well below market. - So where are home prices going down the most and going up the most? - Yeah. - Values are down the most in Austin. So they're down 27% over the last four years in Austin. They're down about 16% in Cape Coral, Florida, Cape Coral, Florida, Myers. Places like Phoenix and Denver are down about 10. Vegas is down about five from peak. In terms of larger markets, values are going up in places like Chicago, in New York. Those are two of the hottest markets right now, especially wealthy suburbs outside Chicago and New York are on fire talking like 10% you ever appreciate. We were just in Chicago, it was beautiful. - First real time in the city of Chicago. - Yeah, I'm a raid rest. - I'm a raid rest. - I'm a raid rest. - Underrated city. - Oh my gosh, to me it reminded me of New York, but like so clean and just nice. - The river running through, oh my gosh, it was beautiful. That being said, it's extremely surprising still though that the property values are going up there, especially in New York, especially the luxury real estate when you have the mayor saying Ken Griffin who lives in this mega mansion for two days out of the year, I'm gonna raise my taxes on you and off the property that you own and yet that could be going on while simultaneously the property values are increasing. - It's so funny because the Mombami example in New York City is a really fascinating case study right now and like what's actually driving things. So they did something called the Pieda tear tax, which is now law where I can quite remember the specifics, but it's like if you have a second or third home in Manhattan or New York City, it's worth over a certain amount of money. They're charging you in extra tax on that and that extra tax can be tens of thousands of dollars per year depending on the price. And their whole idea is like they wanna get those people to sell or they wanna get them to pay their fair share. Now the predictions were that that was gonna lead to a flood of supply, which is not happening. Manhattan inventory is at its lowest level in 10 years. Manhattan did correct during the pandemic. Condo prices in Manhattan went down about 20%. Actually they were close to like oh five levels in Manhattan after the pandemic. So relatively we had Manhattan is undervalued actually before a Mombami came in, which is the main reason I think that market still is actually doing well is because it didn't really appreciate for 20 years. - And while we're on the topic of taking care of yourself, it's also really important to think about the people who depend on you. I think a lot about how much goes into building financial security and making sure the people I care about or taking care of is a big part of that. - Yeah, it's something nobody really wants to think about, but getting a plan in place is actually way easier than you would think with our partner ethos. They make getting life insurance incredibly simple so you can make sure the people who depend on you are taken care of in case something happens. - Look, I understand. Life insurance is one of those things that's really easy to keep putting off indefinitely, especially when you're young and healthy, but that's actually when you could lock in the best rates. - With ethos, you can get a quote in seconds, apply in minutes and even get same day coverage with no medical exam required, you just answer a few simple health questions. - And you could get up to three million of coverage with some policy starting as low as $30 a month. Plus, even if you have life insurance through your job, that might actually not be enough to cover your whole family. And it almost certainly does not follow you if you leave that job. So having your own policy means that you're protected no matter what. Ethos has a 4.9 out of five on trust pilot with over 4,000 reviews and getting started takes about 10 minutes. So take 10 minutes and make sure the people who rely on you are covered. Get your free quote at ethos.com/eistcoffee. Once again, that is ETHOS.com/eistcoffee. The link is also down below in the description. Application times may vary and rates may vary. - Now, there's almost like some economic forces bringing people back to the city. When you think about AI, like in what AI does to the economy. You think about all these people who like worked remote in tech and finance during the pandemic. There's still some of those jobs around, but now if you work remote in tech and finance, your job might get replaced by AI, right? So there's a kind of a glomer, what's called an agglomeration force now with AI. I think bringing some people back to these tech and brain hubs like New York and San Francisco. Actually, San Francisco's market might be the hottest in the US. San Francisco County is up 15% year over year, close to that. Inventory is down 40% in San Francisco. Obviously the AI boom, all the frontier labs are there. I do have some questions of how legitimate recovery is, we're not seeing the job growth yet in San Francisco. But for sure, it's what I call the legacy brain hub markets. San Francisco, Chicago, New York. Those are the hottest right now. And it speaks to how this old narrative of like the Exodus is over from those areas. It's actually an agglomeration force pulling people back. And there's just also that migration cycle. We're for the next five years. That's probably gonna happen. And then eventually the sun belt, you know, we'll have its boom again once it gets affordable enough. So out of 10, how screwed is the average person looking to get into real estate right now? I think looking to buy their first primary home. - Okay, because I think it depends on who you're talking about. If someone's looking to buy their first primary home and they're in a market like Nashville, which is at a 15 year record in supply and a 15 year low in demand, I actually think it's actually not bad. Like in a market like Nashville, I say, get out there and make offers right now because you can get a good deal. If you are in Chicago or New York, it is tough going. Like you're not, for at least several years, you're gonna be frozen out of the market. It's gonna be tough. You're gonna have to overpay. So I think it really depends on where you are. If you are in these sun belt markets, I think there actually is a reason for optimism because for the first time in like a decade, things are shifting in your favor. With that said, it's still really expensive, you know, and the wage growth is something like 3.2% year over year and it's about 40% of someone's income to buy a house with a mortgage. So I think the average person, when they hear me say that, it's probably saying rolling their eyes a little bit. They're probably saying like, oh, okay, Nick, like sure, there's more supply and some price cuts, but I still don't even feel like I'm in the ballgame. So I think a lot of people still feel that way. You know what's interesting is that you and Graham may have opposing viewpoints on this, but I'm curious to hear what is your view of the importance of homeownership in terms of the fabric, like the social fabric of America? Like do you think that it's actually important for the citizens of America to be invested in land, in the US economy, in real estate? Graham would probably argue no. I'm leaning more towards yes. Adam Corolla made a great point when he was talking about homeownership. There is something when you are invested in the country that you are more likely to work harder, take pride of ownership. And maybe invested in locally too. Like in the city that you're in, you're a part of a community, makes you want to help out more, be a better citizen. I tend to agree when he said that, because before he said that, I honestly thought it doesn't matter. If you rent, you're saving money. If you have the discipline to save the difference and just invest instead of paying the extra interest to the bank, it's probably better financially. But when he said that, I was like, oh man, that makes sense. Why so many young people these days feel totally hopeless, 'cause they're renting. They have nothing invested in their area doing well. Yeah, I think you're right. I think it is important, just one qualification though. It's totally timing, right? In the 2010s, it was cheaper to buy than rent. Like in the 2010s after the '08 crash, the mortgage payment was lower than the rent. Think about that. And then the prevailing market interest rate was lower than people's existing interest rate. So it was just, it was a money maker to buy houses always in the 2010s. It's not that way anymore. But to answer your question more directly, I think for the system, Like social fabric, it is important. You don't want an area with like 20% homeowners. Like I was just in Berlin in Germany a couple months ago filming over there. It's a 15% homeownership rate in Berlin. And they have a really like messed up market where like the renters there almost have like rights of owners. And if you're an investor or landlord, like you, there isn't even a lease term. Like you have a tenant in Berlin and like they can just stay as long as they want. They're not going to leave until they want to. So who's investing in Berlin? Probably nobody. I don't know. I think it's only like these investors with like massive, massive scale who maybe can afford the lawyers is that they need to afford to be able to like handle that stuff. But you know, maybe certain parts of the US are going to start to go in that direction a little bit like California. It's about to say that seems a lot like Santa Monica. Right. Yeah. So what's to prevent the US from eventually becoming something like that with a really low home ownership rate because they get so strict about certain policies. And if you were people own homes, it makes you wonder what are they investing in instead? Yeah. So Nick just told us that he puts most of his money right now in cash and treasuries. And since we ask a lot of our guests where they put their money, I think it's only fair that you get to see exactly where we put ours. And you can actually do that now with our partner blossom. It's basically social media but for investors. You get to see what people actually own instead of just what they say they own. Yeah. So Jack and I both uploaded our own portfolio on there and you could see exactly what we're invested in and whether or not we're up or down. So we can finally settle the debate of who is the better investor. We already know the answer to that, Jack. Anyways, Caleb Hammer is on there too. And right now he has more followers than us which is completely unacceptable. We can't let this happen. So please go and support us by downloading the blossom app for free using the link down below in the description. Again, it really helps us out. We have to at least catch up to him and then beat him by like one. And that one could be you right now. Follow us to see what we actually do with our money. Who is the better investor and help us pass Caleb? Seeing whether an investment is up or down is one thing but figuring out what's actually making money in your business could be a lot more complicated. 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If your revenues are at least in the seven figures, go to NetSuite.com/Eist, get your free guide at NetSuite.com/Eist. Again, that's NetSuite.com/ICED. Again, NetSuite.com/Eist. It's about to say that it seems a lot like Santa Monica. - Right. - Yeah. - So what's to prevent the US from eventually becoming something like that with a really low homeownership rate because they get so strict about certain policies? - I hope it doesn't. But maybe in a place like California, it will, right? Or in California, they think they're doing a good thing, right? They think they're doing the moral thing of like, oh, we wanna protect the tenants. So we're gonna have all these rules. You can't evict them if they're not paying rent or you have to spend $50,000 to evict them if they're not paying rent. But in reality, all that does is take away housing supply from people who can't afford to pay the rent and who would pay the rent. And so we're running a little AB test. I think in the US with local policies and we'll see how LA does in the next 10 years. I don't think it's gonna happen all across the US, but I have a feeling it's probably not gonna end up too well for them. Probably's gonna make just costs get more expensive. - That is interesting because in LA, I feel like the only money that's moving there to invest in real estate is actually the people with a ton of money. Because if you're like a upper middle class person, you would be insane to try to go up against the system of California to do cash for keys, try to evict a tenant. But if you do have the economies of scale and you have lawyers on retainer or whatever, salaried lawyers and you're a billionaire, you could navigate the system and jump over the obstacles, navigate the red tape. But for the average person, you would get destroyed trying to invest in that area. - 100%. Well, you know, your question about like, what would you say to someone trying to buy right now? Well, I think if someone's a first time buyer in