2268: Debunking Housing Bubble Myths- The Truth About Inflation, Housing Prices, and Mortgage Rates in 2025 with Expert Mortgage Broker Jason Thibodeau

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I just finished listening to your July 5 episode, man. I just absolutely love your content, man. It gives me value every time I listen to it. It gives me a different perspective on how I view some of the stuff that I do. It's just always good, man. And I just, I want to keep telling you the same thing over and over and over. It does affect people, it does change people's lives and really appreciate all of the effort that you're putting in for that because I know that you've really got better things to do than this, but yet you still sacrifice that time and do it. So hats off to you, bro.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome empowered investors. We've got a great show for you today. As you can see, I'm in the airport. I'm just about to leave for the British Virgin Islands to host my masterminded yacht adventures. So that's where I'm off to. But today we have a great show for you. We have a mortgage professional on the show not to talk about financing that he would offer you, but to talk about the economy, the Federal Reserve, monetary policy, interest rates, and all of this kind of stuff that affects our real estate investments in such a major way. Anyway, let's listen into that, but be sure you have registered for Empowered Investor Live and you took advantage of the early bird beal and go to empoweredinvestorlive.com we have confirmed a few speakers so far and we'll announce more as they come. We have a couple of rich dad authors speaking at the event and if you've been to our events in the past, you may have seen them before, but they've always got new material for you. We've got Sharon Lecter, who's The author of many books. You've heard her on the show many times, probably know who she is. She is speaking at Empowered Investor Live in Irvine, California. We've got Tom Wheelwright, rich dad, cpa. He will be speaking. And we've also got Mike Maloney, a new speaker that we have not had before. If you followed Mike and his lessons on how the Federal Reserve works, how money works and the importance of sound money, he will be speaking for the first time at Empowered Investor Live, Mike Maloney. So join us for that. We'll announce many more speakers as the days go by, but be sure to register atempowered Investor live.com and let's go ahead and get into today's interview and before we go, let's hear an interesting clip of the day.

And he started laughing. He said, aaron, what do you think women's liberation was about? And I said I had pretty conventional thinking about it at that point. I said, I think it's about women having the right to work, getting equal pay with men, just like they won the right to vote, you know. And he started to laugh. He said, you're an idiot. And I said, why am I an idiot? He said, you want, let me tell you what that was about. We, the Rockefellers, funded that. We funded Women's Lib and we're the ones who got all over the newspapers and television, the Rockefeller Foundation. And you want to know why? There were two primary reasons. One reason was we couldn't tax half the population before Women's Lib. And the second reason was now we get the kids in school at an early age, we can indoctrinate the kids how to think, which breaks up their family. Kids start looking at the state as the family, as the school, as the officials, as their family, not as the parents teaching them. And so those are the two primary reasons for women's love, which I thought up to that point was a noble thing. You know, when I saw their intentions behind it, where they were coming from, when they created it, the thought of it, I saw the evil behind what I thought was a noble adventure.

It is my pleasure to welcome Jason Thibodeau to the show. He's got a good first name just like mine. He is an expert in the mortgage market. He is a top producing mortgage person and a 20 year veteran in the business located in my old stomping ground in Orange County, California. And I was reading about some of his thoughts online about where the market is going and what we can expect in this year with a lot of changes. So I wanted to bring him on the show. Jason, welcome. How are you?

Yeah, thanks, Jason, for having me. I appreciate it. I'm doing good. Yeah. Excited to talk to you about this today.

Good to have you. Good to have you. So I know you've got some thoughts on inflation. Maybe we want to start with that or maybe we want to just start with your kind of macro view of the economy and then kind of let's funnel it into real estate specifically.

