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Episode 259

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Published on:

10th Dec 2024

2025 Housing Market Predictions You Can’t Ignore

Buckle up, folks—it's a wild week for the economy, and The Higher Standard crew is here to navigate the chaos so you don’t have to. Chris and Saied tackle the avalanche of data from the ISM, JOLTS, and the much - anticipated Jobs Report. (Haroon is still out on paternity leave.) Will these numbers flex harder than a bodybuilder at the beach, or are cracks starting to show? And don’t worry, Fed Chair Powell made sure to sprinkle some cryptic wisdom into the mix, like a monetary-policy Gandalf reminding us that "You shall not politicize!"

➡️ Meanwhile, the housing market predictions for 2025 are wilder than a Florida hurricane forecast. With Sun Belt cities building apartments like they're going out of style, rents are dropping faster than your self-esteem at an open mic night. And the predictions? They range from Apollo's optimistic “We’re all gonna be rich!” +10.8% to Moody’s pessimistic “Yeah, no” at -0.4%. Which regions will boom, and where will your real estate dreams get a reality check? Tune in to get the laughs, the insights, and maybe a crystal ball for 2025!

💥 Have you left your "honest ⭐️⭐️⭐️⭐️⭐️" review?

👕 THS MERCH: http://www.thspod.com

🧊 Get 12% off any purchase at Ice Barrel (Excludes chillers)

🔗 Resources:

Fed Chair Powell Defends Fed Independence (Investopedia)

Rents in Southern and Sun Belt Cities Are Falling (Business Insider)

Realtor.com Predicts Modest Rise in Home Sales and Prices for 2025 (Business Insider)

Housing Price Predictions Across Major Markets (Lance Lambert via X)

Will Home Prices Crash in 2025? (Market Watch)

⚠️ Disclaimer: Please note that the content shared on this show is solely for entertainment purposes and should not be considered legal or investment advice or attributed to any company. The views and opinions expressed are personal and not reflective of any entity. We do not guarantee the accuracy or completeness of the information provided, and listeners are urged to seek professional advice before making any legal or financial decisions. By listening to The Higher Standard podcast you agree to these terms, and the show, its hosts and employees are not liable for any consequences arising from your use of the content.

Transcript
Chris:

You say, I wouldn't wear that in the office.

Chris:

The problem is you should wear what you would wear everywhere, because that's you.

Said:

Honestly, I.

Said:

I just recently became a Jordan 1 guy.

Said:

I was never a Jordan guy.

Chris:

That's disappointing.

Said:

I was always an Air Max guy.

Chris:

Air Max 90 Air Max ones.

Chris:

Those are excitable.

Said:

Yeah.

Said:

My go tos.

Chris:

Yeah.

Chris:

You know, I can't.

Chris:

Can't fly.

Chris:

Fault you for that.

Chris:

Yeah, I can fault you for a lot of stuff.

Said:

A lot of stuff.

Chris:

Yeah.

Chris:

But.

Chris:

Well, let's have a moment of silence for Arun.

Said:

We're not even going to wait for the introduction.

Said:

Oh, come on, man.

Said:

Welcome back to the number one financial literacy podcast in the world.

Said:

Sitting next to me on my left is my partner in crime, Chris Nahibi.

Chris:

And sitting next to me is my partner in time.

Chris:

Time together.

Chris:

Time with one another.

Chris:

In person.

Chris:

Actually being engaged and involved in the podcast together, we spend a lot.

Said:

Oh, yeah.

Said:

Okay, go ahead.

Chris:

The one and only.

Chris:

Say Omar.

Said:

Thank you, my man.

Said:

And sitting behind the ones and twos.

Chris:

Is not our partner in time, nor crime, nor presence.

Said:

We miss him a little bit.

Said:

I do.

Said:

I miss him.

Chris:

Do you think he listens to the show and goes a.

Chris:

I missed the.

Said:

I missed the.

Said:

The jabs.

Said:

He would give you.

Chris:

He would give you.

Chris:

First of all, his jabs didn't look like the hand gestures.

Said:

No, no, no.

Said:

This is holding a knife.

Chris:

Is that what that is?

Chris:

A knife?

Chris:

It did not look like a knife to me.

Said:

It's a pocket knife.

Chris:

You had an open hand when you did it.

Chris:

You close your hand when the camera's pointed.

Said:

Yeah, yeah.

Chris:

Like fisting.

Chris:

Yeah.

Chris:

And there goes YouTube views.

Said:

Somehow we managed to get flagged in the first minute.

Said:

Yeah.

Chris:

That's how we do.

Chris:

We get flagged.

Chris:

Well, we got an interesting show packed full of good stuff, and I should probably give a little bit of background and color as to how we got to this particular topic.

Chris:

I started looking around on the interwebs and I started seeing all the housing reports come out.

Chris:

Okay.

Chris:

And everybody and their mother literally has a different opinion of where the housing market's going to go.

Chris:

There are very few people that have a similar opinion as far as, like, you know what?

Chris:

to go up or down next year in:

Said:

Okay.

Chris:

So I thought, why don't we do a show where we start off with some of the important things are going to happen this week because it's a big week for the jobs reports.

Said:

Huge.

Chris:

Yeah.

Chris:

Massive.

Said:

Yeah.

Said:

First Friday of every month.

Said:

You get the jobs report from the previous month, which also discloses wage growth, unemployment, so on and so forth.

Chris:

Yeah, all the good stuff.

Chris:

Then I thought, okay, let's take that, because we know the Fed's mandate.

Chris:

Jobs.

Chris:

Right.

Said:

And inflation.

Chris:

And inflation.

Chris:

Inflation has been largely propped up by housing.

Chris:

Housing is the number one contributor keeping inflation to where it's at today.

Said:

Also, auto insurance.

Chris:

Yeah, Auto insurance is a problem.

Said:

A lot of people.

Said:

It's her.

Said:

It's her in this household.

Chris:

Yeah.

Chris:

Every time I see somebody driving by the Lambo, I'm like, you're going broke.

Chris:

You don't know it yet.

Said:

Hey, I know.

Said:

You don't got it like that, though.

Chris:

You don't.

Said:

Honestly, you don't got it like that.

Chris:

I not even talking about.

Chris:

I'm not talking about the car.

Said:

Right.

Chris:

I'm talking about the insurance, brother.

Said:

Right, right.

Chris:

Yeah.

Chris:

You can't afford that Lambo insurance.

Chris:

You can afford the Lambo.

Said:

Exactly.

Chris:

That's not a problem.

Chris:

When they charge you 6 of your car payments every single month for the insurance.

Chris:

That's a problem.

Chris:

Yeah, but I knew that housing.

Chris:

And really sitting down and being thoughtful about where the market is likely to go based on the data that we're seeing and some of the changes that we're seeing in the landscape.

Chris:

e some market predictions for:

Said:

Let's do it.

Chris:

I mean, we haven't been wrong very often.

Said:

You want to make predictions, huh?

Chris:

Do you remember that one time we were wrong?

Said:

I don't.

Chris:

I don't either.

Chris:

Strange.

Said:

Come on, give me some fuzzy knuckles.

Chris:

It's very weird, actually.

Chris:

Mine are very freshly shaved.

Chris:

Freshly shaved.

Said:

How do you shave them?

Chris:

I take a razor in the shower and I shave my knuckles.

Said:

No, that's how you do this.

Chris:

Well, I've had laser hair removal, so there's not like a lot of hair there to shave.

