Weirdest Housing Bubble Ever: Will Your State Crash? | 3.9.25
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Why are mortgage applications surging despite high prices?
Interest rates dropped this week to their lowest point since October last year, sparking a 20% surge in mortgage applications. While housing remains unaffordable for many, some real estate experts say we're on the precipice of a market crash, but only in certain regions of the country.
In this episode, we speak to a former Wall Street analyst and financial author about why this housing bubble is unique and what he expects to see in the near future. I'm Georgia Howe with Daily Wire Editor-in-Chief John Bickley. It's Sunday, March 9th, and this is a weekend edition of Morning Wire.
What makes the current housing bubble unique?
Joining us to discuss what he's calling the weirdest housing bubble ever is financial analyst and five-time author John Rubino. John, thanks so much for coming on.
Oh, sure, Georgia. Good to meet you.
Why are first-time homebuyers struggling now more than ever?
Nice to meet you, too. So you had a recent Substack where you said that we are living through the weirdest housing bubble ever, and you outline a few reasons for that. Particularly, you point to the age of first-time homebuyers. Can you unpack why this is such a unique time for homebuyers?
Yeah, normally the way a bubble works is that the price of something starts going up and it keeps on going up and eventually people get so excited by the rise in price that they experience FOMO, fear of missing out, and they start piling in and you get a lot of action as the price goes up. But houses have become so unaffordable that the market is kind of frozen, even though prices are just insanely high. And a normal person, especially a normal young person, cannot afford to buy a house in the United States right now. And the median age of homebuyers now is in the 50s. It used to be 30 or so, 30, 35-year-olds. And now the only people who can afford to buy a house are basically people who are at their peak of their lifetimes of earning and have a lot of money saved so you've got a market where even though prices are at an all-time high the amount of deals being done the amount of homes being bought are at 1990s levels even though we had 50 million fewer people in the 1990s that's the level of home buying and selling that's going on right now
And what are the reasons for that? One thing that comes to mind is there's sort of some consolidation among older people buying multiple homes and younger people buying none.
How does inflation impact the housing market?
Well, kind of that explains what's happening. But the reason it happened is inflation. We basically debased the currency. That means the price of things when measured in dollars goes up. And houses are one of the financial assets, because you use debt to buy a house, which makes it a financial asset. So house prices have gone up faster than the salaries of most people have gone up. So houses get more and more unaffordable with time. And that's not a function of houses changing in any fundamental way. It's the value of the currency going down. And what this does is it benefits the people who were there at the start of the inflation, basically baby boomers, my generation. We own a lot of the financial assets.
We own the houses, we own the stocks, and we own the gold, and all of those things are going up dramatically. So we're getting richer. While the younger generations are being impoverished because they can't even afford the basics of adulthood right now. You know, if you're a 30 year old and you want to start a family and buy a starter house, good luck unless you make a quarter million dollars a year, you know, and very few people at the age of 30 do that now. So we have basically screwed over younger generations while enriching the already rich. And that's what inflation does. And that's why it's so insidious. Now, housing market is a perfect example of that. So where we go from here, though, I think is the really interesting part of the story, because people are starting to put their houses on the market now. but they're doing it at current prices, which means nobody can buy them. So inventory of homes for sale is starting to pile up in a lot of formerly hot markets like Texas and Florida.
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Chapters
6 chapters
1
Why are mortgage applications surging despite high prices?
0:03–0:41
2
What makes the current housing bubble unique?
0:41–0:53
3
Why are first-time homebuyers struggling now more than ever?
0:53–2:28
4
How does inflation impact the housing market?
2:28–4:13
5
Is the housing market about to crash in certain regions?
4:13–5:49
6
What regional differences exist in the current housing market?
5:49–11:46
Speakers
2 identifiedMore from Morning Wire
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