certain markets, there's opportunity. I think if someone's trying to become like a mom and pop landlord or scale their investment portfolio, it is not a good time to do that. If you're in a place like New York, California, you got all the local laws, right? You got all the money you're gonna need to pay to lawyers. You have that lost rent that you're gonna have to deal with. But even if you're not in those markets, like the returns just don't make sense. Right now, let's call it the cap rate, which is you take the net income from the property and divide it by the price. It's just the return you get per year. The cap rate is about 4.8% for a single family house in the US, which is now less than the 10 year treasury. So think about all like the effort takes to buy an investment property and like run it and manage it and then maybe scale the portfolio. You can get a higher return by just buying a 10 year. - Yeah, but a lot of people say, well, you know, I might make 4.8%, but that single family's probably going to appreciate another two to five percent a year. So even though it looks like I'm getting 4.8, I'm actually getting maybe seven to 10. It depends on when you buy, right? So if you buy at a time where the real estate's fairly valued or undervalued, that is true. If you bought in the early 2000s or in the 2010s, that was certifiably true and you probably made better than that return. The problem is if you buy in this market, you're buying into an overvalued market where the prices relative to income and rent are just way higher than they were. And if the prices are higher than income and rent, I would just challenge that person say, well, how are they going to grow two to five percent a year? Because ultimately it's rent and income, which determine where prices head in the long run. So I think we're just in an overvalued market right now that I wouldn't bank on two to five percent. I would bank, like if I'm buying in most markets, I'm performing, like if I'm building my DCF model, right? I'm performing negative appreciation for the first couple of years. How much of this is fueled by the top 1%? Because we were talking about a very bifurcated market where the luxury buyers are on fire. They're coming in with cash deals. They're buying anything in sight whereas the lower end or like the average of the house is really suffering. It's funny because like the top 1%, they don't change the reality of the market. But they certainly, they seem to change the narrative. You know, like in Florida and Miami, home sales are way down. Not just similar from Vegas, they're kind of similar markets in a certain way. Home sales are way down. Prices have corrected a little bit. But the luxury buyer in Miami is still coming in. You got Palantir moving there. You got Jeff Bezos moving there. You got Zuckerberg moving there. And yeah, so like about condos priced at 10 million, it might sell for 12 million two or three years later. And that grabs the headlines, right? That allows the local realtors to be like, hey, look at Miami. Jeff Bezos or Mark Zuckerberg just moved in and the luxury prices are going up. So I think it has more an effect on like the narrative. And again, what I talked about before, like why people need data on the housing market is because these narratives are all over the place and quite confusing. Honestly, like I even sometimes get confused. Like I track different sources, you know, redfin and zelo and realtor.com. And if like the same story, they could have different headlines. Like realtor.com one day might say, biggest decline in list prices since 2017. And this literally happened a month ago. Redfin said biggest surge in sale prices in four years. And I'm like, how's that possible, right? So it's just so important for a buyer to understand their market. You know, what's happening in your zip code? Where's supply in your zip code? What's demand in your zip code? What's the forecast in your zip code? Does that something me what matters? Like if you're going to spend 500,000 buying a house or 600,000 or over a million or even 250, that's a huge investment. The issue I see in real estate is it's so behind the curve on analytics. Like when you compare it to stocks, it's crazy. Like every stock has like 10 analysts, right? And multiple different technical analysis tools and fundamental analysis tools. But then where is that for housing? Like why does every home buyer not know what the forecast in their zip code is? Shouldn't that be something every home buyer knows? Even if it's not a perfect forecast, shouldn't they kind of have some idea from an objective source? And you guys ever read or watch Moneyball? It was about like Billy Bean on the Oakland Athletics baseball team in the early 2000s. He was the first one to introduce saber metrics and statistics into baseball. And you kind of had this battle between the old school scouts who didn't want stats. They just wanted to go and watch the game and tell you who was good. And then the Oakland Athletics started bringing in statistics and they started winning way above their payroll. They started winning even with like the lowest payroll in baseball and now like every team uses statistics to analyze players. I feel like housing is still in the early 2000s when it comes to analysis. I think in the next 10 to 20 years, it's going to be pretty normal for every single buyer and seller and realtor to just know, hey, here's the forecast from my zip code. Here's the demand metrics. And ultimately, my mission with Reventure is to make that happen, right? So no one's like in the dark when they're making a buying or selling decision. So I'm curious though, in terms of future values, it's said and estimated that millennials are going to inherit [BLANK_AUDIO] 46 trillion dollars through 2048. Isn't that going to be enough just to keep prices from falling? Well, there's two sides to that coin, right? There's the money millennials are going to inherit, and then there's the houses They're going to hit the market, right? So Freddie Mac estimates that there's going to be 9.2 million Baby boomers aging out by 2035 and the baby boomers were the biggest demographic population segment, right? Biggest generation. The number of 55 to 64-year-olds in the US was always around 8 to 9% of the population 50, 60, 70s, 80s, 90s until the 2000s when the number of 55 to 64 started spiking in the mid 2000s and kept increasing through 20, 20 Why? Baby boomers. Those were the 20 years where baby boomers entered their early-to-mid retirement years and I should say retirement home-buying years, but now what's happening is the number of 55 to 64-year-olds is dropping Is the baby boomers are getting older and they're shifting more to 75 plus and we're about to see a spike in the 75 plus population in the US That's good. Historics never happen. So what you're going to see from that is baby boomers passing down their homes to their kids Right data from Charles Schwab says about 70% of inherited homes get sold So yes, baby boomers are going to transfer the wealth to the millennial buyers There will be more buyers on the margins millennials because of that At the same time, there's going to be way more housing supply on the market Yeah, but don't you think that would cancel up because let's say they get the house 70% sell now they got this money. What do they do with the money? Chances are they're going to go and buy a house of it They don't already own a house. Yeah, that's a good question. I mean if someone already owns a house I don't know if they're going to buy a house if someone's been renting for a while and They've been waiting. Yeah, they'll probably buy a house But see if they own a house and they inherit a whole bunch of money. I guarantee they're not staying where they're at I mean if it's anything substantial They're going to probably upgrade that house sure and at worst they're probably going to renovate their house They're existing homes. So it might be good for places like Home Depot Because if you get to our grand and it's like oh well, we could fix up our current house. You're probably going to do that We actually just added a new metric to revenge your app, which I think addresses actually the point you're making We're comparing the 25 to 44-year-old renter population to the 75 plus owner population because 75 plus owners will age out Who's going to buy the homes on the margin the 25 to 44-year-old renters Right the trouble for the US is that ratio is plummeting The number of 75 plus owners is growing way faster than the number of 25 to 44-year-old renters And in places like Florida it's going to go below one in the next couple years Meaning Florida probably in the next five years is going to have more 75 plus owners than 25 to 44-year-old renters So I think it's also regional areas with older homeowner populations I don't I don't see who's going to come into buy those homes Right like if you're in Naples, Florida Are we going to see millennials flock to Naples, Florida to buy up the homes that the Boomers are aging out of I don't think so If we're in Austin, Texas if we're in Denver, Colorado where there's like a younger population predominantly Maybe yeah, I think that could have more likely that that supply is absorbed in younger markets So where do interest rates need to be then to unlock the inventory in the market? And is there a chance that we're never going to see that I'm starting to lean on the latter To answer the first question since We'd probably need a mortgage rate closer to five To make the cost benefit for some of these owners with three to four percent rate work for them to sell We're going in the opposite direction right now. I think today literally today the mortgage rate just cross seven percent again And it seems like there's a global bond market solve so in the short term I'm hard to envision lower rates unless there's some type of recession Right, I'm starting to lean to like we're just never going to see that again If you actually look at like 135-year graph of mortgage rates in the US the average rate Is 6.2% over 135 years But it's not like Crazy right even in the 90s mortgage rates were 8% so I have mixed feelings about the mortgage rate thing because like obviously it's having a huge impact Right, but then if you just zoom out It's actually not that abnormal mortgage rate. It's just abnormal compared to what it was in the 2010s in pandemic Like that 3% thing had never happened before which is why I think it's probably never going to happen again And really the problem is prices so if you look at long-term mortgage rates versus long-term price It's it's very clear prices are the problem prices are too high homeowners are sitting on something like let's say it's like 38 trillion in equity I think total housing markets value around 50 trillion in the US. There's like 15 million in mortgage debt 35 trillion in equity homeowners are sitting on What are they doing with that equity? Well, they're not really caching out refives refives are pretty low They're not selling their house You know sales are low. I kind of like feel like homeowners are just like sitting there like refreshing their Estimate and are like oh my gosh my house is worth this or like remembering what their neighbor sold it for four years ago So I don't see any way this ends without prices dropping What about the argument though that AI is going to make things so efficient Prices are going to drop across the board. We're going to see a lot more unemployment And because of deflation the Fed's going to have to drop rates just to incentivize people to really participate in the economy Could definitely happen. I would have thought that would have happened by now. That's still so early though. Yeah It's almost like we skipped a cycle somehow like it felt like maybe in 2022 2023 was going to happen But then it didn't and then We actually haven't had like I don't know if you consider the pandemic a real recession It was kind of like a manufactured recession with like then all this money printed We actually haven't had a real recession in the U.S. since 2009 17 years Kind of crazy. I guess kind of now a pretty long time But like obviously there's still some legs on the AI boom, right? I mean like look at what's going on San Francisco real estate You look at what these AI companies are doing. You look at what it video is doing They're buying up other AI companies building data centers left and right or providing the chips for the data centers So they're obviously still some legs. Again, I would have thought like a deflationary like recession would have happened already It is interesting though to address the AI Because I'm looking at the local housing markets in the Bay Area And I think this is so interesting San Francisco County booming prices up 15% year-over-year Santa Clara County Price is going down Alameda County Oakland values down year-over-year almost every tech market in the U.S. values down Seattle values down Austin values down Denver values down except for San Francisco County So I'm saying this is like a little weird Right like you have San Francisco County where like it's like the seed of the AI