They're Lying About the Housing Shortage

There's a problem. Everybody knows we need to solve it. They don't like the solution. So let's keep the game going. The circle pay for play just keeps on going. Meanwhile, our young Americans are not able to afford homes. And I proved whether anybody wants to believe it or not. That we do not have an inventory shortage. But if you just take household units and number of people, you can just see we have more housing than we've ever had. But it still is pervasive and that inventory shortage myth, the Fed doesn't matter when it comes to mortgage rates. But every analyst out there will just talk about the Fed like it's the only thing that matters. I honestly think they do that to hide what's really going on. We're starting to see distress in the prime book, Spani and Freddie. And once that happens, nobody's going to be confused about what's happening. Welcome to the debt doctor podcast where we deliver the definitive prescription for navigating distressed real estate debt. I'm your host and America's most qualified debt doctor bill by mail. I spent my career investing in diagnosing and reviving thousands of distressed real estate situations. The debt doctor prescribes proprietary remedies to help you identify, acquire and monetize undervalued real estate assets. Each episode gives you insider access to the strategy's top cohorts use to transform market volatility into double digit returns. If you enjoy what you hear today, hit the follow button, subscribe so you don't miss an episode. And please share your support with a quick review. You can find me on the web at billbimel.com. Thanks for joining this episode of the debt doctor. When I started the debt doctor podcast, I launched it just over a year ago. And one of the first names on the list of folks that I wanted to interview and speak with was Melody Wright. Melody is the founder of a her own advisory firm, Herringa, that does mortgage strategy and technology advice assisting investors in industry community navigating the ever changing landscape of real estate mortgages and financing. But where I know Melody from is when my former partner and good friend, Joe Batag turned me on to her. Oh, I don't know late night late 19 late teens early 20s. I started reading her work and I immediately realized that Melody and I think the same way. Melody, thanks for joining the debt doctor. Thank you. It is my absolute pleasure. Thank you for having me. I cornered you in a conference in Nashville a few weeks ago. I didn't take much to, I guess, to put it to our right. When I really, I started reading and listening to you and speak about the industry. And you and I see ourselves contrary and I think is not the right word. I think it's someone who looks beyond the muck and the fallacies of the market and looks at the data and the reality. And that's what really connected, you know, what I connect with in what you do. I think it was 23 or 22. You came out with an article that actually caused some waves in the industry. And it spoke to what you saw was a fallacy in this whole talk about a limited supply. Everyone post-COVID-Roll, why are prices going up so high? Why are prices going up so high in real estate? And still the rule of thumb seems to be that there's less housing than available than people need. And I always just disagreed with that. You wrote a pretty significant paper about it. And I think that this is really still true today. Talk about that. Yeah, it was just so wild. I never meant to get where I am. Bill, what I mean by that is I didn't want to join social media. I don't I wanted to hide in the shadows. But I was reading all these experts and you know, I come from the industry. I started in mortgage in 2006. I fell in there by accident. Like everybody does. I just needed a job to pay my loans back. I had a top five original server and September 2006 who had just completed a purchase where private equity had purchased us. And so suddenly that private equity group wanted a purchase price adjustment because they started to see some indicators that things were going a little crazy. And so that's the back story. But so I started. I first I was at a FinTech company and one of my. My president said, tell me when weights are going to rot. When rates are going to rise because you know, we were enjoying this historic origination boom. And I just couldn't understand what was happening in the market. I couldn't understand why the stock market was up like nothing made its sense. And so then I read fed up by Daniel D Martino booth. I realized the only way I was going to get to to hear what she was saying was by joining. What I thought was like, you know, Satan's realm at the time, which was Twitter. It might still be by the way. Well, every day now it's turning more that way. But when I joined, it was actually what we call Fin Twit was just a group of people that were just trying to figure it all out. And I started. I was reading religiously like Wall Street Journal, which is by the way owned by the same people that owns realtor.com. And Bloomberg and I was reading all these things and I was like, why is everyone missing this story? They would get some part of it, but not all of it. And they would they weren't getting the amount of speculation that was in the market. And so very quickly, I just woke up one day read an article by, you know, Joe, his daily briefing on Bloomberg. And I was like, that is absolutely categorically untrue, you know. And so that's when I got on the road. And so I'd written that article in January late. Well, it was really late, 22, but it got published in early 23. And what everybody screamed at me was like, well, this is a thing piece. I was like, yeah, that's what they asked for. But anyway, I, I, my