Said:

Yeah.

Chris:

But I, you know, I try to get the remnant hairs.

Said:

I did that once and I got one ingrown hair.

Chris:

Laser hair removal or shaving hair?

Said:

Well, I did the laser hair for my back, but the testosterone was too much that it all came back.

Said:

I did.

Chris:

Somehow I doubt that.

Said:

Seven sessions.

Said:

Seven sessions.

Said:

And then I shaved.

Said:

No, I shaved the hair on my knuckles once and I got an ingrown hair on the ring finger of all fingers.

Said:

And I was like, I'm never doing this again.

Chris:

Yeah, ingrown hairs are like, emotionally disturbing because they stay with you and mess with you.

Chris:

For, like, weeks on end.

Chris:

And as long as they're just there and they go away, they think they're there.

Said:

And if they're visible, like, you gotta hide it.

Said:

It's like, come on.

Said:

No, I don't have warts.

Chris:

People think you got finger herpes.

Said:

Yeah.

Chris:

It's just not a good thing.

Said:

Exactly.

Chris:

Is that gonorrhea?

Chris:

Is that what that looks like?

Chris:

I'm pretty sure that's not.

Chris:

Damn it.

Chris:

There goes YouTube again.

Chris:

There are certain words that I really just got to start bleeping out because I know that YouTube won't pimp the show.

Chris:

If anyone's ever looking at our YouTube feed going like, hey, these guys get some good numbers on some shows and some terrible numbers on some shows.

Chris:

Just know that ones with terrible numbers are the ones you probably would get a lot more joy out of listening to.

Said:

Exactly.

Said:

It's the reverse.

Chris:

Yeah.

Chris:

It's because we can't really market those very well.

Chris:

So let's talk about some of the key events this week in the market as it relates to housing in the reports.

Chris:

So on.

Chris:

On Monday, we had the November ISM manufacturing PMI data.

Chris:

It's kind of important, but it's kind of not the sexiest topic of the week.

Said:

Right.

Said:

It kind of just lets you know.

Said:

It gives insight into what you might be able to expect out of the future inflation reports.

Chris:

Yeah.

Chris:

So, you know, it's kind of a tease.

Said:

Yeah, a little bit.

Said:

That's what the nerds want.

Said:

They need something in the interim in between, like inflation reports.

Chris:

It's a palate cleanser.

Said:

It is.

Chris:

Yeah.

Chris:

It makes you make sure you're all fresh and ready for the data that comes through.

Said:

Yeah.

Chris:

October.

Chris:

I'm sorry.

Chris:

On the second report was the October George Jolts.

Chris:

Jesus.

Chris:

I just.

Chris:

I can't speak.

Chris:

The October Jolts report came out on Tuesday for job opening data.

Chris:

That's a big one.

Chris:

The.

Chris:

The Fed loves the Jolts.

Said:

Yeah.

Said:

Whether we like it or don't like it does not matter because the Fed loves it.

Chris:

Yeah.

Chris:

I don't like it.

Chris:

It sounds like a really messed up superhero.

Chris:

I am the Jolts Man.

Said:

Right.

Chris:

But you know, it's.

Chris:

Whatever.

Chris:

And then today, Wednesday, as we were recording this, this is Wednesday, December 4th.

Chris:

It is late in the evening hours.

Chris:

A little special time for Said and.

Said:

I spent a lot of time together today.

Chris:

We did.

Chris:

We signed a lot of documents.

Said:

Yeah.

Chris:

And didn't make any money for doing it.

Chris:

Think about it.

Chris:

It's kind of sad moment, but, yeah, we spent a lot of time together.

Chris:

You're welcome, by the way.

Chris:

Hashtag blessed.

Chris:

Okay.

Chris:

Like my Mont Blanc pen.

Said:

I did, actually.

Said:

I wanted to steal that from you.

Chris:

The white porcelain one.

Said:

Yeah.

Chris:

Yeah.

Chris:

They sell a thing for $6,500 now.

Said:

The audacity that somebody would walk into a store, be like, you know, I want to spend money today.

Said:

I want to spend it on a pen.

Chris:

Yeah.

Chris:

I need to spend $7,000 on something.

Chris:

You have a pen?

Chris:

I can.

Chris:

I'll buy that.

Chris:

It's porcelain, sir.

Chris:

Great.

Said:

The nerve.

Chris:

Great.

Said:

The nerves.

Chris:

Like, why I gotta be Honest, my pilot G10, hands down.

Chris:

Better.

Said:

The G10s.

Said:

Exactly.

Chris:

Yeah.

Said:

If you don't know what a G10 is, do yourself a favor, look into it.

Chris:

Anybody tells you any kind of pen is their preferred pen, that's not a pilot G10 liker.

Chris:

You know, lover, they're lying to you.

Chris:

They just don't want you to go buy pilot G10, so they tell you.

Said:

They like something else, and they're also.

Chris:

Yeah, I don't want to be this guy.

Said:

I can't trust.

Said:

I can't trust.

Said:

I can't trust anybody, you know?

Chris:

Sam Altman carries around his little spiral notebook so he can rip out pages open.

Said:

AI is OpenAI's CEO.

Chris:

He's a big guy.

Said:

Okay.

Said:

Classic.

Chris:

Yeah, classic.

Chris:

I believe he's just lying to the American people so they don't buy out the population of pilot G10s.

Said:

There you go.

Chris:

Yeah.

Chris:

It's.

Said:

The fact that, you know, that about him is very questionable.

Chris:

He's a really.

Chris:

So this is the thing, you know, I saw him stumbling to respond to a question on a podcast.

Chris:

And so I watched this clip, which wound up being a long clip.

Chris:

He kept saying the word like over and over again.

Chris:

I'm going like, this is the fucking guy who's made billions of dollars with AI tech, who is lauded as a widely intelligent man.

Chris:

And he sounds like a Valley girl.

Chris:

He's like.

Chris:

So, like, I need to get this, like, binder that has, like, the rings so I can, like, tear out the pages.

Chris:

And I.

Chris:

When I'm done, I want to be able to look at multiple pages at once.

Chris:

So I can.

Said:

He's an engineer by trade.

Chris:

Right.

Chris:

And engineers kind of have this personality, you know?

Said:

Right.

Chris:

But I'm.

Chris:

God damn, bro.

Chris:

How many times can you say the word like in a sentence?

Chris:

Like, you know what I mean?

Said:

Like, like, like, like.

Said:

Yeah.

Chris:

And it's just.

Chris:

It was.

Chris:

It was a strange.

Chris:

You can just tell he's hyper intelligent and he just has a difficult time articulating himself.

Chris:

In a very conversational way.

Said:

Right.

Chris:

But his brain is just working differently.

Chris:

But it was just.

Chris:

It was just weird.

Chris:

And obviously this whole.

Said:

Usually you don't see that out of CEOs.

Said:

Right?

Chris:

CEOs for the most part are articulate and well spoken.

Chris:

At least they.

Chris:

And I would say the tech CEOs are a bit different.

Chris:

Like Dara over at Uber.

Chris:

He's very articulate, very well spoken, very presentable.

Chris:

Tim Cook, very, very similar.

Chris:

He's not Steve Jobs.

Chris:

Steve Jobs could present.

Chris:

That's how Apple got all these massive presentations, is they had, you know, this very charismatic, gregarious CEO when he was on stage.

Chris:

He was a different person when he wasn't.