boom values are surging But in every other tech market values are dropping it almost says to me that there's like Is AI taking away jobs from the other tech markets And then putting the value of that surplus value in the frontier labs in San Francisco and the AI startups I think you're overthinking yet. I think places like San Francisco are so unique because they really prohibit building It's so difficult to Add any new inventory out of the market and the existing neighborhoods there Everyone wants to live in like these certain little pockets of San Francisco and Atherton And there's so much money there sure that when all these people now essentially they sell off their wealth globally Because anytime they're raising money, it's global and so you have Worldwide money flowing into a small little subset of it an area and they could buy whatever they want And they don't care if it's like a few million plus or minus to get the house of them. Sure. That's what I think it is You're definitely right. I would just say the why is that not happening in Santa Clara County Right like and obviously there's not as many AI startups there right it's more in San Francisco I would have just thought there'd be spillover At this point, but instead of spillover into other tech markets. It seems to be like contraction Obviously you're right though San Francisco is unique. It did drop during the pandemic We have it is undervalued right now and even with the recent increase Again, so kind of similar to New York and inventory is way down sales are way up So it is a legitimate totally legitimate recovery happening there But I am curious to see what's going to happen these other tech markets This I have this operating theory building that AI frontier labs are creating tools are actually harming the other tech markets Because the leading to job losses and that's leading to prices declining But so whole other conversation about the impacts of AI The other thing I want to mention though in terms of interest rates I actually just did a video about this Where we looked at the historical returns every single time interest rates were raised and lowered When compared with inflation Guess how many times the housing market went down When interest rates went up none Three one one time. 91. I believe it. Yeah, I don't know off how but put the chart on the screen here But in most cases real estate kept going up even though interest rates went up And it was more common for real estate to go down when interest rates went down And the thinking behind this is that interest rates generally go up when the economy could support it when the jobs market is strong or there's inflation All of those things a strong economy benefits housing inflation benefits housing So higher interest rates are not the cause for real estate going down Now on the other hand interest rates are lowered When they need to save the economy when unemployment rises when inflation declines All of those things hurt the housing market So if anything the higher interest rates go for the most not always but the most part The other thing Other conditions are good for housing, oddly enough. It's true, as factually accurate, and it speaks to how weird this time is right now. The counter I would give is that all those other scenarios didn't feature a housing bubble. There's only been two times in US history where real estate has been in a bubble relative to inflation and prices right now in '06. How do you classify now as a bubble? How do we know it's a bubble? The case-shiller inflation-adjusted home price index. This data is available back to 1890. Start from Robert Schiller, an economist from Yale, who's the kind of like the godfather of housing economics. He initially started coming up with this housing price indices in the late 1980s, well ahead of the curve. He started looking at prices index for inflation because you kind of have to index it for inflation to see is the growth driven by inflation, or is it driven by something else? It's crazy. From 1890 to 2000, inflation-adjusted home prices didn't grow at all. Meaning that over the long term, home prices tracked inflation and that was it. In the 1970s, when you had crazy inflation, home prices boomed, but relative to inflation, it just kept pace with inflation. Something changed though in the early 2000s. For the first time ever, prices relative to inflation skyrocketed and never seen it before. Then there was the crash. Then starting in the late 2010s in pandemic, prices relative to inflation are now back up at that level. We've never seen that persist ever. In US history, you also look at prices to income and prices to rent. It's the same situation. That's why I think it's hard to say like, I know people always say this and how they like in the 1981 mortgage rates were 18% and home prices went up. Well that's because home prices weren't in a bubble back then and that's because wages were going up 6, 7, 8% a year in the 70s. There was like this massive true inflationary mindset in the 70s where people felt like their next raise was going to be 10%. So yeah, I'm going to buy a house, even if I can't afford it. People are getting 3% raises right now and so it is truly unique times, but when you look at that price to income, price to inflation, it says we're in a housing bubble. We've never seen this bubble persist before in US history and the mortgage rates are this confounding factor that's like making it even harder for affordability. But I wouldn't say that just because prices have never really dropped when rates went up, it doesn't say they won't this time because we're in an actual bubble this time when we really weren't in previous periods. How much is Wall Street buying up residential real estate affecting the housing affordability? It was a huge impact in the 2010s. In fact, the US government actually helped give Wall Street money to buy up homes in the early 2010s, especially in markets like Vegas, companies like Invitation Homes and American Homes for Rent and Progress Residential, they bought up close to a million homes in the US over 10 years. So undoubtedly, the Wall Street investors made the situation worse for affordability and they made it particularly worse in certain cities. Vegas would be one. There's Wall Street investors all over the housing market, Atlanta would be another. Particularly neighborhoods, these investors own 50% of the homes. So locally, it was a huge impact, nationally, they only own like two to three percent of the housing stock. So wouldn't be right to say that Wall Street investors are the reason national prices are high. It would be right to say, though, that in certain markets, they're a principal reason and certain neighborhoods, they're the main reason. Interestingly, they stopped buying four years ago. As soon as rates went up, Wall Street exited the market. The biggest Wall Street investors, like their purchases got cut 50, 60, 70%. So they kind of saw the writing in the wall. That stuff I talked about before with the returns and the cap rates, like the mortgage rate is now above like what they can make. So they're not really buying. And then they just got banned, which is kind of an interesting story. But I think they did have a really sizable impact in certain markets and making the housing less affordable. There's also studies that say Wall Street landlords increased the rent more than mom and pop landlords as well. So what do you call Wall Street landlords? What is that defined as? So it's like several companies I think of, right? The ones I mentioned before, the US government just defined it in the road to housing bill, which just passed. They defined it as owning more than 350 homes. So that's now the threshold where if you own more than 350 homes directly or indirectly, you are not allowed to buy more from the existing housing stock. That law goes into effect January 2027. It's for 15 years through 2042. So yeah, 350 houses is actually lower than I thought it would be. Like I think of corporate investors, maybe it's like a thousand homes or more. But 350 homes is now the cutoff and these investors have to report to HUD each year. So if someone owns more than 350 houses, directly or indirectly, they're mandated starting in 2027 to provide a list to know that. Yeah. Well, I knew I called it performative because you tell me these numbers and I say from all of my research that they're buying built to right communities, they're not necessarily going and picking salaries home down the street and competing with a normal owner user. Like it never makes sense for a Wall Street investor to say I'm going to compete with someone who's going to live their full time because the numbers never pencil out. They did. So from 2012 to 2022, they did buy up the existing homes. They did, but those were portfolios from banks who were never going to sell them individually. The banks would say, hey, we got 300 homes that are underwater and it's not worth our time to parse these out individually. You could buy them for 70 cents on the dollar. And so they bought those, but those were never meant to go on the market to begin with. Sure. Yeah. I mean, they certainly did buy in bulk 2013, 2014 after the last crash. They got amazing deals, right? These houses in Vegas, they got like 70 grand per door. They did continue to buy and scale the portfolio through the late 2010s, early 2020s, especially in markets like Atlanta, especially in markets like Vegas and Phoenix. That's all with my own eyes. But I think your intuition is correct that it's performative in one sense. Like that's, that law passing is not going to like dramatically change anything. I think it's going to change a single thing and it's not going to matter at all. That's where I would disagree. But I think that does stop them from getting in as the downturn. Now build to rent communities are excluded. So if anything, they could go and build their own community and rent out single family houses, which I think is good for the market. This is great. It essentially shifted their focus, right? If they had any remaining focus on the existing housing stock, it's now shifting to build to rent. They're almost turning into builders, right? American homes for rents now like a top 35 home builder in the US. So yes, some of these Wall Street landlords are going to have to become home builders to stay relevant, which is, which is good to your point. But I'll just tell you what I'm seeing in Florida again, like when I was there last week, there are houses crashing in price. Those investors are now kind of locked out from buying up those homes that are crashing in price. So I think that's the one benefit, let's say, right? Is that if certain markets do go through an extended crash in this cycle and some are already, they're not going to just be, all these homes aren't just going to be scooped up again. But couldn't you say, though, that's negative for the entire market, because what's going to happen? People don't like to hear this, but in a way, a lot of these Wall Street investors saved the housing market from falling further, because you have, let's just say your grandma and grandpa, their home is now worth 50% less. And if investors weren't there to stop the bleeding and to buy up this inventory, prices would keep falling. And it's not like other people were going and buying. I mean, everyone had the opportunity in 2011 to be able to buy a house if they had the means to buy a house, but they didn't. And prices kept falling and falling and falling. So if anything, you could argue it would hurt the broader market if they didn't come in to buy. And if they're not buying in Florida, what does that mean? Maybe prices keep falling and falling and falling and you could argue, well, that's great for the average person, because now they're able to go in and buy cheaper. But what does it say to everyone else who owns a home in the area, and they're banking on those values, at least staying somewhat stable to figure out what they're going to be doing with their life and how they're going to be spending and if they feel comfortable moving and if they want to relocate to, if you're under water on a house and you don't have any money, you're not selling. You're staying put. Yeah. So you could argue maybe that's worse for the market. And that's the problem. Without enough buyers, prices can keep falling. If you're on a business, reaching buyers matters too, especially with Black Friday coming up. Exactly. And if you're only selling in person, it now's a good time to get your store online so that people could shop wherever they are. And that's why we love our partner Shopify. Before Graham and I started working together, I set up probably five or six different Shopify stores. And if even I can figure it out and get some sales here and there than you can too, I also kept going back to Shopify because it is literally the easiest way to create an online store and start actually selling product. And now their pre-built themes in AI site builder could help you create a professional storefront without having to hire someone to build your website. Plus, getting set up before Black Friday