mission from that point was to prove it. Just prove it out in the data. But the data I suddenly realized was wrong. I mean, because, and how did I realize that I went out on the road and I tried to match up permits. I tried to match up listings for sale for with what I was seeing. Not only new homes, which you couldn't find anywhere really all of the new homes. And then I found Zonda new home source. But like on realtor.com or Zillow, they didn't have all the new construction. And they also were missing a lot of existing homes for sale. And then of course, we knew that we were building more family multi families since the 70s without the demographics to support it. Plus all of this Airbnb plus all the institutional that had bought up all the long term rental plus all this build for rent. Like it was like everyone went insane all at the same time. And so I just went on the road. And I don't even know. I've got to count it. How many miles I've driven. How many communities I've been to. But it's, you know, it's tens of thousands of miles and it's probably over a thousand communities at this point. And I, and I proved whether anybody wants to believe it or not. I mean, since they started tracking the data. So, you know, but it still is pervasive. And I, that inventory shortage miss. But I think it's partially it's like there's a problem. Let's, let's have the developers pad the pockets of the politicians. And the politicians then pretend that the developer solutions are going to be good. And then, you know, the circle pay for play just keeps on going. Meanwhile, our young Americans are not able to afford home. So that was a very long answer bill. And for those that may not have read the article, it was called debunking the housing inventory myth. And you can look it up online. We'll have a link to it as well. And that was really the start. I was on a very similar campaign. You pointed to the fact that even at that time when what was a maybe available for sale might have seen limited. You had you have people stacking up after COVID second, third, fourth homes, buying properties for to do Airbnb's. Investors and and as you correctly pointed out, we were building as something like a million five million seven multi family units a year, the largest inventory of new construction since the 70s. So and at the exact same time, the media and the investors and the managers were still out raising money under the the belief that they still pump today that there is this. So short. and there isn't a shortage. There may be shortages in certain areas of the country, but there is more housing per capital available. Where does that take us, I guess? - Yeah, well, so it's so funny. So let me just be clear that I think we have a shortage of affordable homes because they're all mispriced and misallocated. Anybody that tells me, "So the Northeast always comes up," right? And they're like, you know, "Well, so and so New Jersey has a housing shortage." And I'll like give me that zip code, and I'll use something like property radar. And I'm like, "Well, let me tell you how many vacant homes are there. Let me tell you how many probate notices or flags are on those homes, meaning that someone has received a notice of a death. Let me tell you what your own or occupancy is there, meaning that your boomers, who own most of the homes, also own most of the long-term rentals." So what happens? They don't just leave one home behind, which we know Charles Schwab has done a study and said 70% of the time those homes get sold, which that's probably gonna go up 'cause Moops people can't afford them. But they have to offload not only their primary residence, but their long-term rentals. And I know, so I often tell people, when you're confused about the economy, look at the people that you know. And if you don't have people, like let's say you don't have that crazy cousin who hasn't worked for 10 years, let's say you don't have poor people in your family, then go talk to the dry cleaner, go talk to the coffee barista or whatever. But you will find out what's going on and I know someone in my family right now who inherited three long-term rental properties from their parents and they've sold off to because they can't handle the expenses. And that's what's, and they're not even, that's not even a boomer. I'm just telling you what happens when those parents then give those homes to their children because nothing pencils anymore. With rising electricity costs, property tax insurance, you can't make a profit because rates also rose and you can't refy, you can't do the burr method and refy into a lower rate. But go ahead, you were gonna say something. - No, I bet you're totally in line with it. I'm sitting here thinking, how does it, what shifts? We're, as we own about homes that we're trying to market or resolve loans and PLs in about 35 states right now. After I, last week I was in New Orleans, it just so happens for another event. And I decided to go look at one of the properties that we just put on the market that's not getting any offers. And what I learned that I could never have experienced from sitting at my desk or looking at the BPO's or the pictures, the inspection reports from HUD or whatever is, was that this is a town that is dying. It is outside the seawall. - That's right. - You know, right, it looked great to me on paper. It was waterfront, lakefront property. - Like citizens. - This is a house that you can't get insurance on. - That's correct, yeah. - Homes are sitting vacant. People are just, you know, all the retail and commercial has moved the way. And that, I'm seeing that, that's a bigger issue that relates to the weather, but there is a lot of that out there. And I'm wondering what kind of, what turn, you know, we've already