Said:

I feel like tech CEOs are they allowed a little bit more freedom to go against the grain?

Chris:

Yeah.

Said:

You look at Zuck, looks like he's just straight out of Urban Outfitters now.

Chris:

Yeah, it's more like a Miri face.

Chris:

Yeah, right.

Chris:

He's kind of got that, like the whole, like, I'm cool hip la, you know, but you're not cool hip la.

Chris:

Yeah, but then he had like the whole, like, fro thing going for a.

Said:

Little while, the chain hanging outside.

Said:

That really threw me off.

Chris:

Yeah, he went hard, too.

Said:

Too far.

Chris:

He went.

Chris:

He went a little too far.

Chris:

And you know what?

Chris:

God bless him for it.

Said:

I love it.

Chris:

I have a whole theory as to why he built a bunker in Hawaii that's really dark.

Said:

Okay, maybe we'll get into it at the end of the show.

Said:

Wow, you want to do it now?

Chris:

No, I don't want to do it now.

Said:

You want to go full, like, left turn?

Chris:

No, no, we did that on two shows ago.

Chris:

Didn't cover a single topic that we had.

Chris:

So I want to get into today's data print and I want to get into it in a very healthy way.

Chris:

November adp.

Chris:

Non, non farm employment data came out.

Chris:

But more importantly, what came out today was the Fed chair, Jerome Powell spoke.

Said:

JP from the hood.

Chris:

JP from the hood spoke at a conference.

Chris:

And Andrew Ross Sorkin, I think it was interviewing him.

Said:

Guy from cnbc.

Said:

Squawk box.

Chris:

Yeah, I don't like him.

Said:

If you like him, we can't be friends.

Said:

Let's just put it.

Said:

Let's just leave it there.

Chris:

Yeah, smart guy, I'm sure.

Chris:

But Jesus, man, let your guests talk.

Chris:

Bro, how are you?

Said:

Yeah, we watched.

Said:

We watched another interview where he was interviewing Jeff Bezos.

Said:

Yeah, yeah, Bezos.

Said:

And Bezos kept trying to jump in to answer the question.

Chris:

I'm.

Chris:

You're interviewing me.

Said:

Right, yeah.

Said:

You, you understand people are here for me, right?

Said:

Not you, me.

Chris:

You look me dead in the eye when you said that.

Said:

Because I want.

Said:

I wanted to pass.

Said:

Make you feel awkward.

Chris:

That was awkward.

Chris:

Mission accomplished.

Chris:

So I wanted to get in the drone.

Chris:

Pals comments.

Chris:

Also coming tomorrow, initial jobless claims.

Chris:

And then on Friday is a November jobs report.

Chris:

So all jobs reports all week long this week, every single day, there's some type of data as it relates to jobs.

Chris:

More important than all of that, however, I think we're really Jerome Pals commentary.

Chris:

But before we get into it, let's, let's talk a little bit about the job market and some of the impacts here.

Chris:

Right.

Said:

We're going to the Jolts report.

Chris:

We can do that as well.

Chris:

But let me give you some little primer information then jump into it.

Chris:

The November jobs report is expected to reveal the strength of the holiday season season hiring environment.

Chris:

This is very common.

Chris:

Lots of holiday hiring starts in October.

Chris:

Get people through December, maybe January and then you have some of that part time staff go.

Chris:

Historically it spikes around this time.

Chris:

So to see a spike in response to the holiday hiring would not be abnormal.

Chris:

And I don't think it's something to go, oh my God, the job market's so strong.

Chris:

I would caution that because we also have consumers with all time credit card debt 1.17 trillion.

Chris:

Will that impact holiday shopping or not?

Chris:

That's more of an impact to me than I think the jobs as it relates to holiday hiring.

Chris:

Okay, Right.

Chris:

The US labor market has often shown resilience in the face of tightening monetary policy.

Chris:

For example, during the:

Chris:

We've seen three, I wouldn't call them aggressive three cuts recently, but we've seen some pretty aggressive rate hikes to get to where we are.

Chris:

And we're coming off that cycle.

Chris:

So despite that aggressive rate increasing, it showed the economy's ability to adapt.

Chris:

And the labor market isn't always affected by this really, really strong aggressive rate tightening cycle.

Chris:

But we also saw some really strange reporting this time.

Chris:

Okay, so I don't know if you can place a whole lot of reliance on the jobs data to date.

Chris:

I only hope that it improves with what we see now.

Chris:

So to your point, let's get into some of the Jolts data.

Said:

Yeah, let's get into some of the Jolts data.

Said:

So Jolts data came out yesterday, Right.

Said:

And what it showed is there's been an increase in the amount of job openings.

Said:

Right.

Said:

There's 7.74 million.

Said:

That's up 372,000 jobs.

Said:

Estimates came in at 7.5, meaning they beat expectations.

Said:

Right.

Said:

That ratio now is somewhere between 1.1 jobs available for every unemployed person.

Said:

Okay.

Chris:

Which is a weird way to quantify when you think about it.

Chris:

Yeah, there's 1.1.

Said:

Exactly.

Said:

And the interesting data point that came out of this, that really signaled something to the markets that the markets liked.

Said:

We can get into whether it's worthy or not worthy in a second, but the markets seem to have liked it.

Said:

Is that voluntary job quitters?

Chris:

Yeah, I saw this stat.

Chris:

Yeah.

Said:

Okay.

Said:

Increased 228,000.

Said:

Okay.

Chris:

So what is that?

Said:

What does that tell us?

Chris:

Yeah.

Chris:

The suggestion there is more important than.

Said:

The number more people are feeling comfortable to quit their jobs.

Said:

Right.

Said:

Which sheds light on how confident they are in getting a new job.

Said:

Is it worthy to.

Said:

Do you think that people should have that level of confidence in quitting their job right now?

Said:

If all we're saying is, you know, we're in a recession, you know, companies are feeling the pinch.

Said:

They're feeling the squeeze.

Said:

A real recession is right around the corner.

Said:

I wouldn't feel so confident, personally.

Said:

I wouldn't give the advice to anybody that I know and love to go ahead.

Said:

Yeah.

Said:

If you feel a new job offer and you want to jump ship and you feel like you'll have some stability there, I think that's hard to believe.

Chris:

Let me reframe those numbers.

Chris:

Okay.

Chris:

So 1.1 jobs for every unemployed person.

Chris:

Right.

Chris:

What that really means is there's 11 jobs for every 10 unemployed people.

Chris:

Okay.

Chris:

I guess in theory there's more jobs than people who can fill them.

Chris:

But to me, that doesn't scream surplus of opportunity, because I know some of those jobs are ghost positions that companies just leave posted open.

Chris:

Right.

Chris:

To make themselves look like they're still prospering and hiring.

Chris:

I know that a lot of those jobs are government jobs that are artificially propping up the economy, which I expect to go away January 1st when the new president comes in and the Department of Government Efficiency gets implemented.

Chris:

And again, some of those jobs could still equally be ghost jobs for the government that they're, quote, posting for, but not actually going to hire, because now we know that there's a policy change coming in January.

Chris:

So the government was hiring 50,000 workers a month.

Chris:

Right.

Chris:

That's a lot.

Said:

It's a lot.

Chris:

So I think that the optimism that somebody has.

Chris:

First of all, most people don't resign from their job at this time of Year.

Said:

Exactly.

Chris:

That's also a strange cadence to see the increase.