Sure. Yeah. Well, there's a lot going on right now. We have a new administration. I'm sure everyone knows. And the question is what kind of impact is that immediately going to have? And I just, to be honest with you, my personal opinion is that's going to take the next couple of years to play out. Right. If you believe the media. Oh man, the sky's falling and everything's falling apart and tariffs are going to shoot inflation through the roof and interest rates are going to go higher from here. But I really kind of feel like 2025 is going to be have a somewhat similar feel to 2024. I don't think a heck of a lot has changed. The Federal Reserve has talked about higher for longer. That language started in 2022 and here we are 22, 23, 24. Now we're 25. We've made a lot of progress on inflation. Right. Going from what was a PCE 9% down to high twos. So we're getting there. And I think the light's at the end of the tunnel and we're about to turn the corner. But I just honestly think these things just take a lot longer than I think people anticipate.

And Jerome Powell doesn't really have any reason to cut very much with employment being so strong. Right.

I would love one morning at 5:30 in the morning to wake up and see the employment claims Spike past 200,000 at some point. And I say that tongue in cheek because no one wants to see unemployment spike. But it's a conundrum. It really is. The labor market, it's a little schizophrenic for lack of a better way of putting it, because on one hand, the initial claims are remaining stubbornly low. Right. And then you have the continuing claims slowly but surely rising. But then you've got household survey versus BLS report on the job side, what to believe because those two reports show entirely different things. I'm not really sure, to be honest with you. All I can tell you is that at least from a layoff standpoint, that is what the most lagging piece of all of this. Right. So in fact, we're probably well into recession if we ever get there before initial claims start going up. We're just not there yet. So there's no reason the Fed would be aggressive with cutting rates. Why would he? We're at 4.1% unemployment rate. Inflation has settled down in the high twos. Job creations, depending on which report you believe. Seems to be, seems to be okay. But just like the anecdotal feel of man on the street feel, people are struggling. Right. I'm not talking about the people with, you know, seven figures in equities and owning a ton of assets, commercial, residential, real estate that are all fixed at 3% or less. That's. I'm not talking about those people who, of course, a bunch of liquidity sitting in money markets making 4 or 5%. I'm talking about the average Joe who is paycheck to paycheck, is raising a family, may or may not own a home, but that's about it, right. That if you're talking about those people in terms of cost of living, the grocery bill and everything else, don't get me started on insurance costs right now, especially with Southern California, where we're from, and the fires. The insurance industry was already a mess in California before these fires happen. I just, gosh, I'm worried what that looks like, you know, in the next three to six months for everyone.

So I think what we're seeing is we're just seeing a bigger and bigger wealth divide between the haves and the have nots. Of course, those who own assets and owned assets the past several years, especially during COVID did extremely well. So we see consumer price inflation, of course, but asset inflation has been even bigger. And that's got the multiplier effect of. Yeah, if it's real estate, it's leveraged most of the time. Right. And so the rich are definitely getting richer.

There's going to say that. You took the words out of my mouth, the rich get richer. I think I'm an empath is the way my wife describes me. An empathetic human being and who I feel so terribly for in this situation we're all in right now is your average millennial first time homebuyer. It's a bummer. It really is. Right. These are people who are entering their prime earning years or at least just about. At the very least, they're in their 30s, right. Where they're thinking about starting a family, finding shelter, and ideally they'd like to buy a home. And here in My marketplace in Southern California starter home where I'm from in Huntington beach is well over a million dollars. Right? We're talking 1.3 to 1.5 for your average starter home. A lot of people aren't thinking about property taxes. I hear a lot about interest rates, but property taxes are astronomical right now. Homeowners insurance is astronomical right now. And then you couple that with high real estate prices and high interest rates, I really feel bad. I feel like we've failed the next gener. Like with all this spending and everything going on, the mismanagement of our federal government, local and state governments, it's just like it's starting to manifest in a very significant way for the next generation. And I think it's shameful.

We've done a lot of research on that over here. And let me take a little bit of a counterpoint with you. I mean, I get everything you're saying for sure. And I'm guessing you're probably a Gen Xer like I am. You're not quite a baby boomer yet. Neither am I. So we're sort of in that in between demographic cohort, right? Where we're not this and not that. We're, we're a small little group, Gen Xers, but the millennials with all of their complaints and they've got some legitimate gripes. I agree, but it is better than we think. And I'll tell you one special reason why is that the millennials are on a six year lag from their baby boomer parents. And what I mean by that is they're doing everything about six years later. Getting married, forming a household, buying a house. So if they are making this comparison of, look, when my parents were 30 years old, they had a home and a white picket fence and you know, yada yada yada. But they have to compare that to their ages. 36. Okay.