means you're ready for the extra online traffic when more people are shopping and actually ready to buy. So if you're ready to launch your business before Black Friday, go to Shopify.com/ICH to start your free try. That is Shopify.com/ICH. Go to Shopify.com/ICH today to hear your first, if you're under water in a house and you don't have any money, you're not selling. You're staying put. Totally depends. Yeah, totally depends on your perspective and like who you represent, right? So like me and my channel and the data, I very staunchly have the interests of home buyers in mind, right? You know, I'm 36, right? Like, I just bought a house and I want to settle down and have a family, right? So I'm thinking from that mindset. I'm not thinking from the mindset of like what's best for the existing owners in terms of their value. However, you do bring up a good point. You don't want like full-scale calamity, right? Like in Vegas in '08 to 2012, it was horrible. I mean, this area is still scarred somewhat. Like, you talk to people who are in Vegas back then, it scarred a generation of people being through that crash. Prices in Vegas dropped 63% from 07 to 2012. A $350,000 house in '07 was worth like 140, which is hard to fathom, right? That is bad, right? And the market did was going to fall further if it weren't for some of those investors buying. I don't think this is the same, like, period in that sense. Like, consumers have stronger balance sheets. We don't have as much mortgage debt in the economy. I don't think we're going to see entire markets go down 65 percent. I think we'll see entire markets go down 30 percent, like Austin is. Austin's a great test case. Austin's down 27 percent in four years. What's happened? Unemployment rates 3.6 percent. There actually hasn't been like this like full-scale. Let's just call it like economic calamity. It just handled the correction. And I think with where the consumer balance sheets are, I actually think a lot of owners could handle the correction. And banks also have less exposure this time around. So I think the housing market has more cushion to absorb these declines. Like I said, homeowner equity is 35 trillion. Just give some of that back to buyers, right? Like, it's pretty simple and the market will improve. So that's why I don't think we need Wall Street. I think it was like a one-off. I don't think we need or want them in the housing market again to buy. So build is a different discussion. Wall Street still makes up such a small percentage. I have it here in my notes that investors this year in 2026 still make up 19 percent of home residential purchases. And the median investor capital gain on resale is currently $196,000. Now when did they buy? I guess it's the question. But how many investors do you think or know are underwater on their purchase? Or how many people? So I think in the worst market right now, it's probably around like 10 to 15 percent of people are underwater on their mortgage. And Austin, it might be like 30, 35 percent of people are underwater on their purchase potentially with given how far values have fallen. So it's still a minority of the market. And that's why I actually think it's like something that the market can handle, right? And you're right. Mom and pop investors still do buy some houses, right? A lot of them maybe look at it like a long-term investment. But overall, investor purchases are down 50 percent from peak in 2022 and Vegas they're down 70 percent. So literally like in Vegas, the investor purchases were 3,300 I believe. Now they're like 1200 per quarter according to Redfin. So it has been an investor exodus. And I think it's going to be a while before investors come back to the market. This is just the math. Just doesn't make sense. Where are they moving their money instead? I'm noticing the stock market personally. It's just like everyone's going into the stocks, right? Which also worries me that when everyone is doing something, sometimes I think, well, maybe that's not the best choice if everyone else is doing it. So that gets me worried that like, if they're not investing in real estate, now I tend to think, oh, well, maybe that means there's actually an opportunity in real estate. I don't know. Certainly right. Yeah, like it's not cool. Real estate is not cool anymore. When I started my YouTube channel in 2020 and started putting together the data, real estate was so cool. Like everyone wanted to become like an Airbnb investor. Everyone wanted to buy homes in different states and scale it. No, it's not cool anymore. And yeah, you're right. It is starting to teeter on like, it's so not cool that you wonder if that's a signal of something. And that's why I tell people who are in markets where there's actually a lot of supply. I'm like, now's not the time to buy. But now's the time to make offers, right? Like figure out what you would be willing to offer for that house objectively. Put it on paper. Do the do the mortgage payment out. Maybe look at it as an investment property, just for fun. And figure out what you would be willing to offer. And even if it's 150,000 below, make the offer. That's the stage we're in right now. It's not time to buy, but it's time to start sniffing around if you're in Atlanta, if you're in Vegas, if you're in Dallas, if you're in Austin, in Denver, in Seattle. It's time to sniff around in these markets because you would actually be surprised if you do that enough. What can happen? I am shocked, by the way. I really regret not making an offer on Floyd Mayweather's house. He had it listed here in Vegas at like $14 million. Wow. Dropped it to 12, dropped it to 10, dropped it to 8, and it sat there. And part of me is thinking, man, it's just, it was a big house. It was like 12,000 square feet. So you're saying it went from 14 to 8? Do you remember what it sold for? 6.6. And I look at that and I honestly think in hindsight, I'm like, I would have paid 6.650. I give them a little more money than what they got for 12,000 square feet. This was like a custom build right on the golf course, on basically a cold, the sack's street. Oh my gosh. That was the place to go out of curiosity. Was that recent or was that recent? Really? That was a recent sale. And my understanding with that is that they had quite a few issues with the house and title. There might have been issues of like, we don't know quite who has the authority to sign off on the house. So there might be an issue with title or there might be leans that have to be satisfied before we're able to issue a clean title. I don't think it was an easy transaction. And my understanding is that whoever bought it, we did quite some time. So they had the patients. That was a great property. Yeah. Why out of curiosity, why didn't you make an offer? At the time, I didn't think it was sell for that. I thought that it's Floyd Mayweather. And this is before it kind of came out that like, hey, maybe he doesn't have a lot of money. I thought it's Floyd. It's like he doesn't give it. That's like, if it doesn't sell it, but sometimes like to your point, you never know. You never know. And we actually developed like a little system that we've entered to help home buyers with this. And again, goes back to the property I just purchased in Atlanta. It's like, here are the markers of a seller that's willing to negotiate because one thing you got to do, you got to differentiate between the sellers that are just like, taking a flyer, trying to get like this like price that they're not that interested in selling, right? Versus sellers are actually interested in transacting. For me, I only look at houses that have been on the market more than six months. Because in this still very overvalued market, I know I'm not going to get a good deal with the house has been under on the market for less than six months. I want to see also multiple price cuts. Those two signals are signals to me that the seller is like, at least somewhat wanting to sell the house, right? And then if I see that, I do my own math on what I think it's worth. We have like a listing tool analyzer that helps people figure that out. And yeah, then make an offer. Sometimes that'll be 100,000 less, 150,000 less. There's kind of almost like a system to it that I'm starting to develop. It's like, you don't want to just come and make the offer immediately. This is you're going to piss them off potentially. Right? It's more like you want to see the house. You want to show your proof of funds. You want to establish credibility up front. You want to just be this guy who's like, I see the house and then like two hours later, lowball, right? You want to establish credibility. You want to tell, you know, a legitimate story. And you want to figure out what it's worth. And you want to go to the agent listing agent. And I would actually call almost recommend people do this direct. And just say, hey, I love the house. I'm interested in making an offer. It's going to be substantially below this price. Would you like me to still make the offer? This way, it's like you're preparing them. And they might say no. And at that point, you just know it's the waste of time. But you didn't have to like go through making the offer. If they say yes, you know, they're intrigued, then make the offer. And again, when I bought that place in Atlanta, I, you know, this is really fascinating. It was like 490. They cut the price to 415. So they're already taking a loss. I offered 315. They rejected it and counted 400. And I was like, no, and I just let it sit. And then they came back around at 360. I counted at 330. I got the property. And that's not to say you can easily do that. But that's to say that in this market, where prices are in a drop and there's a lot of supply and there's some more distressed sellers, if you can isolate the people and the sellers who fit the profile of being willing to transact, you could potentially get what I call post crash pricing. Now, does it make sense to get an adjustable rate mortgage? I mean, if rates are going to continue to go up, probably not. Right? But like in general, is that a potential thing that someone should explore, cats out the bag, I got an adjustable rate mortgage. But you launched in for seven years. For seven. However, now kind of gratitude, because the tone of the conversation is that rates will not go back down. Yeah. Like the tone of the conversation is that they will stay the same or continue to go up. And now I'm like, well, I got 5.7%. I don't know what I could have gotten if I just did a fixed rate 30 year, maybe like 6.1, 6.2. But who knows. I think seven years impossible to predict. Yeah. That's how. So is it seven years before then it turns into an adjustable rate? Yes. So it's, it's - Fixed for seven. - Fixed for seven, and then it adjusts, but it will still be below the 30 or fixed. In seven or six now, I suppose. So it'll trail that a little bit. - So you're gaining. So basically, yeah, you gain up front and that you're gonna be below market and you just expose yourself to tail risk. I guess in some ways, it's not a bad idea. The average homeowners in their home for seven years, right? So like, if you're the average homeowner who's gonna end up selling, right? In seven years, you could potentially like pocket that differential. - That kind of if you're buying to sell in seven years, maybe you shouldn't be buying in the first place, at least in terms of, that's a good point too. I'll be telling you, again, depends on the market, like in Nashville, it's just shocking. Every house on the market, it seems like was sold in 2022 to 2024. Like, it's just like, why? Like, how many houses are on the market that just sold four years ago? And sometimes it just has to do with like, the type of market it is, like Nashville, super transient. People come in, they come out, right? They come in for a job, job moves them, right? Somewhere like Chicago is not that way, right? Usually people in Chicago are like, you know, upstate New York or Connecticut in New Jersey, they buy, they're often there for a while. So if you're planning on holding to a home for X amount of years, if you were to buy, what is that number? - I don't mean to cop out on this, but again, it totally depends on the market. Because in California, the cost to buy versus rent is literally insane. Like the same house in California that you're renting for four grand would cost 9,000 a month to buy. So I would put the, like I would put that threshold much higher in California, because like, if I'm in California, I'm saving money renting. I really am saving money renting. I'm saving money still renting in Vegas. I was just looking at a house today, cost to buy 2800. It was just on the market for rent a year ago, 1850. Why would I buy a house for 2800 a month when I can, it was literally just on the market for 1850 in rent. So I'm doing that upfront math equation, and I'm figuring out, okay, how much in this market, how much more am I spending by buying? And I think just in the majority of circumstances, that means that you need to stay in the house for a long time. To your original point, to your original point, you need to stay in the