Said:

Like a working professional is not going to leave their job right before the holidays.

Chris:

And some people have bonuses that get paid out at year end.

Chris:

Some people have, you know, holiday travel they're going to take.

Chris:

So.

Chris:

And you don't want to quit your job around the holidays because you not going to start looking for a job and having people call you back until probably mid January.

Chris:

So why give up a job that you have currently unless, you know, there's some kind of motivation there?

Said:

Or maybe, maybe it's really, you know, grabbing debt data points from, you know, lower income earners that are willing to leave their job for, you know, some seasonal job that's possibly paying a little bit more for the time.

Chris:

Yeah, I mean, maybe.

Chris:

But again, you know, I don't place a lot of confidence in the numbers.

Said:

It's hard to say.

Said:

So there's mixed data there.

Said:

Now we do know that there's a Fed meeting this month, December 18th.

Chris:

Yeah, big one.

Chris:

Last one of the year.

Said:

Last.

Said:

Exactly.

Said:

Big one.

Said:

And market expectations are that they will be cutting rates again.

Said:

Okay.

Said:

The reasoning that they've been leaning on to cut rates the previous two times that they did the last two meetings has been the labor market.

Chris:

Yeah.

Said:

Now let me ask you a question.

Said:

Q3, GDP was printed why that matters.

Said:

It shows how healthy and strong the economy is.

Said:

It came out at a positive 2.8%.

Said:

Meaning we're, we're in a very strong economy right now.

Said:

Everything is going great.

Said:

That's what that number represents.

Said:

Okay.

Said:

Are we, are we not?

Said:

Remains to be seen, but that's what that number represents.

Chris:

Yeah.

Said:

Okay.

Said:

So they don't have to worry about that.

Said:

The Fed's dual mandate, as we mentioned earlier on the show, is they have to care about inflation and they have to care about the jobs report.

Said:

Inflation is still not at their target.

Chris:

Right.

Said:

At 2%.

Said:

It's at 2.8%.

Said:

That's core PCE.

Said:

Right.

Said:

Their preferred measure.

Said:

All you need to know there is, they still haven't reached their target goal.

Said:

So if, if the economy is strong per GDP and inflation isn't where they need it to be, why would you cut rates?

Said:

You need to lean on the job market.

Said:

And the only job print that you have right now before this Friday is you're in a good healthy labor market.

Said:

So it begs.

Said:

So you're getting all this mixed data point like, wait, you guys are going to cut rates again?

Said:

But everything is fine.

Said:

It doesn't make any sense for the.

Chris:

First Time in a long time.

Chris:

I have very little confidence that the greater than not probability of the rate cut is accurate.

Chris:

Right now I think World and Trade probability and Chicago Mercantile Exchange seem to show a more likely than not over 50% probability of a rate cut of 25 basis points.

Said:

I have, I have the Chicago Mercantile Exchange as of today, I believe at a 70% chance that there will be a rate cut.

Chris:

I think that's inaccurate.

Chris:

I do not think, I am not very confident that a rate cut's going to happen.

Chris:

And I two, three months ago, I probably would have a lot more confident they're going to do it just because they said they were.

Chris:

They telegraphed it.

Chris:

But they've been saying some things and I actually have some of Jerome Powell's commentary if you want to get into that.

Chris:

Yeah, yeah, absolutely today.

Chris:

Because a lot of his commentary in my mind seemed to back off their more aggressive rate cutting strategy in and seemed to suggest, well, you know, hey, about that.

Said:

Right.

Chris:

So let's talk about Jerome Powell's remarks today because, you know, I love to.

Said:

Quote JP and why does it matter?

Said:

Why should we care about what he's saying right now as opposed to just looking at what the Chicago Mercantile Exchange is saying or the Bloomberg World interest rate probability?

Chris:

Well, I think what he tries to do as the Fed secretary is if you were to ask him, and I don't necessarily agree this is the appropriate interpretation, but if you were to ask him, he would say he likes to be communicative and fully transparent about how the Fed feels at any point in time.

Chris:

And he's much more talkative, if you will, than previous Fed secretaries have been.

Chris:

He speaks a lot more often than a lot of people would and he speaks very freely.

Chris:

The problem is he also tries to control the narrative and change the direction based on how he and the rest of the FOMC members are feeling at even given time, which to me takes away from things like the beige book, which is supposed to be indicative of how they feel.

Chris:

Let the beige book talk for how you and the rest of the FOMC feel.

Said:

Let the Fed minutes talk.

Chris:

Yeah, let the Fed minutes talk.

Chris:

You have open minutes for your meeting to explain to people what you guys said and what you guys were thinking.

Chris:

Why do you need to come in in between and change the narrative?

Chris:

Right?

Chris:

If your wife says, hey, we're going to have sexy time tonight, like don't.

Said:

Talk about it, don't.

Chris:

We were good, we're good there.

Said:

Stop.

Said:

I don't need to know anything else.

Chris:

Everything else you Say in between now and then is either going to lead me more into it, which we already know you've said we're going to do.

Chris:

Right.

Chris:

Or it's going to back off.

Chris:

There's no good outcome here from.

Said:

Right, exactly.

Said:

And now there's needs to be an element of surprise still.

Chris:

You've already said there's going to be sexy time on December 18th, Jerome.

Said:

Right, correct.

Chris:

And now you're saying, I had to do a lot of work tonight.

Chris:

I had to wash a lot of dishes.

Chris:

I'm feeling very tired.

Said:

Oh, yeah.

Said:

How was your day?

Said:

You can't come.

Said:

You can't come up.

Chris:

I don't want to know how your day was.

Said:

Yeah, yeah, exactly.

Said:

Because I know it's not good.

Chris:

Go freshen up, jp.

Said:

Go freshen up.

Said:

Hit the powder room, jp.

Chris:

So, first and foremost, JP was really concerned with independence.

Chris:

And I got.

Chris:

I get it.

Chris:

You know, Jerome Powell is saying, well, Donald Trump's coming in the office and he's been very critical and he has this weird new Department of Government Efficiency coming in with some guys like Vivek and Elon who have been very critical of the Fed.

Said:

Shame on you.

Chris:

The Fed's supposed to be independent.

Said:

Shame on you for not calling him by his last name.

Said:

Yeah, that's a golden opportunity.

Chris:

Yeah.

Chris:

You can say Ramish Ramaswamy.

Chris:

You can't listen.

Chris:

I don't know how.

Chris:

I don't.

Said:

Come on, man.

Chris:

Is it Ramaswamy?

Said:

It's Ramaswamy.

Said:

You can't let those opportunities go.

Chris:

I can't say.

Said:

It's a fun name to say.

Said:

It's a fun name.

Chris:

Go freshen up.

Chris:

Ramaswamy.

Said:

Ramaswamy.

Said:

Love it.

Chris:

So Powell emphasized the critical importance of the Fed's Federal Reserve's autonomy from political influence, asserting that this independence is essential for making decisions that benefit the broader economy rather than serving partisan interests one side or the other.

Chris:

He expressed confidence in the strong bipartisan support.

Chris:

Both sides of the House support me, guys, for the Fed's independent status, stating, I think there is very, very broad support for that set of ideas in Congress, in both political parties on both sides of the Hill.

Chris:

And that's what really matters, really, jp.

Said:

Right.

Chris:

So from historical perspective, which I like to provide, because I think that not every listener has the broader vision.

Chris:

They're just looking at the economy today.

Chris:

People just need a little bit history here.