Keep in mind, it's of course more complex than that. Then they'll say, well look, we have these massive, massive student loan debt. And listen, I'll be the first to agree that the student loan debt is a complete scam. That's all the government's fault. Because in the 70s when, you know, they started financing college, of course the colleges saw this tidal wave of money coming at them and they said, well, we'll raise our prices, of course, right? And you know, college is fake scarcity. There's no scarcity of education. It's all just fake. Okay, so college is a scam. So the millennials will say we have this massive student loan debt and our parents didn't. Okay, fine, but guess what? Your parents had that. You don't. They had children. Okay? And children are pretty expensive, too. So, you know, there's a lot of nuance to it, of course. Right.

And it goes back to personal responsibility and spending habits and all that stuff. I think you're right. So I love the other side of that coin. Right. Because it's the era of social media and instant gratification and impulsive spending. And, you know, yolo, right, Is what they call it. And YOLO doesn't coincide very well with buying your first home, so I hear you on that.

Right, right. Exactly. Hey, look, you know, your baby boomer parents, millennials, did not go become a digital nomad and hang out in Europe for a year, okay. They didn't get to do that most of the time. So, anyway, okay, let's talk a little bit about infl. And then, you know, circle back to, you know, real estate. Specific topics. You've got a few visuals. Not everybody's watching on video. Some are just listening on the podcast on audio only. So let's try and explain them to you.

I'll explain it. Yeah.

But first of all, you're talking about shelter and core inflation, of course. Just go over some of these points with us.

Yeah, I kind of like nerding out right. On the data, so to speak, especially on the stuff that directly impacts what I do for a living in my career, which is mortgage. Right. I'm a producing branch manager for a residential mortgage company. And the thing that we're all waiting for in our industry is to say, see inflation come down to that magical 2% target, and it's kind of settled at a stubbornly high 2.8%, more or less, let's call it, with the Fed. For those that don't know, I'm sure many of you do. The Fed's favorite measure of inflation is pce, specifically core PCE that comes out at the end of every month. Now, in terms of, like, what is keeping inflation stubbornly above that 2% target? There is a very specific answer to this from a mortgage guy's perspective, and it's shelter. It's the shelter component, which makes up 18% of the core PCE. Now, it's remained stubbornly high, and as you can see from this slide, it's 4.8% year over year. Now, here's the thing. It's very, very, very lagging upwards of two plus years of old data is carried in that. And if you're looking at real time rents. CoreLogic is kind of the gold standard. Real time rents is actually 1.7% year over year. So this is the maddening part for guys like me and the mortgage industry or anybody who wants to see interest rates come down. Because the Fed, we all know, is data dependent and they're just going off of these headline numbers. I'm assuming they're smart enough and they can dive into this and they understand this. Which is what leaves us scratching our heads sometimes. Because if you actually apply real time rents, that 1.7% to core PCE, the overstatement is 3.1%. And what does that actually translate to? If you take into consideration the core weighting of shelter, that's a result of a half a percent higher than it should be in the core PCE rating. Like, technically speaking, if they're using real time rents, not the lagging 2 plus year old data, PC Core is actually at 2.3%, a heck of a lot closer to the Fed's target. And my fear, as always, if you look at the history of the Fed, is they're old and slow, right? Meaning they're going to be reacting to old data and by the time they finally realize what's going on, it's going to be too late. You know, job data is still holding up, but again, the job data is the last thing, the last domino to fall. And usually we're already a quarter or two or three into recession by that time, so it's too late. So. So I'm a little bit worried, these boom bus cycles that are created, right, that the Fed is going off of this old data to keep interest rates restrictive. And to be honest with you, I don't think we have an inflation problem. If you look at it from this perspective, I know that's probably blasphemous for a lot of people when they hear that, you know, when they go to the grocery store or whatever. I'm not talking about deflation, right? I'm not talking about prices going down. I'm also acknowledging that over the last three to five years, the cumulative effect of inflation has been devastating, especially for the middle and lower class. All I'm saying is, from a pure data standpoint, if we apply real time rents to the core PCE shelter component, we don't have an inflation problem. So my concern is the Fed's going to stay too high for too long.