house for a long time. These, you're gonna need the value of that house to go up to make that worth it, and that might take in this market 15 years. - 15 years for places like California, maybe in other places like Florida, you would say a smaller amount. - Yeah, exactly. - What about you, Graham? - I would say it's probably gotta be 15 years, maybe 12 years, just to make sure that you're gonna lose money on that sale compared to rent day. And it really depends on the interest rate. Like when interest rates were 3%, I would say seven years. Then when they were like five and a half, six percent, I told people like 10 years. Now I think it's gotta be even higher, because you're paying so much up front. Like just to be having more of your mortgage payment go towards principle than interest, I think now is like 18 to 20 years. So you're front loading all the interest on your mortgage, you're really gaining nothing. And so you're banking on appreciation. Are we gonna see appreciation over the next decade? I think it really depends on the area. And so that's for someone looking to buy a primary residence. What about an investor of real estate? What strategies have you seen actually work in today's real estate environment? Running as fast as possible. That's the only strategy that works that I have seen be really effective as you just see a house. And then you turn around and you walk out the door as fast as possible. So just avoid it. Avoid it. That works a hundred percent of the time and put it in an index fund. International index funds and muni bonds. Well, at this point I would like to ask Graham about his experience selling his portfolio in California, because I feel like it's a very relevant topic for that question, right? Like what prompted you to liquidate and get out? Prices had risen to a level where I was looking at my alternatives and I was looking how much were these properties making? What is it worth? What would my net be after I sold after commissions, closing costs, taxes? And I determined after selling, I could make just as much money in a tax-free muni bond. More, in fact, than owning the property. And I saw the writing on the wall if a lot of my properties were under rent control and I don't think it's gonna get better. And so I see all the risks and the headwind with rent control, the hassles, the time, every single thing I had to think about and I hated, I had multiple times, where I'd get a letter from my insurance. Your insurance is canceled. I'm calling them up and they go, "Oh, it's an error, but right now they cancels your policy, we have to reissue it." I said, "When is that gonna happen?" About 48, 72 hours. And so I have to hope, in the next 72 hours, my home doesn't burn down or there's an earthquake. And the amount of stress, and this has happened, by the way, almost once a year. And when you put this through multiple properties in LA and there's an insurance lap for a few days on something, I'm dealing with this multiple times a year and I have to be on top of it. And then I get the property tax bill. And I got really lucky that I have extremely low tax basis on these properties, where my property tax bills on like a $1.3 million rental might have only been like eight grand a year. But I still see that, I'm like, there's eight grand gone. And you could say, well, yeah, it's baked into the rent and this and that, but I'm looking at, it's just a waste. And then I get a $500 water bill from LADWP. And I say, "What are my 10s?" Why are they wasting the water? Well, it's because they don't pay the water bill. I pay the water bill. And when you, when you pay the water, but I'm cognizant of how much water I'm using, let's not flush the toilet 50 times. We don't need to take it. That doesn't affect the water bill. Let's take too many bags. Maybe one cent per flood. Somebody, somebody is, I don't know what they were doing, but the fact is they're, it's 12 hour showers. It's watering the lawn, it's hot outside. They just take a hose and just leave. I don't, I don't know. It's fucking challenging. It's just yard every day. It's just, it's something going on where I'm paying now. I'm paying now a high water bill and a high electric bill too, because electricity rates are going up. We've been having a heat wave here and I'm so glad. I don't have to pay the electric bill for what's going on there. They'll run the AC 60 degrees. And they'll say, "I had great 10s." Like really, really good 10s. I was lucky with all the 10s and I like them. But I don't like the bills. And so I looked at that and I said, "It's time to sell. I don't want the stress, I don't want the hassle. I want to be done with it." And so we priced aggressively. And I also made sure I spent so much money. I spent between like three properties. I must have spent 140 grand between these properties, fixing them up and staging. I mean, I went to the nth degree to make these places look awesome so that when we come on the market, we get multiple offers sold over ask. People do not realize how expensive it is to actually in a home, all of the things outside of principal interest tax and insurance. Last year I was doing all of my bookkeeping for the house that I live in right now, which I rent out four of the rooms at, which you would think would at least cover the cost of living there. It's four room rentals. Problem is, I collected about 30 some thousand dollars over that year in rent and it cost me 60 thousand dollars. - Good idea. - My PITI was like $2,500 a month. So where did all of the additional 30 some thousand dollars go to, you know, Wi-Fi, which is $180 a month. It goes to electricity, it goes to water because we have a pool and filling up the pool. You have to do that every few days in Vegas. I mean, the pool, we had a water bill that was like $600. I think I had an $800 water bill last year. - Oh, by the way, for Vegas, that's a lot because LA, it's normal to get like a $500 water bill. Vegas, my water bill, by the way, with a reef aquarium and a pool is like $80 a month. - Really? - So that is like a gas bills and like the hundreds of dollars. On top of all of that, every single year, you have a capital expenditure that you didn't expect to have. So last year, it was air conditioning. I spent like $13,000 on air conditioning. The year before that, I had my pool re-plastered. That was $8,000. I also had to do another AC unit. I also had, I installed solar, which was $40,000. I had the pool pump go out. That was a couple thousand dollars. I had problems with irrigation. That was a couple thousand. My main line, that was $5,000. It's like, I've owned the house for five years. The house was actually taken care of pretty well. But just in home ownership, especially if you have a pool and especially if you're in Vegas, things happen. Especially if it's an older hope. People think they're saving money by buying a house that hasn't, you're not paying the exorbitant prices of new builds, when it actuality, if it's a 30-year-old home, everything is expiring. Yeah, I got another one too. I had a tenant move in. They were paying about $3,500 a month. Moved in second week, the AC goes bust. And it was $10,000 to fix. The air conditioning is the biggest scam ever because it is planned obsolescence. The best AC units are the 30-year-old AC units. Those ones never go bad. And I was told this by my AC technician. And they change the fluid that they use, like the coolant that the air conditioner is used every few years and then say, oh, well, you have to buy the new unit because it uses the new fluid. And if you have the old unit and the fluid goes bad, like you just have to change the entire unit. Like, it's crazy. And if you change the AC unit, then you have to change the actual coil. Interesting. It's absurd. So I do have a question on the water in Vegas. I want to get two to seconds. They see that in my comments section all the time. Oh, it's like me running-- It's not running out of water, it's all the. California almond farms that are using the water, it's not Vegas. Vegas uses so little water compared with the farms of California and everywhere else, myth. - And doesn't it just like recycle? - Yes, they do. The entire Las Vegas strip drill so far down that they use like well water. So it's all reclaimed water. So they're really not pulling from anything. - So is this whole thing about like Lake Mead running dry, Colorado River running dry and like impact on like Vegas? - I've seen this. - Is this all like kind of a fear, fearful? - I would say yes, but there is a water issue that will happen down the line. It's not because Las Vegas residents have a pool or they're taking 12 minute showers. Like it's not that. It's California almond farms that are pulling the majority of the water. - It's actually the almond farms. - Yeah, oh my gosh. The amount of water it takes to create a single almond is insane. Like when you look at how many gallons per almond, so why do we not have like taxes on these almond farms? - We should. - And why do people even eat almonds? They are the worst delicious. They're the worst tasting nut. Especially if they're unsalted, it bothers my mind. People are still eating almonds. - So it's 1.1 gallons of water per almond. - That's insane. - Per almond. - So every time you take a handful of almonds and put it in your mouth and get like a three out of 10 on the flavor scale, you're also contributing to 60 gallons for 40 gallons a lot. - I think we could ban almonds tomorrow. I'd be okay with it. I just wish to open it. But we know who wouldn't survive the almond blooms. - Yeah. Now Las Vegas though is taking measures to conserve water in ways that they can. Like pools right now are limited to 600 square feet. You could only have a certain amount of water features on your property. So you couldn't do like a huge like water fall in front of your home. They're really going for astroturf instead of grass. The golf courses are now using a different type of grass that requires less water. Some golf courses are even letting the grass-- - The grass. - 'Cause I do so much research. - Yeah. - Golf courses plus almonds. - Yes. - That's the real grass. - But it's not really the golf courses. But they're also using a new type of grass that they'll let die off so that they could then re-fertilize it a few months later and then have it grow back again to conserve water for a few months. Because when I'm looking at golf course frontage properties in Vegas, the last thing you want is for your golf course, your view, your backyard, to go brown. - It's disgusting. - All the golf courses I at least go to, the public courses are completely dead during the summer. Completely. - Yeah, because you're gone. - I didn't know that. - Like no one's there or the grass is there. - The grass is brown. - Well, the grass is always greener. - Any other side. - To try the course. - At the private course. - Yeah, I've got it. - Well, I just want one thing I was like picking up on when you guys were talking about your experiences owning real estate is there's a couple of themes that kept popping up there. One was inflation, right? There's the costs of owning, right? Whether it be property taxes, insurance, water, Wi-Fi, all that stuff. So it's just generalized inflation, right? Increasing your costs. The other thing was hassle, right? And there's just like draining you mentally, let's say, right? Like, especially if you're someone who's like a creative person and you need for your job, right? And you're like having to worry about all this stuff. So it's inflation and hassle. And I think actually the big fundamental issue is that rent, I know this is not crazy. Rent hasn't gone up enough to make up for the inflation on costs and hassle for investors to stay in the market. Like hypothetically, if for both of you, the rent was double on your respective properties. You know, what did have changed? Like, you know, your perspectives on, is this hassle worth it or no? - I think it would have, it would for me. I mean, granted, I'm still living there, but let's just say I got double the amount of rent. Then I would just hire a property management group. Granted, I've also never worked with them. And I know sometimes they kind of pass the hassle on to you still even after you pay them. But I would pay the money for a property management group. - Yeah. So that just goes back to my thinking about the market, right? Like I was talking earlier about the home price to rent ratios and how the prices have gone up way more than the rent. And it sounds like the cost of ownership have gone up more than the rent, too. And I think that's squeezing landlords. And I think that's squeezing investors. And it's taken, you know, 10 years ago, something that was like very attainable to get into real estate investment 10 years ago. And like feel like I can make money, right? Now it's not. I have a friend, he actually lives in Florida. He owns about eight properties in Cleveland. And he owns a couple properties in Florida. And he was actually sending me your stuff, Graham. He was like, look at this. Like what Graham's saying is exactly what I'm feeling. You know, he feels the same way. He's