Chris:

pendence was enshrined in the:

Said:

Right.

Said:

Monetary policy is what they're Responsible for fiscal policy is what the government is responsible for.

Said:

All you need to know there is the government is responsible for how they spend the money.

Said:

Right.

Said:

And how they allocate the money and how they receive the money via taxes.

Said:

And the monetary policy is they're controlling interest rates and they're trying to control how fast or how slow the economy grows.

Chris:

And.

Chris:

Well, let's just talk about fiscal policy from one glaringly obvious problem, the deficit.

Chris:

Government spending has been a wee bit out of control.

Said:

A little bit.

Said:

Little tiny bit for a long time.

Chris:

Long time.

Chris:

Now, if you got a hot wife and she's promised sexy time, that might be worth it for you.

Said:

I mean, you can't disappoint, but, you know, gotta keep putting that on the black card.

Chris:

Unless you got Jeff Bezos money, you can't afford Lauren Sanchez.

Chris:

Okay.

Chris:

That's how that works.

Said:

By the way, I missed out on the opportunity to just talk about the interview that we watched a little bit today where somebody asked Jeff Bezos, you know, or they were making fun of the fact that Amazon wasn't profitable for many, many years.

Chris:

Oh, yeah.

Said:

Before they became profitable.

Chris:

What a baller comment.

Said:

Honestly, it was one of the most gangster comments.

Chris:

It was.

Chris:

Was it Ted Koppel or somebody?

Chris:

It was like some.

Chris:

One of the older news anchors asked him, can you even spell profit?

Said:

Mr.

Said:

Bezos alluding to the fact that for years.

Chris:

11 years.

Chris:

11 years profitable.

Said:

11 years the company was not profitable.

Said:

Yeah, he said, yeah, actually I can.

Said:

How do you spell it, Chris?

Chris:

P R O, P, H E T.

Said:

Left it in silence.

Said:

Because I'm a prophet dog.

Chris:

Yea, though I walk through the valley of the shadow of death, I shall fear no evil.

Chris:

Mr.

Chris:

Koppel.

Said:

God damn, what a gangster.

Said:

And he's sitting there with all that testosterone, too.

Chris:

Yeah, he's definitely on trt.

Said:

All of it.

Chris:

Yeah, all the trt.

Said:

If there's a shortage of trt, you know who took it.

Chris:

Yeah.

Chris:

You think he asked Lauren Sanchez to put it in his ass?

Chris:

Or he had, like, a nurse coming and do it.

Chris:

We're never going to be able to advertise this show.

Said:

Hey, Laura, go put it in my ass.

Chris:

I'm not gonna lie.

Chris:

I asked my wife do it all the time.

Chris:

She's the registered nurse.

Said:

Yeah, she.

Said:

She would know how to do it properly.

Chris:

You've been trained to put it in my ass.

Said:

Right?

Said:

She looks like she's been poking some needles, so she knows.

Chris:

Yeah, it's.

Chris:

It's.

Chris:

Whoa, whoa.

Chris:

What happened after Lauren Sanchez?

Said:

Well, she got the lip fillers bro.

Chris:

Don't, don't.

Said:

What's wrong with you?

Chris:

Don't even know what a lip filler is.

Said:

Wait a minute.

Said:

Hold on, hold on.

Said:

Am I wrong?

Said:

Hold on.

Said:

That's the richest man in the world.

Chris:

Hold on, girlfriend, or whatever.

Said:

It's not mean.

Said:

If I'm not wrong, it's the truth.

Chris:

She has had a little enhancements.

Said:

Ok, don't call them enhancements.

Said:

Call them adjustments, ok?

Said:

I wouldn't say that.

Said:

I wouldn't very.

Said:

I wouldn't say it's enhanced.

Chris:

Here's the thing, ok?

Chris:

Like I'm going to be this guy, ok?

Chris:

She's a former news anchor.

Chris:

You're a public figure.

Said:

I remember her being a news anchor.

Chris:

Yeah.

Chris:

Like, you know, in la.

Chris:

Why not be subtle about it?

Chris:

Like, you know, we're gonna know.

Said:

What do you mean?

Chris:

We see your face all the time.

Chris:

We're talking about the weather.

Said:

Yeah, but I feel like some people, when they get to that point, it's like to the point where, like, they don't even care that it looks that much.

Chris:

They're all morphing into Kim Kardashian.

Chris:

Why?

Said:

Why?

Said:

I don't understand.

Chris:

Like, nobody wants to do something unique.

Chris:

Like, they're all morphin into her.

Chris:

People gonna look back at our culture in like a thousand years and be like, why do they all look the same?

Said:

Yeah.

Chris:

And when did this abnormal butt genetic flaw happen?

Chris:

They'd be like, wait, no, no, wait.

Chris:

It wasn't genetic.

Chris:

They put fat in the ass.

Said:

Yeah.

Chris:

Why?

Chris:

Because it was more attractive.

Chris:

It was more attractive to look like you're out of shape.

Chris:

Yeah.

Chris:

What?

Said:

Yeah, exactly.

Said:

Exactly.

Said:

100 years from now, what's still going to be around are cockroaches and the fat in their asses.

Chris:

Those two things, the fillers.

Chris:

The fillers in their face.

Said:

The fillers.

Chris:

Can you imagine digging those skulls up?

Said:

Yeah.

Chris:

Oh, my God, man.

Said:

What was this?

Chris:

Like an archaeologist?

Chris:

Yeah.

Chris:

You try to explain that.

Chris:

They did it for decorative purposes, I believe.

Said:

Yeah.

Chris:

It's very confusing.

Said:

Not gonna be able to understand.

Chris:

They're not gonna be understand.

Chris:

And I mean, keep in mind the stuff we see, we see masks on, like, you know, some of the pharaoh's tombs, and we're like, oh, my God.

Said:

Right?

Chris:

They're wearing masks.

Chris:

Yeah.

Chris:

They also didn't jam silicone in their face.

Chris:

But, you know, hey, whatever.

Chris:

So, yeah, this whole independence has been the cornerstone of the Fed's ability to fight inflation effectively.

Chris:

Allegedly.

Chris:

during the Volcker era of the:

Chris:

And it was really pronounced back then.

Chris:

But the chair.

Chris:

ch as the financial crisis of:

Chris:

Essentially all comes back to one glaringly obvious theory, is that anytime the times get tough financially, the Fed always says, we need to be independent.

Chris:

We need to be able to make decisions without all the political influence and all the political pressures.

Chris:

Because frankly, politicians are going to use this in one way or the other to support their side of the fence on the fights.

Chris:

Right.

Chris:

This is how we should do things because this is how the economy will change.

Chris:

You need somebody who should be able to parse through the bullshit.

Said:

Yeah.

Said:

The government needs somebody to be able to.

Said:

Look, it's not us, it's them.

Said:

They're acting independently.

Said:

And you can label it as like, we, we have the tough job, we have to make the unpopular decisions.

Said:

We don't have to worry about winning elections.

Chris:

Yeah.

Chris:

And we're here for a different duration of time named by a president, which is somewhat political, but we're here for a longer duration than their presidency in most cases.

Chris:

So the second thing that Jerome Powell, during his conversation today noted was he was talking about the economic outlook in monetary policy.

Chris:

And this is where the backpedaling began.

Said:

Oh, let's go.

Chris:

This is where he was like, how do I row this boat the other way?

Said:

Oh, God.