Okay, kind of unpack a little more. This idea of PCE versus rents. Tell us about that a little more.

Yeah, it's the owner's Equivalent rent. There's more than one component, Right, of course.

And that's a whole subject of debate.

Owner's equivalent rent, of course, shelter, the cost of housing. And, you know, there's actual rent and then there's over owner's equivalent rent. I don't know if you want to go into that granular of detail or not.

You can talk about owner's equivalent rent if you want, for a moment. I've talked about it on the show before. You know, it's the way they.

Silly, right.

The shelter cost in the. In the cpi. Okay, but go ahead. Feel free to talk on that. But, you know, I just want to get this unpacked a little bit more. Well, interesting.

Sure, sure. So in terms of rent, like, basically what the PCE is saying in terms of shelter, which is mainly what they look at, which is a head scratcher in and of itself, is rent, not the price of housing. They're looking at the cost of rent year over year and whether or not it has increased. So according to. But this lagging data, the shelter component shows that cost of rent to rent a house has increased year over year, 4.8%. Okay. And part of that is actual rent, but the other parts. Owner's equivalent rent. I always thought it was silly, and this is probably why it's having a hard time coming down. Jason, is owner's equivalent rent is a phone call to a homeowner, and the question is, how much do you think your house would rent for in this marketplace? And then they answer off the cuff.

Yeah.

Why? That is the main driver of what decides the shelter component and the PC.

That's pretty silly. Yeah.

I. I don't know. And. And think about it. Pride of ownership. And what are you going to say? Oh, it's renting for way less. No one's going to say that. You know, it's like when you have an appraiser go out to your house to refinance your house if you're a homeowner, and then they come back with a number that's less than you think it is. And there's this outrage effect. Right. Because we always think our house is worth way more than it might be, just because it's. It's a natural human tendency. I do the same thing. All right, so, yeah, owner's equivalent rent is the main thing that's keeping this way too high, in my opinion. But, you know, it is what it is. This is how this PCE works.

Right, Right. Yeah, got it. Okay. Let's talk about the monthly shelter Readings. You know, we've got PCE again here.

Well, that's just to show you like a long term trend. Right. So this is just the graph that shows you the long term trend of what we just looked at on the last slide. And the good news is if you look going back to February 23rd is how far back the slide looks. Not that far back, but you see a clear trend, right? It is going down. The rent portion will continue to catch up to reality and in my opinion, year in 2025. So here's one piece. If you go to the next slide, I think this is where the meat and potatoes are. Jason, no one's talking about this stuff. I like nerding out on it. If you look at January 2024, you see the shelter PCE and then you see the core PCE highlighted. What do you notice about those month over month numbers? They're very high.

Yeah, okay, got it.

You see what I'm saying? So 50 basis point, month over month increase in January of last year also for the core pce. So for those paying attention with pce, the data the following month at the end of the month. So this means when it comes to this tomorrow, the actual report tomorrow, we're going to see a big roll off, a big number roll off and be replaced with whatever the current month over month number is, which we're hoping is around point two. So just with tomorrow's PCE report alone, we'll probably see if things work out in our favor as much as 30 basis point drop in inflation.

Yeah, very interesting. And so that'll basically give the Fed cover to say we're not cutting.

Well, if anything, I mean, core PCE right Now is like 2.8. If it drops 30 basis points tomorrow when the PCE is released, we're going from 2.8 to 2.5. With any luck, he might just say, oh, we are making the progress we wanted to see and I am gaining more confidence. You remember last year the language with the Fed was we need to gain more confidence.