experienced something like 60% of counties seeing a decline in values, but not a major decline. How, what turns it, I mean, is it on its way right now or is there gonna have to be some massive shift in some market sentiment, do you think, that gets people kind of realizing that you gotta return to fundamentals? - Well, it's certainly on its way. But I think that the Northeast is honestly the last, so the Midwest, what you're starting to see there, sales have screeched a halt because last year, the investors were still playing around there, but that has all changed inventory as starting to build, and you're starting to see price weakness and places like Kansas City, Cleveland, others, so they're on the verge of turning. The Northeast is also starting to build inventory, and the place like Boston is on the verge of turning because of the double digit property tax increases there. And the very, again, very low owner occupancy, so landlords are having to get out. But I do think it's gonna take this awakening moment of like, oh, crud, and that's gonna be, you know, national media, probably of what's happening. And, you know, so probably the first time we get a year over year price decline from the people that are trying to sell you something, nor national social. - They all know what you're doing. - Right, then you're gonna know, but you take someone, so people are gonna say, like, oh, Louisiana, you know, they have the citizens, you know, state insurance down there, just like Florida, but waterfront, you can't, because of the insurance problem, the problem is, is that it's not just waterfront, it's like you take Columbus, Ohio, I'm doing a deep dive on them right now. They just had, you know, historic rainfall and flooding. And so it's in areas that are not on the coasts that are getting hit, and our insurance, you know, market is getting hit very, very hard, because replacement costs, all these things have made it impossible to ensure, you know, some of these places. You know, I think we are witnessing a seismic shift in things like how we get home insurance and things like that, but it's just going to take, I think, a little more time. Bill, and I think things are gonna get really kind of serious is in Q4, because what you're starting to see, you're starting to see headlines about foreclosures. In fact, there were two in Wall Street Journal last month, it was like, oh, finally, you're gonna start talking about this FHA program. But those for various reasons, they still have options. There are people that still have options through an additional fourbearance, because they didn't say, oh no, no, you had the COVID fourbearance, so you can't ever have another fourbearance, which is typically how it works. They say, no, you can get another one. So even when they run out in this partial claim craziness, they can get another four. So the point in this is that the new guidelines went on in October, it just takes an incredibly long time. So by the fall of this year, we're gonna have material for a closure, and then on top of that bill, what I'm finally starting to see in my client books, and although, night is not ice is not coming out, and saying you can see it between their comments that we're starting to see distress in the prime books, Fannie and Freddie. And once that happens, nobody's gonna be confused about what's happening. - Yeah, you mentioned that, and that was the first time I heard it on stage a few weeks ago, or maybe it was on one of your own webcast interviews that it was-- - I was, I did all those that same week, so yeah. (laughing) - It was like crazy week. - The only one, again, the only one speaking about this. - I was in New York and then Nashville, like literally the next day, so yeah. - Yeah, you know, like the violin. I, yeah, I think once the prime books start to see that notice them, and the only thing that has kept the default rates low in the general conventional mortgage market was the COVID servicing guidelines that allowed you to call, wake up, call your servicer with a call. - You even have to call, yeah. - Yeah, you know, you have a little sniffle, and you now have a new modification. - Yeah. - The rest of that gets thrown in the back. You know, like you said, the partial claims that were just people, some people were using multiple times a year. - Back and back and back, yeah. And that ended September 30th, I agree. In the first quarter of this year, I started to hear some of my law firms hear hiring again that they were starting to get the first spot. - Well, they're in so much trouble. - Yeah. (laughing) - Well, no, 'cause they had to fire everybody because they weren't, because of milestone billing, they don't make enough money, but so why? - That's right, the lawyers, they're gonna have to do exactly what they did, unfortunately, in 2009, which is gonna lead to a whole 'nother mess, which fire all these young kids out of college that have no idea how to foreclose or how to even stand and talk to a judge in a courtroom, which I experienced as an investor, you know, in 2010, walking in and having-- - Yeah. - Why would you-- - Let's not talk about those corporate witnesses, yeah. - Exactly. - Yeah, exactly, yeah. They're, yeah, that's some crazy town. - That's right. (laughing) - Hours at GMAC led us to an entire consent order. So, you know, you know, you know, you know. - And he should have never, ever billed. That guy should have never been testifying in a court, yeah. - Yeah. - Anyway. - I ended up buying a couple of those over the years. And you, thank you for hitting the nail on the head with the weather and insurance issue. As you know, this is a conversation. I've just gotten started myself with the release of the book, The Storm. And hopefully, it's just the beginning of a