In this episode, we talk about the housing crash, the Federal Reserve, and why we should all be worried about a housing crash. We also talk about why the housing market is so bad, and what we can do to fix it.
00:00:19.080Yes, my view. So, you know, and I think the President has said, too, they're way too high.
00:00:24.000But here's the problem that I see, Patrick, is you have a guy that President Trump put in this position,
00:00:28.540and he's running the Fed into the ground. He has just completely destroyed the integrity of the Fed.
00:00:34.340I'll give you an example. I criminally referred Lisa Cook, the Federal Reserve Governor, for mortgage fraud.
00:00:40.720There's credible mortgage fraud, I believe, that she's committed.
00:00:44.240In a normal environment, if he didn't hate the President, he would have already have launched an investigation into Lisa Cook.
00:00:50.160He already would have potentially said to her, hey, look, Lisa, it's time that you step down.
00:00:55.260Now you have a situation where Lisa Cook and the President are going to be going at each other in the Supreme Court,
00:01:01.600where the President has the right, in my view, to fire her. He did fire her.
00:01:06.180And so you have this just lack of leadership at the Fed.
00:01:09.180So, you know, we're doing everything we can at Fannie Mae and Freddie Mac, but these interest rates have got to come down.
00:01:13.960We've got to get a new Fed chair. I think the President will pick a great new Fed chair, but they've got to come down big time.
00:01:18.600Okay, so let me read this story. For U.S. homeownership dips in 2025 for the first time in nearly a decade.
00:01:24.380And here's why. This is a New York Post story.
00:01:28.560The number of U.S. homeowners fell in 2025. First time in nearly a decade.
00:01:32.660The figure has dropped. According to a realty company, Redfin, about 86.9 million Americans belong to a picket fence crowd.
00:01:41.500As of April 1st, down 0.1% from 86.28. Who owned homes at the same time, 2024?
00:01:47.940The United States last saw a drop of homeownership in the second quarter of 2016, early 10 years ago, from 74.36 to 74.4.
00:01:57.600In April, the number, 1.1%. Inflation, high interest rate, mortgage rates, and skyrocketing real estate prices have priced a lot of people out of the housing market.
00:02:05.700Redfin's head of economic research, Chen Zhao, told the Post the key metric had steadily increased each year since then,
00:02:13.880climbing to 75.41 in 2017, 78.1 in 2018, and so on until now.
00:02:20.440Over a decade of low mortgage rates since the 2008 financial crisis had helped people buy homes until recently, explained Chen Zhao, Redfin's head of economic research.
00:02:30.960That's a lot of sudden changes in 2022.
00:02:32.800What do you say to somebody that's sitting there wanting to buy a house? Should I go in and buy a house? Wait, what should I do?
00:02:37.080I think buying a house is always going to work out in the long term because it's an inflation-protected asset in many ways.
00:02:42.160However, I would say this. We are hitting it from every angle.
00:02:44.320So we're not just blaming Powell because he is to blame and he deserves the blame.
00:02:47.720But also at Fannie Mae and Freddie MacPatrick, we just allowed rent to be counted towards your mortgage.
00:02:52.060So if you have been paying your rent the last 10 years, that should count towards your mortgage.
00:03:06.600I do think, though, if people are going to buy a house right now, the best thing to do is to make sure that even if there was a housing crash, which I don't think under President Trump that will ever happen.
00:03:15.080I think under other presidents like Biden, it could have happened, frankly.
00:03:19.300I think in many ways it did because look at how bad the housing market is and we're trying to turn it around.
00:03:24.960But if you buy in the right location and you buy something that is a good asset that's located well, can survive a crash, I think you'll do great long term.
00:03:32.400So this is a good transition for me to go to, Brandon.
00:04:09.300On the building side, the question I want to ask is, Brandon, who just turned 30 years old, right?
00:04:14.960You know, wanting to come up buying a house, you and I will have the conversation and we'll talk about the price of lumber, price of concrete.
00:04:23.080Yeah, everything like sheetrock, concrete, lumber, windows, all that stuff has opened up.
00:04:28.680We always talk about how it seems that it's not profitable to build houses and it's like a national crisis that it is unprofitable to build houses and there's a giant shortage in it.
00:04:37.840So that's something that concerns me a little bit with rates going down.
00:04:40.720I understand that inflation is low, so there's a lot of good reasons to bring rates down.
00:04:44.760But remember when COVID happened, we brought rates down and the average house price went from like $378 to $500 in just three years.
00:04:52.680So, you know, I'm concerned about prices going up like that again with the shortage in housing.
00:04:57.680So, I mean, what do you say about that?
00:04:59.320Well, I would say that the builders sit on a lot of land.
00:05:01.500They sit on over 2 million lots by what we can tell.