Chris:

Powell noted that the US economy has demonstrated unexpected strength with growth surpassing expectations and inflation remaining slightly above target.

Chris:

To Saeed's point, why would you cut if that's the case?

Said:

Because you're still not at your target.

Chris:

You're not there.

Said:

And so you would need it to still be tight.

Said:

You need the Fed funds rate to still be higher to bring it down.

Chris:

Yeah.

Chris:

Why take Cialis if you're not going to use it?

Chris:

That's all I'm saying.

Chris:

You know, we've taken some Cialis.

Chris:

Are you just not going to use it now?

Said:

No, no, no, no.

Said:

It's the opposite.

Said:

Right.

Said:

It's.

Said:

You've taken Cialis.

Said:

Why would you dump cold water on the Cialis if you haven't got done using it?

Chris:

Clearly you don't have any experience with Cialis.

Chris:

Cold water ain't going to be done.

Said:

Clearly.

Said:

Sorry.

Chris:

Try cold plunging with Cialis.

Said:

Yeah, well, that's also this case too.

Said:

Right.

Chris:

It's a good way to get frostbite.

Chris:

This is never going to get advertised.

Chris:

All right, so this robust, robust performance allows the Fed to adopt a more quote, measured approach in Fed pal's.

Chris:

Words to future interest rate cuts.

Chris:

Measured approach means slower.

Chris:

Okay.

Said:

Yes.

Chris:

He indicated that the central bank could afford to be, quote his words, more cautious, end quote, in adjusting monetary policy, aiming to achieve a neutral stance that neither stimulates nor restrains economic growth.

Said:

Okay.

Said:

So on their last summary of economic projections, where they laid out where they envision the rest of the year going.

Said:

Right.

Said:

ere they ultimately end up by:

Chris:

Yeah.

Said:

Okay.

Said:

If they were to cut rates this time, we would be at four and a half percent total.

Said:

That would have been down from five and a half percent at its peak.

Chris:

Yeah.

Said:

So if they were to, you know, take a slower approach, they'd be within the right.

Said:

They have eight meetings next year to still cut a few times and still get to ultimately 3% over the course of the next two years.

Said:

So I personally wouldn't be too surprised if they chose not to cut.

Said:

Even though they did signal, a majority of them did signal that by the end of this year we would be at four and a half percent.

Chris:

Yeah.

Chris:

And I think a lot of those things are the best laid plans of mice and men.

Chris:

And the resilience of the economy is not what they expected.

Chris:

Now you can make a compelling argument the resilience of the economy is somewhat artificial.

Chris:

You got housing propping this stuff up.

Chris:

Housing is a big problem, which is part of the reason we put in that on the tail end of the show.

Chris:

Because all of this really comes down to how if housing changes and inflation numbers change, you got a different spin from the fomc.

Chris:

You got a different spin as it relates to the economic.

Chris:

Housing is propping a lot of the economy up.

Said:

Here's the problem with all this data that, that we're citing and what, you know, Fed Chair Jerome Powell saying that, you know, the economy is showing some strength.

Said:

Go talk to any normal average person.

Said:

They're not going to feel like the labor market is strong.

Said:

Okay?

Chris:

No.

Chris:

And they're going to feel really, really impacted by inflation and.

Said:

Exactly.

Said:

Savings is down.

Said:

Credit card debt, household debt is at an all time high.

Said:

Okay.

Said:

Everybody's feeling the pinch.

Said:

Go talk to any local, like small business, shop.

Said:

They're not going to tell you business is booming.

Said:

They're not going to tell you that they feel that we're in a positive 2.8% GDP, you know, Q3 market.

Said:

Right.

Chris:

That's not going to happen.

Said:

That's not what, that's not what they feel.

Said:

So that's the problem with this mixed data is, like, the reports are showing this, but everyday people, a majority of the people, are not feeling that.

Said:

So here's the problem that the Fed has, is you have reports that are saying one thing, even though they know everybody's feeling something completely different.

Chris:

Well, they don't.

Chris:

They're financially disconnected.

Chris:

Some of these Federal Reserve positions pay pretty good money.

Chris:

These people are in the media a lot.

Chris:

You know, Jerome Powell's rolling around the black cars.

Said:

I mean, they do.

Said:

They are.

Said:

They know that.

Said:

But they also know how this data is being taken in.

Said:

Right.

Said:

A lot of it.

Said:

A lot of it is lagging.

Said:

That's not telling the full story.

Said:

And I still refuse to believe that the job openings numbers are accurate.

Said:

I refuse to believe the job report numbers.

Said:

We already know that it's skewed because the government's adding 50,000 jobs a month.

Said:

So I wouldn't.

Said:

And on top of that, we talked about on the last show that the inflation numbers, you can't even go pull up the raw data.

Said:

It's not available for us.

Said:

So, I mean, take a word for it, America.

Chris:

It's good.

Said:

It's good.

Said:

Yeah, it's good.

Chris:

Don't worry about it.

Said:

No, it's fine.

Said:

Yeah, yeah.

Chris:

Don't worry about that.

Chris:

Of course, it wouldn't be an interview with Jerome Powell if somebody didn't bring up the political proposals again.

Chris:

And they did.

Chris:

And he said, addressing concerns about potential political interference.

Chris:

Meaning, hey, there's an incumbent president who's been pretty aggressive with changing the way the government operates.

Chris:

Powell dismissed suggestions that the incoming administration might install a, quote, shadow Fed chair to influence monetary policy.

Chris:

He reaffirmed the established institutional relationships between the Fed and the administration, stating that.

Chris:

I don't think that's on the table at all.

Chris:

I don't think Ramit Swami feels that way.

Said:

He does not.

Said:

Yeah, definitely does not.

Chris:

I'm pretty sure the Prince of Doge, AKA Elon Musk, doesn't feel that way.

Said:

No way.

Chris:

But good for Jerome.

Chris:

You know, I wish I had that job security daily basis where he's like, you know what?

Chris:

Nah, I'm good.

Said:

I don't have to worry about it.

Chris:

They're not gonna worry about me.

Said:

No.

Chris:

Yeah.

Chris:

You know what?

Said:

Can't do none.

Said:

You can't touch me.

Chris:

I'm not going anywhere.

Said:

Come on.

Chris:

I'm Jerome Powell.

Said:

They gotta get rid of Neil before they get rid of me.

Chris:

Yeah, I mean, Kashkari uses crayons.

Said:

We don't need him.

Chris:

Just do the math here.

Chris:

Okay?

Chris:

Who's more valuable.

Said:

Right, right.

Chris:

And then lastly, future policy considerations came up again.

Chris:

Looking ahead, Powell highlighted the importance of monitoring economic indicators to guide policy decisions.

Chris:

We gotta look at the data gaze guys were data dependent.

Chris:

So he's now said, hey, look, we're not politically dependent, we don't have a side, we're independent.

Chris:

There's not going to be a huge change coming.

Chris:

I know you all stuff, you've heard the news and whatever, but we got a good relationship, we're fine.

Chris:

We can be a little more cautious around economic policy because the data seems to seem, you know, it seems that we're strong and oh, by the way, we're going to be data dependent now.

Chris:

So we're going to look at that strong data and we're going to really rely on that.

Chris:

He suggested that the Fed is prepared to adjust its policies based on incoming data, maintaining a balance between fostering employment and controlling inflation, which we know are all showing very positive and healthy.