conversation. It doesn't, my book doesn't solve it. It offers a few, because it's, there's new things that are adding into the conversion. that is affecting our real estate markets and just financial markets in general. AI obviously won the, I mean, my book was published before the Iran War and the rise of gas prices. So there's so many interesting factors at play and I do agree with you. The fourth quarter could bring some real reality check. Maybe sooner. There's a good news. We'll come back, we'll do a little good news side. Yeah, well, we can help with a good news. Yeah. Well, I may come back to a few women dark. Yeah. And yeah, I have a son that's 32 and a son that's 28. The 28 year old lives with me doesn't make sense for him to grant or own. And the 32 year old is about to have his first kid. I'm going to be a good kid. Congratulations. Yeah. So it's like, and they live in Los Angeles. So there is-- I'm sorry. Exactly. There is very little chance of them buying their first home. I don't know, Bill. Things are getting kind of gnarly out there. Well, that's the question. So that's really where the positive outlook is. That's right. How-- if you were-- if a young person is listening to this, and this is the thing that all of my nieces and nephews and the young people I work with that are managing directors at funds, even those guys, or the low-level analysts in New York, and all of these next generation people, what would you tell them? Is there a holdout? There's an opportunity ahead. Is that really-- is that really-- I think markets are cyclical. I hope markets will become real again and allow them to cycle, allow the dollar distinction, allow inventory to come out and for prices to fall. Is that what the next generation can be hoping for in the near future? Absolutely. Yeah. Absolutely. I mean, some pretty awful things would have to happen for that not to happen, or some pretty awesome things. Like, we all got salary increases and could afford those homes. But the only way-- when it's a supply issue bill, the only way to get through something like that is suddenly overnight all the supply disappears. And I think you can think about what that would take, and I don't really want to go there. Because there is so much supply from these boomers that are aging out. You know, we're going to lose 15 million of them by 2035, another 26 million by 2050. So there is-- like, let's take glossy angelist, which is now-- Redfin just changed its entire methodology for its data center. But in some ways, it's actually kind of funnier because they're doing a three-month rolling average. And Los Angeles has been one of these that's gone back and forth for year-over-year price declines. They are now absolutely in that year-over-year price decline category. And let me just tell you an anecdote from Los Angeles. Specifically, I started talking about the West, probably this time, last year. I can't remember. It was probably before that, actually, because I did a big California trip after I started talking about it, that we were about to see something there. And we did a lot of motivating selling, but I had a friend who was just committed to staying out in LA. And despite that her life had really changed there, but this is-- it's partly a status symbol to some degree. And-- The weather is really great. And the weather is fantastic. But she was impacted by the palace. She lost her rental home in Altadena. But she had been looking to buy for, I don't know, like 10 years. It had been a really long time and she tried to build. She couldn't do it. But I'm just watching inventory grow, grow, grow, grow. And I'm emailing her. I'm like, you have to be able to find something in your buy box now because she's an older and has more net worth and things like that. And sure enough, she's like, oh my gosh, I didn't want to tell you because I didn't want it to fall through. But I just got this house at a reduced price. And all-- I made an offer on it. They rejected it. 40 days went by. They reached out to me and said, all the other offers fell through. She quoted a very huge significant price reduction because there was a foundation issue that she knew how to deal with because she tried to build her home before. So my point-- and that happened a year ago, Bill. And so it's just-- This stuff just takes so much time, but it's happening. It's happening. So the patient back now is the time where, if you are serious about buying, go out there under no rush, find something that meets your budget that works for you, start to look. And make offers and be patient about it. And hold your numbers. And it's a numbers game, probably, right? Well, and this is the problem is that people-- So what I would say is it's not exactly time for that yet. It's time to figure out the neighborhood you want to be in. It's time to figure out where you want to be. Because what happens inevitably, Bill, and I see this with people I'm trying to help right now, that think they want to buy in three years or this and that. They get in that fomo. And they're like, well, we can go a little higher. I'm like, do you understand this is your financial future? So I'm a big believer in fine where you want to live. And yeah, there are some people that could get a deal right now. But it's the people that are those hard sales negotiators. Because everybody-- I'm still hearing it from people right now. Can I offer this? I think they're going to get mad. I'm like, there are salespeople, number one, and who cares if they get mad? This is your financial future paying 100,000 more of your home, especially if you're looking to retire. That's about a year of income for you. Don't mess around. And so that's the only thing I have a caution about is when people, like housing, as you know, is