Right.

And then they started to gain more confidence and so they, hence they started cutting. They started it off with a 50 basis point cut that surprised everyone. Now we're down 100 basis points and then they're pausing, Right, because inflation started to not cooperate again. Well, all I'm telling you is tomorrow's PCE is going to have this January number roll off. And I'm sorry, by the way, tomorrow's PC is going to be for December, it's the end of February. That January PC is going to fall off. So the bad news is this big improvement in inflation is not going to happen until the end of February when the next PCE report comes off.

Okay. You know, I'd like to maybe zoom out a little bit here and talk about some of these cross currents that are making the real estate market, I think, pretty tough to predict. Number one, Trump wants to build on federal lands or allow developers to build on federal lands. I don't think that really solves any problem at all when it comes to entry level housing. Now, it might solve a problem when it comes to higher end housing, assuming these locations are desirable to higher end home buyers. And I don't even know that. But here's what I'm saying. Most of the price of a entry level home, and that's where the biggest shortage is, okay, is made up of construction cost, the cost for the materials, the cost for the ingredients, the cost to assemble what I call packaged commodities on a site, on a home site. Those are the prices that need to come down to make housing construction cheaper, not free land. Because the land component on an entry level house is very little of that equation. On a high end home, the land component is big if it's, you know, in Huntington beach where you live. Right. Or Newport beach, where I used to live. And so this does not solve the problem. So that's one factor. And, you know, you can address that in a minute. But let me just give you a little more meat to chew on. Tariffs. Think of all of the ingredients of a house that would be affected by a tariff. It's a lot. It's a big number. I mean, all of the small items, the fixtures, the doorknobs, the hinges that, you know, so many things are imported.

And it all adds up.

It all adds up really fast. And so that makes a house more expensive. But, you know, if tariffs cause inflation, but tariffs also bring jobs back to the US and raise wages. I mean, I don't really care if there's inflation as long as my wages are going up faster than inflation or at least keeping pace. Right. And I'm not speaking for myself, I'm speaking for the typical, you know, job holder. So, you know, there's all of these things. And then, you know, we talked about the Fed and the rates and so on forth. And then to add to that, you know, Trump's war with Jerome Powell. Right. You know, well, what if he asks you to step down? The answer is no, I'm not stepping down. Well, Trump could just end the Fed and he doesn't really have to end it. He could just go around it. Okay, so there's a lot going on. It's pretty hard to know.

I mean, at least he's got control of the Treasury Secretary who's coming in. But of course there's insulation between the President and the Fed. Yeah, yeah. It's an interesting conundrum. I think you're right. The damage is done with inflation. I don't see that we're not going to get deflation. We're just not. And if we do, we have bigger problems. And what I would say is the, the thing that I think Trump is touting is oil. Right. I don't know how quickly he's going to be able to get this country to produce even more oil because I think we're already producing at a record pace right now. And when that translates down to cheaper oil and gas prices is anyone's guess. That could help. Help.

But, but again, even that doesn't help much. No, I know, but yeah, I mean, just to comment on it, the cost of energy is in everything we buy. Right? It's everywhere. There's, you know, it's omnipresent. And so if you bring down energy costs, it'll certainly bring down cost. Right. But it's such a small component, you.

Know, I mean, I think the biggest component, Jason, is interest rates, you know. Oh, yeah, no question that's going to be the issue is deregulation is nice, but if everything costs too much and it doesn't pencil out, they're not going to do it. Right. Like, builders are not charity cases. They are businesses for profit. And they've learned their lesson from 2008. They're not going to overbuild. They're just not the only way.

I see, you know, their financing sources will not let them overbuild because they learned their lesson too.