like, oh yeah, like I got into Cleveland. I heard that the returns were good, but I have to evict tenants and left and right. And then he's dealing with issues on his property in Tampa. And he's now focusing actually on small businesses. You actually started an app where, you know, you can analyze small business acquisition. And he thinks that that's like where more of the opportunity is. So maybe that's like another thing, you know, people are starting to look into, too, is like, hey, if I'm not buying houses as investments, maybe I'll buy small businesses. One thing that I thought was actually really interesting, we didn't really tap into it. But you said that you were underwriting for private equity, buying a commercial real estate. Yeah. What was the general return that private equity would get on commercial? Because a lot of the layman, like the average person, probably myself included, think that private equity can go in and then get 20% returns year over year, like the rich get richer, K-shaped economy. And the average person screwed, 'cause they can't tap into this like investing style that only Wall Street can do. Was that true? Like what did you experience underwriting private equity commercial real estate deals? Yeah, so we did like hotels, office buildings, apartment buildings around the US was kind of our main asset class. And I worked there from about 2011 to 2019. So it was coming out of the last crash. You could make screaming returns coming out of the last crash. And we actually did mortgage debt. Sometimes we did equity, but we actually did mortgage debt. The mortgage debt was often like sometimes nine, 10% rates on first lean mortgages on apartment properties in places like Atlanta and Houston. And because the prices had dropped so much, there was so much meat on the bone for like return that yeah, on a mortgage, we could make 13% IRR. On equity, we could make 25%. But that was in the 2010s. I don't know if that's possible now. I don't think it's possible now, because if you raise money now, if you work for a private equity fund and you raise money, that cost of capital is gonna be five, six percent of its debt. It's gonna be nine, 10% of its equity. And then the cap rates for these properties are four and a half. So a lot of it just has to do with where you are in the cycle. Again, coming out of the crash in the 2010s, there was so much opportunity in the early mid 2010s. I mean, that's what I bought. And the properties that I bought back then, I'll never forget San Bernardino. They had sold like 2003, 2004, for like 380,000. And I picked them up one for 59,000. The other for 72. And then another for, I think it was 125. Sorry, what was the original price again? $380,000. I dropped from 380,000. I never dropped. It's sold. Sorry, it's sold. Sold for 380. Sold for 380, 2004, then got relisted in 2011. For, I think it was like $62,000. And I got it at like 59.5. So was that 70%? Something like that. But when I was looking at these, I was calculating the amount of rent I'd be able to receive versus the purchase price. And I had this whole system figured out where I wanted to make about a 15 to 16% cash on cash return after all of my expenses. Buying these properties. That's it. But that's what it worked. But that was normal. Do you remember? So for the 70,000 is like a house? House. For the $70,000 house, what would be the monthly rent? Do you remember back then? I rented initially at $1,150 a month. And I put a little money into it. But it was really just like paint floors. And the floors we got under a dollar square foot at Home Depot. And I remember the workers. I got a really great contractor. And he was like desperate for, like he was just grateful to be able to have any amount of work whatsoever 'cause no one was doing anything. And so he was like just, and he knocked it out in a week 'cause he was like, just I wanna turn out projects. Such a different environment. Yeah, right. But what I'm thinking about is just the math. So 1100 a month is what, like 13,000 a year roughly on a 70,000 purchase. 13,000 times 70,000 divided by 70,000. That's what, like a 16, 17% unlevered cash on cash return cap rate. What was the 10-year treasury back then, like? Oh, I didn't. I had no idea. It's like 3%, 3.5%. So the 10-year treasury was 3.5. And you were buying something that yielded 17%. Yeah. But that's why I felt so confident buying this because I was looking at like how much per square foot for this house. And it was 1,800 square feet for 70 grand. And I was like, you can't even build for anywhere close to that. So my logic was that it has to be worth at least what it costs to build. Or the housing market is screwed forever and they will never build another home ever again, which I knew was not the case. So I felt like this makes so much sense, like this is a no-brainer. But even so, after all of the calculations that you did, had you just thrown that money into an index fund instead of buying real estate, wasn't it kind of the same? Yes. Which is crazy, like in the perfect, like the most perfect of worlds. Putting your money into real estate when you get a 16% levered return cash on cash return in real estate. So it didn't even matter. So what could have just thrown it into an index fund? Here's the thing. So here's where the math stops mathing. I bought these properties cash. And because I bought them cash, I would have made more money putting that cash into the stock market at the exact same time, especially because I eventually left California and at some point, I wouldn't have to pay this California income tax on realized profits decades later. But had I put small down payments on these properties instead and instead of getting, you know, this one property for 70 grand, I put 70,000 on a down payment to buy a $500,000 property and I made that same return, then I would make so much more money in real estate. I just didn't have the credit at the time. So that was my issue. The first thought was like, if you bought them in cash and then put 50,000 or 60,000 other mortgages on after, I didn't have any credit. I bought these property. I had nothing. And so after I had bought them, then I got my first secured credit card, started building credit. And I could have years later done it, but I just, how old were you when you bought those? 21. Yeah. But doesn't that speak to the opportunity that did exist back then, right? Like someone who's 21 with no credit could actually like buy real estate. And that is just like, like, yeah, but you can say that at any point, you could, you could say, you know, 10 years ago, well, you could have bought Bitcoin. You could be working at McDonald's, you know, 10 bucks an hour and being like, that's exactly what you say to me and instead of me selling covered calls, I'm just saying, if you instead just bought the actual stock, you'd be up there. Which is true. When it popped, it popped, Jack, you would have been so better off. I actually didn't have any covered calls against Robin Hood when it popped. Thank you very much. That was a lot. You guys had the CEO of Robin Hood on recently. Yeah, we did. He's great. I like him a lot. Speaking of, not the CEO of Robin Hood, but speaking of like investment opportunities and let's say missed opportunities, you say that you are very big on having a cash position. You have the munibons or cash equivalents. I agree with the idea that you can be right about a thesis, but wrong overall because you are wrong on timing. Do you think that you would be better off instead of building up this cash position and waiting and waiting and waiting and waiting, yes, the market could correct real estate could plummet and you can find plenty of opportunities then. But that could be five years from now and the stock market could be up 80% in five years. Is there any validity in your own personal case of like, hey, maybe instead of hunting this deal in Georgia, I could have just thrown the money into some index funds and held on forever. Potentially. Maybe I'm just like old school kind of, right? I'm a real estate guy. It's what I've always worked in, right? So my mind looks towards real estate and where I can find opportunity there. In the future, I would like to have a small portfolio of properties and grow that a little bit. But can't really really understand or trust the stock market. I'm probably kind of like an old person when it comes to that. And I look at things like the Schiller cape, like the cape ratio for the stock market. I don't know if you guys are familiar. It takes the 10 year inflation adjusted earnings divided by the inflation adjusted market cap. Stock market looks pretty overvalued too when you look at some of those metrics. And so, you know, it's two things. I don't really understand the stock market too well. And then I also just look at some metrics in the stock market like price to earnings ratios. And I'm just like, there's a lot of future growth assumptions in there. And the forward PE on the max seven now is actually pretty low compared to what it was in the future. Yeah. When you look at the market, it's really interesting because you could find a chart that reinforces whatever you want to believe, like you could find a chart that says we're the most overvalued ever in history. Yeah. Find another chart that says, actually, we're fairly well priced when you isolate the data past 2001 because arguably you could say that we can't compare ourselves with the 1980s when the internet and globalization has changed substantially. So that's really post 2000 when you look at it post 2000, it's really not all that bad. So, you know, there's an argument for anything. Yeah. And again, I don't know as much about stocks, right? So it's not my area of expertise, but I'm just always cautious about those like this time as different scenarios. And what that reminds me of a little bit is like when I lived in Austin in 2020, Oracle moved their headquarters to Austin. Tesla moved their headquarters to Austin in the spring of 2021. I start telling people, hey, guys, the price to income ratio in Austin's housing market makes no sense. You know what people start telling me? Well, you have a Tesla just moved their headquarters here, Oracle just moved their headquarters here. Austin is the next Silicon Valley turns out it was, right? And so I'm just always skeptical when I hear narratives about like how it's different and for these things that have changed, I actually just bought a book very, very fascinating. It's called 1929 by Andrew Ross Sorkin, I don't know if you guys are familiar with him. It's about the lead up to the 1929 bust and the Great Depression. And he quotes like bankers at the time and the things they were saying. It was like mirror some of the things people are saying now like, oh, like electrification is going to change things forever, right? People have washing machines and dishwasher's productivity is going to go through the roof. So we can't look at old valuation models. Additionally, the US became an international stock market back then. People are like, oh, we have equities coming in from Britain, that's going to push prices up forever. I think it's funny how sometimes, you know, Mark Twain said, history doesn't repeat it rhymes. And I'm not saying that's going to happen, but I just saw, I'm always skeptical of narratives, like even in Nashville, right? Interestingly, Oracle has now moved their headquarters to Nashville from Austin. And they're supposedly going to build the campus by 2030. Maybe realtor in Nashville, it's just like Oracle is going to move here. And I'm like, yeah, but like the man is at the lowest level in 15 years and supplies at the highest level in 15 years, and they're like, well, Oracle is going to move here. So there needs to be a balance, right? Like between accepting that maybe, you know, certain things could have shifted, but then still also like training your eyes on the fundamentals, right? That's true. But also had you throw your money into the stock market in 1931, like you'd still be so much better off 15, 20, how many years in the future it may be to that, that rhymes every single time. Sure. The earlier your money is in the market, on average, the better off you are. And so I'm always thinking like you can think of all these one off scenarios. Like Graham said, you could find any point online that would validate your theory or invalidate your theory. The only thing that has stayed true regardless of theory is that the earlier you put your money into the market, on average, the better you are. If someone wants to adopt that principle, I wouldn't debate it with them. You know, and maybe they would do a little better in the long run. You know, I think it depends on what you value personally. For me, I'm like, I like having flexibility. I like having liquidity. You know, I'm a multiple business owner, got a successful YouTube channel, successful app. I want to buy some investment properties, right? So for me, it's like, I would rather keep my power dry, right? And else who maybe has a stable W2 job doesn't want to like rock the boat too much in what they do, which is perfectly fine. That