so emotional. And so when they get in that, they're like, OK, but I can go a little higher. I mean, just don't overstretch yourself. And right now, the time is to figure out where and also stay out of debt. But go ahead. Well, if anything, again, you just point to what a lot of those-- that younger generation, unfortunately, got themselves caught in the last couple of years. If you bought a FHA home in Texas in a new construction community three years ago, the developer that probably hasn't sold out and is probably selling the today's units for-- Oh, yeah. --that you paid for. Yeah, they're slashing and burning. They don't care that you're next door. I mean, this was something I was screaming from the rooftops in '22 and '23. I just saw a tweet where someone said, yeah, date the rate turned to date rate. And I was like, yeah, I was screaming that then, like, don't fall for this madness. And unfortunately, I think a lot of people bought into those communities. And they're not sold out. And then even worse bill, what a lot of people did was buy. And they bought it to do long-term rental. And they can't rent it out. I mean, it's just-- it's really-- my first trip in '23, I was just-- I was nauseous every single day because you looked at all these empty homes and you knew they were sitting on somebody's balance sheet. And then you looked at the homes where the poor couple had bought in, you know? And you knew what was going to come their way. And it's just-- so it's been very-- in many ways, distressing to realize what's happening and then see everyone in mainstream media ignore it and not really care about our younger Americans and what they're doing to their financial future. But-- No. And unfortunately, the single-family rental programs have failed some communities. They went in so heavily and then bought in some specific markets and there isn't a pride of ownership. What happens if the single-family rental guys start flooding the market, especially in the south where it's already struggling? Like at Lama, San Antonio. It's already happened. I was in the room with one of the biggest ones in September at a different conference. And what he said to the group was, yeah, as soon as the leases are up, we're rehabbing and we're getting them listed as quickly as possible. And of course, we're chasing price because we don't-- like what the AVMs or valuations are coming-- have no basis in reality. So they can't really say. Like it's almost-- what he was saying at the time is almost not a deal by deal. But it's definitely down. And it's happening-- and this is why you're seeing in markets like San Antonio, markets like Atlanta. They have huge institutionals there. And you're seeing year-over-year price declines. I mean, San Antonio is one of the status markets I've ever seen. I mean, what they've done there is just-- I mean, now between San Antonio and Austin is just one big new build site. Like there's going to be-- this is why I always say I'm bullish bulldozers bill, because that's the only thing coming for that. If we continue to sort of put a lockdown on immigration, I mean, the only thing that would change that would be that we open the borders back up again. Dig deeper into that. You're saying that they've so overbuilt in those Texas areas that they're-- are just gonna, these houses are just gonna sit there and rot, you think? Yeah, until they get bulldozed, you know, and they're gonna get molded, and they're gonna become safety and soundless issues. Like there's some places outside of Austin that probably already are. We're just not hearing about it because just think about all the homeless you have. I don't care which city you go to, even in my small town in Johnson City, Tennessee, there's homeless. Well, what if all somebody just decided to bus all those homeless people to one of these ex-serves where there's nobody living and all these homes are vacant. I mean, that's, I guarantee you, it's already happened, Bill. Like outside of Phoenix, outside of Austin, in these places where they just went that crazy, I mean, just crazy. But ultimately, you know, Lenar got a bailout last time. They got a tax bailout in 2009. I mean, these, it's the big, it's the big corporate builders mostly. And small regionals, you know, but they're all, they, I mean, this is what's so funny. It's like, all of this was so clear in 2023, but you know, we had the bank failures, we had the BTFP from the Fed. We had everybody, we suddenly had the AI narrative, even though all of us working in AI, we're like, it's too expensive. We can still pay people for cheaper and, you know, off shore. But there was all narrative. And so, but the ever since then, the builders have been lobbying so hard and trying to pivot to affordable housing because they don't have any other game. But it's just, it's been obvious for a long time and they've known it. But it's now, we got new home sales today. It was, I mean, it's a joke for April down 10% year of year. No biggie, you know, because what did they do? You know, in March, we saw that new home median sales price really. It went below 400. It was around 387. So they knew they were, they had to move product where they pulled back those price cuts. They pulled back those incentives, you know, home prices went up and sales went to the gutter. And so they know the only way they're going to have, they're going to move this product. And it's coming. I mean, we're, we're about to see what I would say the builders is it's like a combination of late 2007, early 2008. We're about to see, we're going to see probably in the fall, we're going to see numbers like we saw in 2008, which are crazy, crazy numbers. But, but they're tracking, I mean, they're tracking right there. I mean, so average sales, new home