Chris:

The data dependent approach underscores the Fed's commitment to its dual mandate of promoting maximum employment and ensuring price stability.

Chris:

So in my mind he's basically saying, yeah, we're slowing down.

Said:

Yeah, if, and if not, if not at this next meeting, definitely the meetings after that.

Said:

So look, they still have that big jobs report that's going to come out, remains to be seen and unfortunately the numbers are skewed.

Said:

Are going to be skewed because of, you know, the seasonal job hires.

Said:

Yeah, right.

Said:

So unemployment might actually tick down or remain stable when under normal circumstances or any other month that has no seasonality issues.

Said:

It wouldn't show that.

Said:

So that, that also, I don't know how much of that they're actually going to take into account.

Chris:

Yeah, it's hard to say.

Chris:

I mean it's, it's early, but I don't expect there to be any material changes and I'm really seriously questioning whether we're going to get a rate cut on the, on the 18th.

Said:

So do you think that because there's a, it's a little bit more of a coin flip with this upcoming potential rate cut that if there, what were to be a rate cut, mortgage rates would actually, you know, come down a little bit because maybe that rate cut has not been priced in.

Chris:

I think without a material change in the markets, you're not likely to see a material movement in the rate environment, which if you've been listening to the show for any length of time, particularly episode 258 which preceded this, you know, that sentiment has never been worse around home buying 84% of Americans think it's a bad time to buy.

Chris:

Only 15% think it's a good time.

Chris:

That largely is because rates are high, home prices are high.

Chris:

You're seeing more housing supply in the common the markets.

Chris:

But let's talk about the housing market.

Chris:

t's make some predictions for:

Said:

You see what I did there?

Chris:

I know.

Chris:

I saw the Segway game.

Chris:

I took your Segway game.

Chris:

I molded it.

Said:

Made it your own.

Chris:

Made it my own.

Said:

Okay.

Chris:

I took your segue and made it mine.

Said:

Got it.

Said:

You're welcome.

Chris:

Never get this.

Chris:

You're welcome, you're welcome.

Said:

I got the hockey assist.

Said:

You know what that means?

Chris:

I have no idea.

Chris:

These strange sports references, Honestly.

Said:

Okay, I know there's people out there that like hockey.

Said:

That's such a fucking lame stat.

Said:

Okay, what do you mean a hockey assist?

Said:

You know what a hockey assist is?

Said:

All right, so you know in basketball, when assist is if I pass to you and you score, I get an assist.

Said:

Even if I pass it to you and you take one dribble towards the rim and you score, I still get that assist.

Said:

In hockey, a hockey assist is I get an assist if I pass it to the guy that passes it to you to score.

Said:

Why, like two passes removed?

Said:

Like, what is going on here?

Chris:

But you didn't assist me in scoring.

Chris:

That guy did.

Said:

Yeah, right.

Said:

That guy made the decision.

Chris:

Imagine how much more intelligent you would be if you use this brain power towards something of value.

Said:

I am bringing it to a valuable show.

Chris:

That's not.

Said:

I gave you the hockey assist for the segue.

Chris:

Oh, God.

Chris:

Okay, I get the reference now.

Chris:

No equally useless assist.

Chris:

Just for the record.

Chris:

All right, According to Business Insider, rent in the Sun Belt Cities is falling after building lots of housing.

Chris:

You may recall several shows ago, we talked about how the Sunbelt region.

Chris:

Think about it as a smile states, the lower portion of the United States is really being impacted.

Chris:

Think Texas, Florida, those areas.

Chris:

By an oversupply of newly built, particularly high end, luxury, multifamily apartments coming to the market.

Chris:

And as a result of that, you're seeing some downward pressure on rents.

Chris:

You're also seeing some downward pressure on home prices in these areas.

Said:

So how would luxury apartments provide downward pressure on rents?

Chris:

Well, if you're a consumer and your cost of living has gone up by 20% all the way around you, right, you're going to say, hey, look, man, I don't need the granite countertops.

Chris:

I'll take tile.

Chris:

Right?

Chris:

I don't need the really high End carpet or like flooring.

Chris:

I'll take just regular run of the mill landlord taupe.

Said:

And you think, you think these older buildings are going to be forced to, you know, lower their asking rent prices because they can't stay in line with market because the market.

Said:

Now you got this new luxury apartment that people.

Chris:

No, the luxury apartment is going to have to bring their rental prices down to compete.

Chris:

And those workforce housing or less desirable older, not as freshly renovated buildings will be able to probably maintain their level, maybe keep it around market, but it'll eventually bleed down to them too.

Chris:

But that new delivery of product to the market, we thought we were going to get $3,000 a month or $4,000 a month for rent.

Chris:

You're going to have to offer that thing up for $500 a month less or maybe $1,000 a month less to try to draw in consumers.

Chris:

And that's going to draw the top end of the rental rates down closer to that workforce housing rate.

Chris:

Because you're gonna have to find a way to properly motivate people to spend that extra money when they don't have it.

Chris:

And therein lies the biggest problem is when you don't have the money to spend, you don't spend it.

Said:

Right.

Chris:

Unless you want to go broke, in which case you're the federal government.

Said:

Look at you, man.

Said:

Workforce housing.

Chris:

What?

Said:

Who comes up with these politically correct terms?

Chris:

I use it on every earnings call.

Said:

Okay, good for you.

Said:

I don't usually hear that that often.

Said:

I'm like that.

Said:

That's very PC Workforce housing.

Said:

I respect it.

Chris:

See, I know what you're thinking.

Chris:

I'm not even going to say it because they'll get me in trouble later on.

Chris:

But no, it's not that kind of housing.

Chris:

All right.

Chris:

The U.S.

Chris:

is on track to build a record number of new multifamily units this year.

Chris:

About half a million, thanks in large part to Southern and Sun Belt metros like Dallas, Phoenix, Raleigh, Charlotte, Nashville and Austin.

Chris:

All places whose home values are currently in the declining kind of trend anyway.

Chris:

Mo most of them Dallas, I want to say Dallas, Austin, certainly Phoenix and I think Raleigh are going down already.

Chris:

I think Charlotte and Nashville might be on the way, approaching downward negative revisions.

Chris:

But 2/3 of the 1.8 million apartments built over the last five years were located in the Sun Belt region.

Chris:

Two thirds, wow.

Chris:

The real estate analysis firm Co Star recently reported.

Chris:

I'm a big fan of costar data.

Chris:

They're actually right on the corner from here.

Chris:

Good group.

Chris:

People shout out to CoStar a lot of their employees do listen to the show.

Chris:

Shout out Yay.

Said:

Leave us a comment dog yeah I.

Chris:

I dropped by your office tonight on the way home.

Chris:

Don't make me come there and find you.

Said:

Why don't you send the higher standard bro some co star merch.

Chris:

Their merch isn't that good.

Said:

Yeah no no not like ours.

Chris:

It's not like ours.

Said:

Like ours is not like hol I didn't get I had to come straight from the office today otherwise I would have rocked some merch.

Chris:

Yes my wife wore the holiday sweat shirt to the gym.

Chris:

Limited tis the season apparel which we will be giving away to two listeners at the end of the show is what we're doing.

Said:

That's what we're doing.

Chris:

God I can't believe I agree to do that totally for I was like why are all these comments coming up in the last show?

Chris:

And then you reminded me tonight and I was like, oh, I'm an idiot.

Chris:

Yeah, we did that well the building boom was made possible in part by less restrictive land use laws and other regulations governing construction, according to some experts.