might be like, that might be good advice, right? So I think it also depends on just like where someone's at. How much does declining birth rate concern you? The birth rates are down about 35% since 1991. It's a huge deal. And it's a multifaceted huge deal for the housing market in the economy. I believe actually one of the reasons why we have such low buyer demand today is starting to become demographic. And by 2034, we're projecting at Reventure, there'll be more deaths in births in the U.S. That's never happened before. That completely changes things, right? When you think about housing demand and supply, you know, what's the number one fundamental thing that would force someone to buy a house, right? We're not talking like, what should I do with my money? You know, this or that? It's like, oh, you have a kid on the way, oh, you have a second kid on the way, right? It increases the desire for the stability, right? The security in the space that owning a home provides. So when you see declining birth rates and things like declining school enrollment, these are massive red flags. So I lived in St. Petersburg, Florida for a year, late 2024 to late 2025. That market's correcting. One stat that blew my mind when I lived there was at the Pinellas County School Enrollment, which is St. Petersburg in Clearwater, was down something like seven to 8,000 in the last 10 years. And I'm like, looking at that, I'm like, how is that more people not talking about that? If school enrollment's dropping 7,000, what does that mean for the local housing market? That means there's no fewer and fewer families looking to buy. And so I think this declining birth rate is a huge problem for demand. And the flip side of it's the increasing death rate. So slowly but surely the deaths as a percentage of population are going to go up and they're about to go way up the next 15 years, business 75 and 85 population is going to surge. So on Clearwater, my understanding there is because of Scientology really coming in. And they don't send their kids to just like an average school. Scientology is really taken over Clearwater. So that one I think is a Clearwater very specific potentially, but Pinellas County is a county with nearly a million people. Hey, by the way, I just want to pop in here and say that we ended up using a lot of b-roll from Nick's Reventure app. It's incredible. The amount of data, the forecasts, the price projections, it's insane. You're able to type in any location, any zip code, any state. It gives you so much data. It's more data than I've ever seen on like Zillow or Redfin. And I would venture to say, by the way, that maybe it's more comprehensive than even talking to a real estate agent like it's nuts, the level of detail that's in this. So we teamed up with Nick and he hooked you guys up. You save 160 bucks on the annual planet, that is 40% off. If you're thinking about buying selling or you just want to see what your area is doing, go check it out. It is crazy guys. The link is down below in the description. Thank you so much. And now back to the episode. Potentially. But Pinellas County is a county with nearly a million people. I will say though, and this might just be anecdotally. I see a lot of people now having kids again. Like out of nowhere, it seems like so many people that I know are now having a kid. And I'm wondering if we're just swinging in the opposite direction. We're now, it's like cool again to like get married younger and maybe take on a more traditional husband, wife, sort of dynamic, have a kid early. It just, maybe I'm just like getting feeds on my algorithm now, but it seems like it's swinging back the other way. - You could be right. I kind of hope so, right? Here's where I'm skeptical. And one thing we're actually working on right now on Reventure is we're gonna produce 30 year population forecasts for every zip code in the US, looking at these aging trends. And one thing we're noticing, births are a factor of two things. One is the fertility rate of women, right? In certain age groups, which would kind of speak to what you're talking about. Like, is it becoming more trendy to have a kid or not, right? But the other is the number of people in the age cohort. If you have fewer women between the ages of 25 to 35, 10 years from now, this is gonna be fewer births. And what was shocking in the 2020 census was that for the first time, I don't say ever, but in a long time, the under 18 population in the US declined. So what's happening in America is we're entering an aging curve now where there's gonna be fewer and fewer people or teenagers and who are in their 20s, eventually in their 30s. More and more people who are in their 70s and 80s. That shift in age cohort will just naturally lead to lower births. You might be right though, maybe a trend picks up in the future and fertility increases, but that age cohort slowdown has already happened the last 20 years. So for the next 20 years, we're just gonna see fewer people in their 20s. And in their teens, then there were the previous 20 years, especially as a percentage of the population and housing stock. See, part of me thinks the reason for that is simply because a lot of people that I know, a lot of women in their 30s were conditioned when I was younger that you have to go and you have to get a great career and you have to focus on yourself and you have to do you and you have to live your life. Don't settle, don't have kids, it's gonna slow you down. And now in their 30s, they're coming around to it. And maybe because life expectancy is increasing a little bit that they say, you know what, I could afford to basically wait until 35 to have my first kid or 38. It's not the end of the world. Yep. And maybe it's more delayed, but maybe AI will all live into our 90s and hundreds. Well, it's true. What you're saying is actually true in the data that we're looking at on the fertility rates. In some counties, the 35 to 50 year old female fertility rate is higher than the 20 to 34. Like in San Francisco, that's the case. So that's definitely happening. However, if a woman waits until 35 or 36 to have her first child, there's a natural cap on how many children she's gonna have, right? Which wasn't a cap that occurred in the past. So that's why this declining birth rate and slowing population growth is inevitable, even if there is like an improvement. But of course, this is also regional, which is like my favorite thing to talk about. So we look at a metric called the birth to death ratio. It's kind of simple, divide births by deaths. That's your organic population growth multiple. Florida is now below one. Meaning more people are dying in Florida than being born. That's not good. I mean, right, like for economy, society, housing, that's just not good. Florida's birth to death ratio 20 years ago is 1.5. Had a 50% more birth in deaths. Now it's losing for the first time ever. But you go to Utah, it's over two to one. You go to provost Utah, it's over four to one. You go to Austin, Texas is over two to one. Some people think, like, just for an example, Austin, Texas, first Tampa, Florida. If a home buyer, a real estate investor might be like looking at those two cities and thinking they're equivalent in long-term housing appreciation, they're not. In Austin, there's two times more births in deaths. In Tampa, there's fewer births in deaths. Think about where that's gonna put the population 20 years from now. Austin has locked in guarantee growth regardless of what happens with migration. Tampa has guaranteed population decline. Of course, we don't know for sure what's gonna happen with migration. But when you just know those two things to start, you have, like, if you're a real estate investor or you wanna buy where this can be more demand and appreciation, you're just like a massive head start. If you also start looking at these demographic data, if it's as the birth rate continues to slow and maybe it does stabilize, right? Maybe even goes up a bit. These demographic trends are gonna continue to be really big. And just the country I think about Japan. And I'm not saying where Japan or gonna be like Japan, but what happened in Japan is wild. Yeah, but they were really strict on immigration. For sure. And that's a cultural thing, too. But yeah, I mean, it's bad. It won't be without declining populations. It won't be as bad as Japan. Do you know how much nominal home prices dropped in Japan from 1990 to 2010? 50% over 20 years. Today in Japan, the nominal price is still 20% below 1990. 36 years later, that's not gonna happen in the U.S. But I'm saying that that's a warning, particularly for certain pockets of the U.S. of what could be coming when the math on birth and death just no longer makes sense. What do you think of the government issues as stimulus for every child you have? Is that a good or a bad thing? That's one of those things that sounds good, right? Just like allowing someone to stay in the apartment sounds good when they can't pay their rent. I do wonder if there's some type of negative consequence that could come from that. But my first reaction is, look, this is a severe crisis, you know, and could we find some other thing we're incentivizing and cut that and put it towards incentivizing more births? Maybe. Of course, it's like, there will be some secondary and third consequence you're not even anticipating, right? That's so funny. I'm imagining, could it be dinner table? Mommy, daddy, why do I have so many brothers and sisters? And she's like, well, because the government is paying us $6,000 a year. If you could get, let's say $3,000 for having a kid, this dude would have his own cheaper by the dog. How would I have so many kids, can you adopt it? Don't they do that in like the foster system? Like don't they pay parents to like take more foster kids? I don't know about that. My understanding to adopt a child is so rigorous. It's not like you really have to want a child. Like it's not, there must be some like way to do it. So it's just like, there's something about a cash payment for having a kid that seems a little right. At the hospital, like, yeah. But isn't that the hundred of what the idea of, like the government should be, is that you like incentivize and disincentivize certain behaviors. And that's something that could actually end up being quite catastrophic for you guys. Because imagine, imagine they do it, they start paying people like $6,000 a year. And then they run out of money. Like, hey, sorry guys, we're, we're cutting this program. And everyone's like, bro, I just had seven children. What am I supposed to do? Maybe like some type of tax incentive or something like that where it's like, there's a recent tax incentive. Yeah, like, I don't know, like your lower tax rates or something. So it's like, like imagine someone's unemployed. Right. And then like, it's like, I'm going to earn money by having more kids. But they, but they already do that though. Yeah, they already have that. Yeah. You know what I think is kind of interesting is, this is a Jordan Peterson idea that always kind of stuck with me. He said that you should have a kid, even if you're not ready, because it will force you to get ready. It'll force you to mature. And I don't know of anybody who had a kid and just because they had a kid, they became homeless. Like, I don't know if that's like a real statistic. I know potentially I could put you into some more financial hardship. But like, that's not necessarily a bad, it depends on the age because having a kid, I think it's below the age of like 21, 22, you're significantly further behind your peers, because your time and your resources go towards raising a child, then making more money, advancing in your career, networking, like all these things. So it does actually hinder you below a certain thing. But some people say that having a kid was the thing that they needed to like kick them in the butt and then work harder and make more money. Yeah, but as a whole, I mean, if you just go get, yes, for certain people, yeah, for certain people, I bet, yeah, they have a kid at 16. They wind up running a Fortune 500 or something. People just have kids at 16. I'm just saying, but like, I'm sure some of them, like when you look at like the top CEOs, some of them became like dads really early on. It's surprising, like you would think that, oh, they had a kid at like 20. I think, and now they're running this huge company. Yeah, I think the point you're maybe trying to get at, it's like, it's a cop out a little bit. Like sometimes the financial excuse might be a cop out. Like, I have a whole theory. If you want to hear my theory, guys. Well, it's here. I think like Instagram and like TikTok, I think there's some conspiracy going on to like keep everyone just like super consumer oriented. Oh, yeah, it's stuck to their focus. It's not even controversial to say. But if you think about the second and third order effects of that, right? Like someone's like, their Instagram algorithm and they're looking at like what's on there. And then like, like, here's this handbag. And like, you don't need that handbag, right? If you're a girl, right? But