sales since 1999, around 64,000. We were at 58, for April, we were at 58,000. So we're, that's the average. And it was the, you know, from a, so I always looked at combined sales, new plus existing combined sales for April were the fourth, fourth worst April behind 2009, 2011 and 2023. It has been a bismill out there. And if rates go up or hold the same, I mean, it's, it's actually, it's not, it's, it's funny, not funny. I guess, because I've been one of the few people, I mean, for years now, I was just like, I don't know, guys, I don't think rates. And not for the reasons a lot of people talk about, it's more about the structural issues in the bond market. And it's more about, you know, we're at a time when I feel like other countries are going to have to defend their currencies. I think they're, we're going to see what we call collateral shortages. We also have a big group of institutional shorting the bond market. And we said, there's all these structural things. But most of your housing analysts talk about the Fed, which I'm like, why are you talking about the Fed? Like, we've already seen, the Fed doesn't matter when it comes to mortgage rates. We saw that when they first did their jumbo cut and rates went up, the bond market matters. But every analyst out there will just talk about the Fed, like, it's the only thing that matters. And it's just like, I honestly think they do that because to hide what's really going on. But if rates do go up, even more from here, oh, dear, oh, dear, more than anything, you can kind of see that's where the fear factor comes in with a current administration anytime, we get to that four or five on the 10 year, four or four, like, you know, suddenly there's a deal in Iran. And it's, you know, and then it's like, and race go down a little, then we get there again. And that's, and that's the same with the stock market. But pretty soon, probably market version of, yeah, I mean, but pretty soon, people aren't going to, there's not going to be a question because your gas prices are going to be so high. Your food costs will be up because of all the packaging, you know, like, you could see foods shortage. So right now we're in this Goldilocks time where everybody can pretend that what's coming isn't coming, but it's coming, you know, and it's, you don't get around the biggest old shock in our lifetime, some say ever without, you know, oil isn't everything. And, you know, so there are going to be ramifications because of the infrastructure damage. And of course, that's going to have impacts on the housing market and affordability in general. Yeah, I love that you point to the fact that, you know, it's a head fake to look at the Fed for saving us on mortgage rates. And that it's really about the bond market and the strength of the dollar. And we're not doing ourselves any favors, obviously, in that regard. And I think that the reason that the media does that points to earlier in the, at the beginning of our conversation, it's laziness. I think the media is lazy. They are lemmings just like humans are lemmings, right? And rather than look for nuance and look a little deeper into the story and actually look at the data rather than listen to someone else's take and then just, right, telephoneing that. That's how the industry. So hopefully someone will wake up and you're starting to see it. You're starting to see people talk about this and you're seeing the guys at the top of major private equity funds talk about the market. You know, I was pleasantly, I don't know, pleasant is the right thing, but I was optimistic. And when I heard all those guys talking at milk and finally in more realistic terms, of course, I think it's all to cover for themselves because when Rowan comes up and he's like, well, not everyone says as smart as Apollo. So we're worried about some of the other And you know, Apollo is just talking its book. I mean, they're part of the structural problem. I mean, they're actually part of the problem right now, but whatever. Yeah, great. Exactly. Exactly. Exactly. Yeah. So the there is some exciting days ahead for guys like myself for people that buy distressed at that look for deals and look for opportunities and ride the cycle. You also refer to yourself as a technology advisor, but you're what are you doing? I haven't heard you talk much about that. What are you? What's your view of AI? Is it relates to us? How are you advising your existing clients? So I was so excited, Bill. I was a, I mean, I have always. So I was one of those kids who got a free computer like I won some computer like in the 80s and was like coding, you know, like so my name, you know, you spend an hour coding. So your name would appear on the screen like, you know, these days, can you even imagine that would take that long? But you know, but but from there, I taught myself technology. I became a network administrator. I just, I, anything I could and it was always, everything I do is always bad. Accident for the most part. But I just, you know, over the years, I found myself in places like I arrived on the executive floor at the Wall Street Journal, Dow Jones, when they were, they were transitioning from Dow core to Microsoft office and literally no one in the whole company knew Microsoft office. But I had been working at it at, like in a computer lab at college and I knew all about it, you know, so I could train and it just from there. And then I taught myself network administration and did that job for a while. But it was changing. It was becoming so siloed. And this is important for what I'm going to say. Where, you know, I was the kind of person that I love looking at massive systems and like, okay, what's wrong? And so I knew exchange and I knew, you know, databases and I knew how they all talk