No, exactly. Everyone's like got PTSD from what happened and rightfully so. And okay, this is what I would say. So Fannie Mae and Freddie Mac went into conservatorship after 2008. Right. And I'm of the opinion that's a good thing at this point. I'm worried about what the credit rating becomes if they come out of conservatorship and what that does to interest rates and pricing for first time homebuyers. But ultimately we need some sort of backstop and if there's going to be anything that helps builders build affordable housing. If we've got Fannie and Freddie in conservatorship and it's actually kind of worked. FHA still works. VA still works. These are all government programs at this point. The Fannie Freddie 2 with the conservatorship, what does that look like? And this is, you know, just a high level thought. What does that look like? Where the federal government is assisting builders and supplementing to make sure there is affordable housing? Because that's the only thing I can see. Like if it's from a basic P and L standpoint, cost of inflation, interest rates and oil are just too high to make any of this. Pencil out the only thing.

And even if oil comes down, it's not going to, it's not going to affect the end price by that much.

Yeah, the government's going to have to step in and do some sort of incentive for the builders to build affordable housing. Like if we can do that for the EV industry and let Elon Musk become Elon Musk because of what happened to Tesla as a result of that, why aren't we prioritizing that for the most basic human need outside of food, shelter?

Yeah, right. No, yeah, that's a very good question you just asked. And you're absolutely right. It might be public private partnership or just incentives. And the stupid Democrats, I mean, they just did everything wrong. You know, like this idea of, of, oh, let's give first time buyers $25,000. So what does every seller say? Well, let's raise our price by $25,000. That's just idiotic. They're working on the demand side only. There is enough demand. There's no shortage of demand. There's a shortage of supply.

Right, right, yeah. It's adding fuel to the fire of creating the problem that already exists. Right, right. What we're trying to address.

Just like Cash for Clunkers did, by the way. Yeah, same idea. Right, yeah, go ahead.

Yeah, we have to address the supply problem. And barring any sort of significant decrease in interest rates and the cost of oil, which I don't see happening in a significant way in 2025, we might see a settling down in interest rates, but mortgage rates going from 7% to 6% are not going to solve this issue. Right, so deregulation, fine. But we need to help the builders and incentivize the builders the way we do with EV companies to give them a reason to build affordable housing.

Right, yeah, no, good, good point, good point. So the question is, can the government afford to do that and is there the political will to do that?

We have doge. We have doge.

Right, yeah, well, we're saving a lot of money with Doge already, you know, like I think $600 billion already in like the first 10 days.

Is that true? I haven't been following it and it'll be fascinating to see what happens, but.

Obviously, you know, don't quote me on the number.

Yeah, well, we'll see. Yeah, I'm hopeful that given enough time and space over the course of the next six to 12 months, we could figure this stuff out. Now we're definitely in a mess and it's a bummer. I hate seeing it, but it is what it is.

Yeah, absolutely. Well, anything else you want to share? Anything? I didn't ask you, you know, maybe share a little bit about the mortgage industry, if you would. One of the indexes that fascinates me is the Mortgage Credit Availability Index, the MCAI that the Mortgage Bankers association publishes. Because it's not just about rates, it's about availability of money to lend. Right. And so what is the tone of the mortgage market? Are the lenders fearful? Are they afraid to lend? Are they willing to lend? But they're just being incredibly strict like they have been coming out of the Great Recession.