like, maybe you now want that handbag. But then you're like, oh, I don't have enough money. And then the next thing Instagram feeds you is like, oh, you can become a self-made millionaire if you buy this course. And you're like, ah, I'm gonna do that. So I can afford the handbag. Like, like, they're not consciously thinking these things. But like, I think that's what Instagram is like doing to people. And if you play that out, it kind of makes society kind of like very individualistic. Everyone's on their own hunt for glory and making more money to keep up with the Joneses where they didn't even have to keep up with the Joneses. That's 100% accurate. I remember also there was this Jerry Seinfeld clip that I thought was also really interesting. He was like, "Whatever happened to people. "All of the sudden, everyone's obsessed with money." Like nowadays, it's like, "You're a doctor "and you make a lot of money, so that's really cool." Whereas back in the day, it was like, "You're a plumber "and you like what you do?" Nice. Cool. You're a doctor and you like what you do? Nice, cool. But now it's about how much money do you make. And like this is just something that seemed to happen like this. And I think you're right. It's attached to the consumerism culture where we've now mixed up needs and wants. And people think, "Wait, you're telling me "I have to sell this truck?" Because I can't afford it. Well, this is my work truck. It's like, well, yeah, you can have a crappy work truck too. I mean, like downgrade to maybe a cheaper car. That's something also you can observe from watching Caleb Hammer. It's like people think they need things that are actually just wants. And here's the other thing too. Like, you know, obviously you guys have multiple YouTube channels. I have an Instagram. Sure, we all look at the analytics right in terms of like retention and all that kind of stuff. And like every creator is trying to figure out like how to make content that's more engaging. And like the stuff I've now learned about Instagram like in the last like six months even on my own Instagram business channel is like crazy. Of the first three seconds of the 60 second reel. That determines everything about how many music gets and how many people see it. And when I started like looking at it and doing the data, I realized it's not even about like what I'm saying. It's just about like the arrangement of the visuals. And all the visuals need to be like bright, high contrast. And then two or three seconds and you need some type of statement that's like somewhat urgent. And you still need bright visuals. And then you can't reveal really what the video is about for my videos until like 20 seconds in. Like often I'm like talking about like this city, you know, this Northwest former tech hub is now going through a housing market correction and I build it up and build it up. And then 20 seconds in there's the payoff. You can't give that payoff three or four seconds in. And my whole point with this is that I think Instagram is incentivizing creators to make content that keeps people hooked in a way that I, what is that doing? It's a slot machine. It's a slot machine. It's supposed to be like every second to third randomly. Is it something that you're gonna watch and engage with? And there's like a few bad ones. It's like, oh, it hits me again. It's awful. It's really, I've really stopped opening up TikTok at all on my phone. And Instagram reels, I only scroll to send Jack a few reels. It's true. Yeah, to send me a few reels, as you said. Here's a challenge, guys. If you are upset with your screen time, which realistically 90 plus percent of you guys are myself included, what really helps is changing my phone color in a black and white. I love it. It makes reels YouTube shorts TikTok so much less attractive. On that, I've heard from a lot of people, attention is the new currency. I 100% agree with that. And so it being a currency, there's a person that's buying and selling. And if you're constantly selling your attention, you're like losing your attention, giving it up to other people. Like, where does that leave you? Like, what's downstream from you losing your own attention? I think of it in the way of being like, are you a producer or consumer on social media? And if you're a consumer on social media, you're selling something, like you're giving up something, right? You're selling your time. You're selling your time, your attention, whatever the algorithm is doing to people's brains. I just have a second phone. So like, I have Instagram and all those on my second phone for work. And I don't, I can't have it on my main phone. Because if I do, I'm just gonna be like scrolling on it at like 2am. Like, what am I even doing? You want to hear something crazy? I saw this on Twitter last night and it hit me. If you scroll for two hours a day, or you're on your phone just like mindlessly doing something for two hours a day, every year, that's the equivalent of you losing a month of your life, a month from just two hours a day. Yeah, does it got like 13, 12, 13 waking hours? Yeah, great. See, one 12. And when you look at the amount of time that people naturally just sit on a full scrolling, it's about two hours. Imagine if you instead of scrolling for two hours, you played piano. Or like took up a skill, you know, it could be phenomenal at something if you just traded your time scrolling. Confidence. You go to improv. Yeah. Literally anything. Okay, but you could be a servant. Here's the problem with that because I agree with you, but sometimes you're just on the toilet. And you want five minutes to keep going. We get, no, what do you do? Don't even act like you did five minutes on there. I'm in a jack. I'm 30 seconds. I'm efficient. There's no high water bill. I'm just saying I'm just saying, but because sometimes it's like, you're not scrolling because you're sitting there on a couch doing nothing. It's, hey, you know, I'm waiting for the microwave to beep two minutes. And I just want to kill two minutes. That's it. Now I'm scrolling. And there is a little bit of a reality that like if you're not plugged in at all to social media, you do might, you might miss something, right? Like there is some positives to be garnered. I had this idea for like an app, I'm sure it exists already. But it's like, there should be an app that, it's like a harness on your Instagram. It exists. It exists. Okay. Yeah. Like you can use it for maximum utility. And if like you're scrolling for too long, you can be like, hey, instead of doing this, why don't you message someone for like business purposes in terms of a meeting. Yeah. So Macy has a son or a phone. It's really interesting. If she's on for more than like five or 10 minutes at a time, it blocks her out of Instagram or TikTok. And she has to do dualingo. And she has to do like this whole thing of dualingo for like two to five minutes before it allows her back on it. And then now her dualingo score is like crazy. But that's the way around. So I have it right here between ages 16 and 24, three plus hours daily on social media with many reporting four or more hours, 25 to 34, 2.5 to three hours daily, 35 to 44, 2 to 2.5, 25 to 54, 1.5 to 2, 55 plus under one and a half hours daily. Yeah. It depends on what it is though, because I do spend a lot of time on Twitter or X, a lot of it's research or YouTube. And I'm just listening to it. A lot of it's research, but I think a lot of people kid themselves, yeah. And they think that they're gonna research when an actuality, it's like fear, or it's something else. Well, it's the hook, right? It's the hook. It might be research for two minutes, right? And then all the sudden, like, it's something, I just think it is a marketplace. Like imagine you were walking on Canal Street in New York City, right? And like where they're selling all the watch, fake watches and handbags and stuff. And then just like, it's just like, that's social media, it's just vendors trying to pull you in. And it's in this mask of like, oh, you will learn something, you will keep up with a friend. It is for five minutes, and then it becomes your soul to left and right. Then how important is the thing that they're pulling you out of? You know, like, it's easy to trade that because you don't really value it because to a lot of people, it's just kind of time, right? But then there could be something to that. Well, you think about the headspace that people are in when they, myself, like included, when they open up their phone compulsively, right? Like the headspace is not often aligned with I want to learn something. The headspace is aligned with like, I'm looking for some short term stimulation. I just need to get myself through the next period of time. So I would, I think that almost proves that it's not about keeping up with friends, or doing research for the most part because if you just think about the brain state, and we actually analyze this data like for event trap, we look at like how long people spend on our app when they come from different sources and people come from X, they spend like 20 seconds on the app when they come from watching a long form YouTube video. They spend five minutes, right? And I think that's just like a good little analogy about like, what are people expecting when they're on X? X is great. Not criticizing it, but it's like quick. Sure. Do you ever get depressed or sad just seeing so much negative data? It can depends on your perspective. I kind of have the, I have the mindset of like an aspiring first time home buyer where I look at it, crash in sales in Las Vegas and values beginning to roll over as good, right? So I would argue the negative data, if you're a first time home buyer, is good. It's bad if you're an existing owner, right? So I think it depends on your perspective. For me, the reality of a housing market that stays unaffordable, where the mortgage payment to income ratio stays at 40%, that's a much sadder reality, right? Then home price is crashing 20, 25%. What if you are wrong? And what if home price is just to keep going up from here slowly? And you look back and you say, oh man, I didn't realize 20, 26 was the cheapest we ended up saying. You know, my opinion is valuable, right? Like I don't, I'm not always right. So this is why I'm trying to like turn it over to data, right? So we have a forecast on Reventure for every zip code on Reventure app in the US one year forward. And that's based on the fundamentals in the market, inventory, days on market, price cuts, appreciation momentum. So I kind of feel like I'm not going to miss it because I'm going to see the data in the market before it happens, right? Like for instance, yeah, prices are going to go up 6% in Chicago over the next year. That's what our data is saying right now. So I would want a home buyer in Chicago to know that if you wait a year, yeah, it's going to be 6% more expensive next year. So I think it's about the data in your market. I am pulling for, not going to lie, I am pulling for a national home price crash, but right now we're not projecting that, we're only projecting like 1.5% decline nationally in the next year. But that's again, why data is so important, the housing market is emotional, what's going to happen, everyone has their own opinion. What's the actual numbers say, inventory, days on market, home sales, that filters through the prices? Yeah. Do you have any questions for us? Yeah. I mean, I would love to know about the operation you guys have with the podcast and the respective YouTube channels, like, you know, how much time does that take, like running this podcast, like, and what are your goals for it, like, in the future, and do you have, like, other ideas for more YouTube channels, or is it, like, what you guys have now is kind of, is what it is. Hey, everybody. So we actually messed up. I'm watching this back in the edit, and we went really off topic, like, it has nothing to do with real estate at all for the next 45 minutes. So we're going to cap off the episode here, but if you want to see topics on YouTube, the algorithm, some of our business strategy, we'll keep it up for the channel members. So you guys can watch it. Just feel free to join. Otherwise, it's probably best if we ended off here. Thank you so much for watching, and until I send. I watched Bitcoin fall 50% in a 10-hour period, and I was on the couch curled up in a ball, and, like, saying to my now wife, I think our net worth might go to zero on today. Bitcoin is a resilient asset that is really serving as global insurance, and so anytime that there's chaos in the world, there's going to be people who run to Bitcoin. From one sentence, what is your strongest argument for Bitcoin? They will never ever stop renting money. There's two assets you need for the future ahead of tours. Bitcoin and AI, is it too late to buy Bitcoin? Bitcoin is going to continue to go up for the rest of our lives, because the politicians are going to print money for the rest of our lives. So do you think then meme coins are bad for the overall market of Bitcoin? If you were to take one guess at who Satoshi is, who would you say? [MUSIC]