00:06:32.300So if you look at the number of four-bedroom homes skyrocketing, okay, versus the number of three-bedroom homes versus the number of two-bedroom condos, you know, starter homes,
00:06:44.320builders are sitting there saying, why would I get into building smaller homes?
00:06:49.020I mean, if you look at this, 1970s, look how many homes we're building per year that are 14,000 square feet or less, half a million per year.
00:06:56.820And then we go to 400,000 of them in the 80s, then we go into the 300,000 in the 90s, then 200,000, and then today, less than 100,000 homes being built every year.
00:07:10.400If I'm a 25-year-old where back in the days, you know, somebody wanted to buy a home, it took two and a half times average salary to be able to buy a house.
00:07:21.240Right now, in some years, it's five and a half to eight and a half.
00:07:23.580So what incentive do you give builders to say, guys, we've got to go build some 1,400 square foot homes, not these 2,800 four-bedroom homes?
00:07:33.220What can we do to incentivize builders?
00:07:35.560Well, I don't want to just pick on the builders, but I will say they do need to look at the margins.
00:07:39.260And one of the companies that's done this is Lennar.
00:07:50.660But at the end of the day, you know, the builders, Patrick, when I was a kid at Pulte Homes, and, you know, I eventually went and worked there on the board.
00:07:57.080But, you know, when I was a kid, it was less than 10 percent of the market was the big builders.
00:08:01.680Now, Patrick, it's almost 60 percent of the market.
00:08:04.080So a lot of people say, wow, these builders, they almost have like a monopoly on the market.
00:08:56.340And I'd love to see the administration, you know, kind of lead and drive like council of governors or whatever is necessary to say, look, your states are making it hard to build homes.
00:09:06.880You have a lot of environmental regulations.
00:09:08.920You've got permitting that takes forever.
00:09:10.840Just look at the rebuild they're trying to do in Pacific Palisades.
00:09:13.940I know that's a wealthy neighborhood, but homes were there in an area that had, you know, you know, decades of just neighborhood existence.
00:09:39.840And so I'd love to see the administration work with the governors and say, hey, get your state in order and let the let the building happen faster.
00:09:49.340So I think the builders, I don't want to pick on builders either, but they they need to scream loud and ask for the governors and the administration to put pressure on the permitting process.
00:11:29.320But the three bedroom starter homes has dropped nearly 30 percent, 25 percent of homes.
00:11:34.480How can we incentivize both the builders as well as deregulate from the federal side?
00:11:41.620Well, the issue is, as you know, is that at some level of the federal government, you kind of want to stay out of the way.
00:11:47.660And so it is very much a local question.
00:11:50.640However, I do think we are looking at some different ways, both at Fannie Mae and Freddie Mac, to make sure that the municipalities are being competitive.
00:11:59.240We recently held a meeting, me, Scott Turner, the secretary of HUD, Kevin Hassett, the secretary of Treasury, Besant, and many others, Kevin Hassett of the NEC.
00:12:08.960And looking at all types of different ideas on housing, looking at is there a way that we could incentivize with federal funds or otherwise some of these municipalities to get going.
00:12:17.320The good news is, Patrick, I do think that in 2026 this is going to be a huge issue, both in terms of the election.
00:12:23.560But I also think that the House and the Senate, they're telling me – and this is what I don't understand in some of these Democrats who didn't vote for me because I'm just a housing guy – is they sat there and they sat there and they said, oh, we're going to vote for you and everything.
00:12:37.120But they said in the same meetings, in the confirmation hearings, they'd say, well, housing is the number one issue amongst my constituency.
00:12:42.760So I think there's enormous momentum going into 2026, and I think you're going to see some meaningful announcements out of us in the coming months.
00:12:54.920Is it overhyped, the impact that corporations are having on buying up these small houses, or is that something that's actually problematic?
00:13:02.660I've heard a lot of rubblings about that.
00:13:04.180I don't know if it's just BlackRock or private equity companies or just corporations are looking for a good yield that are buying up rental properties at overasking price.
00:13:16.240Now, one thing I want to say is that in addition to what we're doing with the rent being counted towards mortgages, crypto being counted towards mortgages, credit scores, credit bureaus, trying to bring down title insurance costs, all of these things.
00:13:28.760You know, the number one thing, though, that has driven, in my view, in addition to Biden's reckless policies, this housing problem, has been mass immigration that he let in, illegal immigration, letting in 20 million people.
00:13:42.160What does that do to our housing supply?
00:14:14.600Well, yeah. And then what happens is private equity looks around and says, hey, wait a minute.
00:14:18.440Some of these people are going to get rent subsidies from the from the Democrats.
00:14:22.560Hey, why don't we just buy up the houses and then we'll get the subsidies?
00:14:25.840So in a way. And then what happens to the price of land?
00:14:29.380Exactly. Now, now you've now you've lost.
00:14:32.100Now you've got artificial bidders being fueled.
00:14:36.300It's the same thing happens to tuitions, Pat.