No question they're anxious to lend because they're trying to run a business and remain profitable. There's been huge margin compression in the mortgage industry. And then in terms of fear, the fear is indicated by the current mortgage spread. Comparing an average 30 year fixed to the 10 year treasury, traditionally that's about 1 and 3 quarters percent. Right now it sits at 2.5%. That ballooned all the way to 320 basis points. 3.2% at one point. So it's improving, but we're still way elevated over what it traditionally is, which is fear of what's going to happen. They don't want to give the farm away, that's one thing. Now in terms of like just basic mortgage lending, Fannie mae, Freddie Mac, FHA Virginia, which is 90% of mortgage originations in the country, the rules haven't changed, it's just the interest rates are higher. So this is very different from 2008. 2008 was a credit crisis. Right. And all funding sources dried up and we had to figure out what the new normal was. So that hasn't really changed since Dodd Frank was passed in 2010. And honestly it's not that difficult. Right, to zero to 3% down for a first time home buyer. There's a lot of CRA community programs with no mortgage insurance and better interest rates. I think one of the things that is Difficult for millennials is they're just sitting on the sidelines. They're listening to people on X and Twitter talk about a housing bubble. They're fear mongering. They don't actually talk to guys like me. They don't actually say, okay, cool, run my credit, here's my application here, all my income docs, let's do a deep dive together and really figure this out. Their barrier to entry is so hard because people don't want to take that step, right? So. So they're probably making decisions about whether or not they can buy a home based upon what they saw some random person say on X or Twitter about a housing bubble. And I think that's a big problem is the education piece of this. Like, in my marketplace, we have no inventory and prices continue to rise. So, like, the longer they stay out because of fear and misinformation, even if they were capable of buying, guess what? Another calendar year is going to go by and another $100,000 in home price appreciation on average is going to happen. For my marketplace, every market's different. Florida went through those hurricanes and is going through a correction.

No, I know. Look at. Every market's different, of course. I mean, there's over 400 MSAs or almost 400 MSAs in the country. There's 3,100 counties. There's over 9,000 cities. Every. All real estate is local.

Local.

But the interesting thing about the general idea of what you're saying about, you know, especially millennials listening to all these different news sources, folks, nationally there is a massive housing shortage. Inventory is half of normal. And it's been that way for 1.3.

Million homes nationally, 1.3 million. And we need well over 2 million to have balance.

And you're using NAR stats, so I use the Alto stats that only count the actual for sale homes. NAR counts pending and contingent, which I don't think are really for sale. You know, I mean, debatable, but. So. So with their stats, we're under 700,000, and normal for that category is about 1.4 million. Okay, so we're still half, right? You know, what people have to realize is that in any asset class, the market timers always lose. They always miss out. You know, whether it be precious metals, stock market, crypto, real estate. Stop trying to time the market. Like, just, you gotta get. I know everybody tries to do it. I think myself, you know, I try to do it. But the important thing is to be in the market, right? And to take advantage. You know, nobody knows exactly what's going to happen. But you want to be there when it happens because by the time you realize it's happening, you're too late. And this other human tendency that is really scary, maybe you want to comment on, is this idea of that just because housing was cheaper, it has to go back to that trend line. That's just not true. You know, for that to happen, you have to have less demand or more inventory. You're just not going to have a crash when you have less than 700,000 homes for sale. Okay.

There's 140 million units in the country. About less than half of 1% of the inventory is for sale.

Yeah, it's incredible.

There's just nothing. Okay.

Yeah. It's called buy real estate and wait is kind of to capture it that way. And here's what people forget about. We're talking about shelter here. We're not talking about buying an investment vehicle. We're not talking about buying an equity.

Yeah.

We're not talking about buying a bond.

Necessary. This is a necessary thing.

This is a necessary thing. People are looking at price of housing as if it's Apple stock and the NASDAQ or Bitcoin.

Right. Bitcoin is not necessary to life. Apple stock is not necessary. Housing is necessary.

No. People need shelter. And this idea that somehow it's just going to do this all the time. Like I, this Generation went through 2008 and has PTSD. So I do understand it. The same reason the Depression era babies were debt averse.

Right.

It's not like I don't understand it, but you have to have self awareness around that and understand this is, this is not buying a stock or it's just you have to. You're going to have Super Bowl Sundays there, you're going to have Christmas mornings there, you're going to hang Christmas lights. You're. You know what I mean? This is like where you actually create memories in the vast majority of people I'm talking to are buying this as their primary residence because you get the tax deduction. Right. And the government encourages it. So I think the main thing is realizing we don't have a 2008 credit crisis. Right. We weren't giving out in the last 10 years. What the. What they used to call liar loans. No Dodd Frank required full documentation, 30 year fix, no prepayment penalty. The average interest rate is less than 4% for 75% of the people who have a mortgage right now. And by the way, that didn't go up. Inflation has gone up. Up their wages have gone up. Right? But what hasn't gone up is their fixed 30 year fixed payment. So their cost of living is exponentially lower. And that's why at some point you have to get in the game. Even somebody who bought at the very worst time in the history of the market, Right, Right. As things were crashing right at its peak in 2007, if they literally waited less than 10 years later, their house would have been worth more than they paid, right?