together. Well, what the industry wanted was everybody to do their one thing. Like I opened help this tickets and I fixed printers and I do this. And what you would find is everybody would just never be able to solve problems because they didn't understand routers and how, you know, our house software talked to hardware. So anyway, I got out of technology because I was bored. And that's often what happens is, you know, I just get bored with something. It's funny. I haven't gotten completely bored with mortgages. Yeah, I know. I just say that myself. Yeah, it's like bizarre. But yeah, so I left mortgage proper in 2019 to build technology. I was talking about using blockchain and genie may repurchases back in, I mean, gosh, a long time ago. No one was interested. Literally no one was interested. And so I started trying to build technology. And then I just realized nobody was interested in the technology. So and then all the fintechs that I was working for that were trying to build these wraparound solutions in the mortgage industry because that technology is from 1968, 1973. They were trying to use this AI, this technology, but they just didn't have the perseverance. And what you needed was a real investment. And we don't have investment psychology anymore. What I mean is our psychology is to buy back shares. It's not to do real R&D where you're going to research and development where you're going to lose money for a little while. And even if you say you can, the runway is so short, you're never going to fully deploy anything ever. And that's what I just, I have a product graveyard that's so large. And so in '22 what I realized going from fintech to fintech was everyone was doing kind of the same thing. They'd realize, yeah, this technology is exciting, but I can still pay offshore workers in India a lot less than what it would cost to truly implement the technology. And it's a lot cheaper. And what I saw in corporate was just a lack of will to implement this stuff. And so that was 2022. And I think most of the industry knew that then. And I think what we've been witnessing has been a total construct. And are there some that believe this absolutely? Yes. But in reality, you're seeing Starbucks come out, retire. It's AI. You're seeing, I think it's Papa Johns. I can't remember who our pizza hut being sued by one of its franchise owners for having to use their AI inventory. And for those that don't know Starbucks was using AI for inventory as well, they just retired it. So we're more my favorite. And if this is too long to stop me, but one of my favorite recent examples is I got called in as an expert witness on a servicing case where the complaint this attorney had filed said that the servicer had denied a modification and all this. I mean, just accusing the servicer of these crazy things. And due to who the servicer was, I kind of believed when he was first telling me about it. Right. And that was kind of on their non-agency book that was kind of their SOP. But then I went through all the detailed notes. I went through all the detailed letters. And I realized, oh no, like not at all. Like every turn the servicer did the right thing. Well, that guy had already filed a case. And I was his expert witness. And I had to tell him he used AI to do the complaint. And AI doesn't understand that when you send a denial letter on a lost mitigation, but at the bottom, you say, please reapply. They're not denying you forever. That's just a, hey, you messed up. You got to do it again. Anyway, this is his whole case. And he hadn't bothered to check any of those facts before he filed that complaint. Now you're hearing about this all over the legal industry. And in fact, one of my friends in construction knows somebody who's now making banks suing all these people because they were using AI for contracts and they're realizing all of the inaccuracy. So we're just beginning to see the fallout from this massive push that I don't ever think was based in reality. And so I have pulled back from technology development. I, you know, it's just because nobody can afford it. Nobody can afford it. Well, I think that what you're saying is much a do about nothing. And if what you're saying is could be correct in the way that the internet in the '90s was, my gosh, this is going to change everything. And it did change a lot. It changed the piping of how we communicate. It got, it destroyed industries. It's destroyed small businesses all across America, small retail, unfortunately. All those mom and pop retailers or got destroyed by the internet. It did change a lot. And COVID. Yeah. And COVID. But it didn't change the way we generally live. And that's one of the things that I worry about with AI right now is that I think that that's a good reason why this whole, that the valuations are just out of control. And maybe at the end of the day, we could all decide to pull the plug in some way because is it really worth it? I think that has already-- so this is what I like to tell people if you're reading about it in mainstream media, it's already happened, right? And I think that once you dive into these data centers, you realize a lot of people are where we don't have the resources. And we don't have the power. We don't have the water. We don't have-- now people will say, oh, well, some of them are going to generate their own water and clean it and all this. But when you really go out there and look at all the new projects, like there's no power. There's no power. Some of us-- That's the key. Yeah. So if AI is going to get that much better and that much smarter, we have to power it. And are we all going to be willing to pay double the rates for our-- and the other thing that I'm starting to sense is it's good if you can create an AI agent