00:14:38.880Tuitions were driven up by student loans because students could go get loans regardless of what the tuition is, regardless of it went up.
00:14:45.600And the federal government will say, no problem, you qualify, no problem, you qualify.
00:14:48.660And then they dumped it on all the processors.
00:14:50.500And then you had these students said these giant student loans that they went in eyes open.
00:14:54.760But the cost was up. Well, now you've got all these people come in.
00:14:58.640They're going to get rent subsidies from the government.
00:15:00.540I'm BlackRock. You're Citadel. We say, why don't we buy a bunch of them?
00:15:04.200Because we're guaranteed the rent. Oh, I got an idea.
00:15:07.360We'll do Section eight and we'll just put all these people in there.
00:15:10.800So now you can't find a condo to start with because you've got too much demand that's artificial.
00:15:17.800That's the government. It's almost like paying student loans to immigrants to have a place to stay.
00:15:22.800It's artificial. And guess what? Now the land goes up. Everything goes up.
00:15:28.600Guys in the housing business would tell me for the last few years that that was the Biden trade.
00:15:32.520So you'd buy this land, you'd buy these homes, you'd buy these rentals.
00:15:35.960And then, you know, you'd hope that this is not me, but I'm saying this is other housing guys saying that then they'd let in more people and then it would just go up with price.
00:15:44.100And that's exactly what happened. And then they all scream and then they get more subsidies.
00:15:48.400Yeah. Yeah. I mean, obviously, to me, I when you hear the younger generation as they're coming up, they're sitting there saying, I want to find a way to buy a property.
00:16:00.240Do I just sit this one out? Do I just say the idea of owning a house early on? Forget about it.
00:16:05.960Just go do other things. And then these other guys are targeting renters.
00:16:09.920So maybe they don't want me to buy a house. Maybe it's this is not a market for me to buy a house.
00:16:13.940I can't afford in the first place. What do I do? It's not like my income is skyrocketing.
00:16:17.740It's not like the median income is skyrocketing. So to me, the issue becomes, how do you win over the youth that is wanting to pursue the American dream?
00:16:27.400Hence, we marketed it for many years as homeownership. They're they're sitting this out and they're saying, I don't know if it's part of me.
00:16:33.960So I think if somebody in a marketplace thinks about how to win them over, how to address that issue in whatever way, you know, prices are going up.
00:16:45.680So how even a builders are sitting there saying, well, don't make me the bad guy.
00:16:48.900I want to be able to build. There's no incentive for it. Why would I build it? I don't want a nonprofit.
00:16:54.240So I don't think builders can do it by themselves. I do think they need help from incentives to be able to get them to say,
00:17:01.540whoever goes out there building more three bedroom starter homes at this, you know, I don't know.
00:17:07.360I don't know how you do that. But I do think there's a massive market for it economically.
00:17:10.880I'm sure there's a lot of different people that would want to have a blue ocean and doing that, but they can't do without the help of some kind of benefits from the top.
00:17:19.360Yeah. And I think you'll see us unveil that right now.
00:17:21.820We're just trying to work in a constructive way with the builders and say, hey, how can we make this a win win?
00:17:26.240But we do have a lot of wherewithal to effectuate change.
00:17:30.040And hopefully we'll be announcing that. All right. We'll look forward to it.
00:17:32.8802026 is around the corner. I am convinced this is going to be a very, very special year, in my opinion.
00:17:41.760I think we got this other rate cut that's coming.
00:17:44.240I think we're going to have three more in 2026, give or take, based on what Goldman Sachs and a lot of other people are saying.
00:17:48.860We may even experience a new person that's running the Fed by June-ish.
00:17:53.780I think June 26-ish, around that time, that could turn things around the second half of the year.
00:17:58.860If the China-U.S. trade deal gets done, it could be an unbelievable day for the stock market.
00:18:06.400However, all of that stuff going into 2026, what that means to you is nothing if you're not prepared for it going into 2026 with momentum.
00:18:16.120So having said that, if you don't yet have a plan to write out a great business plan for yourself, your family, your executives, your employees, watch this video, Rob, if you have.
00:18:25.480Rob, this is a video we shot of me going into a car, driving a car that goes 1.9 seconds, 0 to 60, and I also borrowed Vinny's old car to see.
00:19:51.760So at this point, we know speed is critical in business.
00:19:54.700The question becomes, with 2026 around the corner, it'll be here in no time.
00:19:58.680How prepared are you going to be versus all your competitors?
00:20:02.100Once here, I host an event called the Business Planning Workshop, where we cover the 12 building blocks on how to write a proper business plan that drives emotion and logic.
00:20:12.200If you've never attended it, do whatever you can for you, your wife, your team to tune in together.
00:20:18.160It's the only one we do that's through a webinar, which means anybody from anywhere around the world can tune in to the Business Planning Workshop.