A lot more than they paid. And not just that. One of the things I love about real estate, and especially why I love income property, is the deal you agree to is not the deal you're stuck with. You can renegotiate that deal forever by refinancing or improving or being creative. There's a lot of ways to renegotiate the deal, but just refinancing renegotiates the deal. So if you bought at the peak, right, you got a certain interest rate, you got a certain price, the price is locked in. But the cost of housing is really in the monthly payment, not the price. That's how everybody buys. So you can renegotiate that monthly payment. When rates dip, you just refi. Right.

By the way, if rates don't dip anytime soon, you know what I don't hear anybody talking about with elevated mortgage rates? Your primary residence as a homeowner. With your mortgage, you can deduct your mortgage interest up to $750,000 loan amount. Okay? So if your loan amount's $750,000 or less on your primary residence, guess what? You can deduct 100% of the mortgage interest. Well, back when I was writing loans during COVID and before, at 2 to 3%, you know what? The mortgage interest deduction when you're filing your tax returns was not very exciting. Why? Because your interest expense was so low. People don't talk about this when they, when they're like doing their itemization and doing their deductions with their CPA and they, they are paying 7% on 700,000, guess what? That deduction is pretty significant. And no one.

Sure it is. If you live, if you live in the socialist republic of California and you're a high earner, I mean, it's like the government's paying half your mortgage, right?

Yeah. And no one talks about that. You can go on social media, Twitter, there's a silver lining to higher interest rates. And, and by the way, these interest rates, while they are elevated compared to what we just came out of for the last 10 or 15 years, they are historically normal. So anyway, just got to talk to an advisor. Education is so important.

You're right. Hey, one last thing. Sorry to keep you. You mentioned Dodd Frank and Dodd Frank was this giant 2700 page bill that came out of the Great Recession and all of the lending problems and so forth. Now that it's been maybe, I don't know, what, 14 years since Dodd Frank, can you give us a look back? What do you guys think in the mortgage industry? I mean, look, I used to own mortgage companies. I don't have. I'm not in the mortgage business now. But what do you think of Dodd Frank now that it's been a while? I'm just curious.

The foundation of it is ability to repay. That's the foundation of Dodd Frank. Prove that you can repay this loan. Okay. And, and so people are like, oh, I got a great credit score. That's nice. Show me your income. Right. So everything before 2008 happened was fog. Amir, liar. Alone, no problem. You can get a loan. No matter who you are, no matter what you do, no matter how much money you make or don't make, you can get a loan. Every single person who got a loan post Dodd Frank had to prove that they could make the payment and not because their FICO score was high. Here are my W2s. Here are my paycheck stubs. Here are my tax returns. Here are my bank statements. That was all 100 necessary. So this is why this marketplace is so different from 2008. Okay? It's propped up by 100 of mortgages. Had to qualify with full documentation. Okay. So in that sense, in my opinion, I thought it was good. There's other.

There's almost no distress in the market whatsoever. I mean, the foreclosure rate, the delinquency rates, they're just nothing. They're not even worth. Worth talking about.

People keep trying to equate this to 2008. It couldn't be any more. More far apart from what 2008 was because of Dodd Frank. So in that sense, I think it was a good thing.

Yeah. Okay. Good, good stuff. Give out your website or a social media link if you want to share that. Whatever.

Yeah. The main thing is Instagram. That's my main place to socialize in the market. So. Jason Thibodeau, mortgage broker. Just type in my name, then type in mortgage broker and I'll be the first to show up. Instagram.

Good stuff. Jason Thibodeau, thanks for joining us.

Thanks for having me, Jason.

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