that replaces maybe a $50 or $60,000 a year administrator. But to do that correctly, it still costs you $10,000 to $20,000 in tokens now. And that is an easy switch for the AI people to flip that makes-- all of a sudden, they're just replacing human salaries with their own income. And that's also another reason why I think we could see some revolt in that regard. It's very easy. Yeah. And I'll just say that we don't have the power. So it's not even about like elevated power-- electricity prices. We literally don't have the power in the grid. And so I've been doing deep dive research on this big one out in New Albany, Ohio, that meta-- they talk about their on-site power generation. It's going to be 200 megawatts. If they're saying they need 1,000 megawatts, we're the other 800 coming. And it's not coming from that grid. And in fact, the energy company there had been building out the power that did exist there since 2010. And so it's not coming. Like we don't have it. Like we're going to have to solve quantum if we're going to get there. But then you're also saying the revolt across the country. And this is already becoming a huge-- in September, I was in a very small room with a very prominent politician who was trying to figure out his AI Bill of Rights and knew then this was going to become a very bipartisan political issue. And of course, I think some people are getting on this late. But this is something Americans really care about. They don't want these things. And so I think that we're at the point where the leaders of these companies have already realized-- they've already realized this isn't happening. And so what will likely get sold is that it's the Americans, these plebs, these dummies who don't want to win against China. It's all their fault. We're not going to get the data centers in X time. We're going to have to wait for space or some such nonsense. But that's just not-- no, that's reality. It's narrative. And I can tell you, I have worked in the space. I have trained models. It is narrative. And I think there are use cases. I think there is technology that if you were committed to the technology, it could become very transformational in terms of getting efficiency and being better. But it's not going to wholesale replace your workers. We are dealing with an over hired situation because of PPP and COVID. And now-- and also, there's a great book called Bullshit Jobs. I mean, just so many of these jobs are like that. And so they're rinsing those out of the system right now. It doesn't have anything to do with AI. Absolutely. Take sales force. Yeah, so many examples of this. It's again all narrative. It's so funny. You're so true. And we live in this social media culture, these short snippets. New wants is often lost completely. And it takes people like yourself, by the way, I acknowledge you for the fact that you've become a voice of reason and skepticism and within the industry. So I really appreciate it. I always ask everyone a bold prediction-- Oh, good grief. Yes. You can make something up and say it's a job. But that may end up being true. Yeah, after I got burned with Newsweek claiming, I said prices would fall 50% one year. You're like, it's bold predictions are not signed. [BLANK_AUDIO] - I'm not too bold. - Right, yeah, I never said that by the way. Anyway, I think by Q4, I think what you're seeing, nobody, KShiller, nobody's gonna argue with KShiller. And KShiller just came out with the lowest year over year, median, so like increase in its index that we've seen since 2023 when prices were starting to come down. And that's in the high season, Bill. And so they take a three month average. So we're still dealing with, when you look at March, you're still dealing with January and February. But what I'm seeing from other indices is that everything year over year is slowing. We are very soon not going to be looking at a national home price appreciation. And I know I remember that moment in the last cycle. I remember it starkly. And so I think we're probably going to get there by Q4, barring any sort of exogenous events, which could accelerate things. But Q4, I believe, is when the foreclosures will be enough, the distress will be enough. If we continue to see these layoffs, it will eventually impact the headline unemployment number, which is we know is just another made up figure that does not accurately portray what's going on. But when your youth cannot get jobs, this is when you know you're in trouble. We're seeing the highest unemployment rates there. So I think Q4, and so this isn't very bold, but it's, I think Q4 is when we're really gonna, you're gonna start seeing other people have this conversation versus just at the fringes. Where the reality of economics, both in real estate and other financial markets sets. Correct. Yeah. And the media for once gets off the lemming train and gets back to reporting the facts, so to speak. Oh, from your lips to the universe is you. I don't know. I don't know. I don't know. I have a feeling the minute happens, they'll just pivot to it's turning around. They'll be another war somewhere, I'm sure. Right, exactly. Bellety, right, thank you for joining the debt doctor. Well, thank you so much for having me. (upbeat music) That's a wrap of today's episode of debt doctor. I enjoy bringing this content to you each and every week, and I really appreciate you tuning in. Remember to follow us so you get notified when ever new episodes release. If you haven't already done so, please share one of your favorite episodes with a friend, family, or colleagues. And if you don't mind, leave us a positive review on Apple's Spotify or whatever your favorite listening platform might be. Until next time, thank you for investing your time with us on the debt doctor.