Chris:

But the new supply of apartments is expected to keep rents relatively flat in the Southeast and Southwest next year, even as the rate of new multifamily construction is expected to slow significantly, said Jay Libbok, director of multifamily analysis and analytics at CoStar.

Chris:

Rents fell in:

Chris:

Meanwhile, rents in Midwestern markets have increased by 2.7% and by 2.4% in the Northeast.

Chris:

So we're not seeing massive increases.

Chris:

We're not seeing massive decreases.

Chris:

We're seeing a leveling out, if that makes sense.

Said:

Right.

Said:

Lowering and lowering of rents in some of these bigger multifamily projects.

Said:

Yeah, right.

Said:

They can only go down so much at any given time because they have their own loans that they still need to debt service.

Said:

Right.

Said:

These, these owners of these buildings are leveraged.

Said:

They have loans against these properties.

Chris:

Almost all of them.

Said:

Almost all of them.

Said:

Right.

Said:

So I'm curious to see how low they're actually going to be able to go and still be able to afford their debt service payments.

Chris:

I think the market is, as of right now, this tidal wave of defaults hasn't hit, although I will say Freddie Mac is showing a pretty heavy increase in multifamily apartment defaults.

Chris:

Now, whether that will materialize into something that actually impacts the market aside from just a defaulting trend increasing I don't know.

Chris:

Is there anything that appears to be catastrophic right now?

Chris:

No, otherwise you'd be all over the news.

Chris:

But certainly there is an uptick trend that people are slowing down on their cadence of payments.

Chris:

Now most these people have a huge amount of equity in their properties.

Chris:

You know, 40%, I would say, on the low side, and some major expensive land areas.

Chris:

Los Angeles, New York, San Francisco, you know, closer to 50, 60% in equity in these properties.

Chris:

So I don't expect people to not be able to sell them.

Chris:

It's just, is there people with enough cash on hand to buy them and put that much equity into them?

Chris:

So, you know, it's going to be an interesting market.

Chris:

We'll see where it all plays out.

Chris:

But I'm not entirely convinced that there's a catastrophic horizon yet.

Chris:

But keep in mind too in these areas, you're seeing a 1.4% decrease.

Chris:

That's not huge.

Said:

Exactly.

Chris:

The bigger implication to these properties is the increase in expenses, which is a much bigger number.

Chris:

Particularly insurance.

Said:

Exactly.

Chris:

Insurance is the bane of all of our existence right now.

Said:

They're being forced to get policies with higher deductibles to just be able to get, you know, that premium amount to still be able to, you know, meet their debt service.

Chris:

It's a problem historical perspective.

Chris:

Yeah.

Chris:

You want, you want a little bit.

Said:

Of, I would love that, a little.

Chris:

Bit of history lesson here, please.

Chris:

Yeah.

Chris:

For you, baby doll.

Said:

Give it to me.

Chris:

The current Sunbelt multifamily construction boom mirrors the post World War II Suburban Housing Expansion.

Chris:

So there is a similar kind of track record of this happening.

Chris:

This time it's driven by demographic shifts, Millennials aging into their prime renting years and remote work flexibility, which I mean, shouldn't come as any surprise.

Chris:

In the:

Chris:

Today it's closer to 30%, making the current 500,000 unit surge somewhat noteworthy.

Chris:

It's a pretty impactful number.

Chris:

nt drop on record occurred in:

Chris:

That is the largest rent drop on record, but it's, you know, almost call it 2.75, three times as much as as the current rent drop.

Chris:

So I guess in on some level, the current rent drops in these cities are noteworthy at 1.5, 1.4% down, but it's the largest drop ever in history.

Chris:

ost great financial crisis in:

Chris:

That goes to show you how stable the income has been relatively absolutely in that product type for exceeding the rent southern decline of.

Chris:

Far exceeding the rent Southern decline of 1.4% versus the 3.5%.

Chris:

So clearly you can see that that little numbers mean a big deal here.

Chris:

But the biggest have ever been, have not been in my mind significant.

Said:

Okay.

Chris:

And the reason why is people generally need a place to live.

Said:

People generally need a place to live.

Said:

And you know, this cited here that, you know, millennials are aging into their prime renting years.

Said:

Right.

Said:

And we know home affordability is at an all time low.

Said:

You mentioned earlier, 84% of people believe it's a bad time to buy.

Said:

So sentiment is also down.

Said:

It makes all the sense for, you know, builders in this space to continue to build.

Said:

Now.

Said:

Now would be the right time, right?

Chris:

Yeah, it would be the right time to solely control inventory to the market.

Chris:

Although I would caution against building high end luxury UN units.

Said:

I agree.

Chris:

And I would caution against areas.

Chris:

Well, and I've got a great example of this actually here.

Chris:

most significant price growth:

Said:

Okay.

Chris:

So some of these markets saw between 30 to 50% appreciation during that period.

Chris:

They appreciated a whole hell of a lot.

Chris:

And now you're seeing a small taper back.

Chris:

It sounds bad, but in reality the housing market is just correcting a little bit.

Chris:

1.4% rent drop in these cities where they had 30, 50% price increases in homes.

Chris:

That isn't a huge return.

Said:

So what do you think this does to.

Said:

How do you think this could impact those communities or those regions and neighborhoods.

Said:

Right.

Said:

That are experiencing some newer multifamily developments?

Said:

How do you think that could impact their single family market?

Chris:

So the single family rentals are less attractive when the multifamily rental apartment market gets softened.

Chris:

Right.

Said:

Okay.

Chris:

So people will go, I can spend less money and live in this apartment complex, everything paid for, and it's a lot less work for me.

Chris:

And it's generally owned by a larger, you know, company or more established kind of infrastructure, you know.

Chris:

But the single family market, depending on where you're at, like in the Midwest, people want space.

Chris:

They don't want this vertical, dense major metropolitan area.

Chris:

So it really depends on where you're at.

Chris:

But what I do think is going to happen for sure is you're going to wind up seeing.

Chris:

You're going to see price growth continue in most markets, but at a very, very much slower cadence than it had been in the recent years.

Chris:

Yeah.

Said:

What happened in recent years is definitely not the norm.

Chris:

No.

Chris:

her Business Insider article,:

Chris:

It's realtor.com?

Chris:

okay, so there's a bias.

Chris:

There's a slight bias, and I'm going to explain how they're more associated with other companies and entities than you probably realize.

Chris:

ng won't be much different in:

Chris:

See fresh data, baby fresh squeezed it just today.

Said:

That's impressive.

Chris:

You know, I'm not here to juice it.

Chris:

The firm's researchers see sales inching 1.5% higher while home prices climb 3.7%.

Chris:

We'll talk about what our prediction is at the end of the show and we'll give you a lot of other people's predictions, too.

Chris:

the rate they've risen since:

Chris:

rage home price increase from:

Chris:

through:

Chris:

I think a number more in line of 1 to 2% is probably more realistic of an average.

Chris:

I don't, I think you removed:

Chris:

But that's basically how they did it.

Chris:

And they're saying that rent stays roughly flat at a negative 0.1%, which in, again, sounds about right nationwide.

Chris:

Okay.

Chris:

And would bolster the idea that the only thing really impacting the multifamily apartment complex, you know, profitability, is going to be the expenses.

Said:

Exactly.

Chris:

Which does include the rate environment because that's your mortgage expense.

Chris:

Right.

Chris:

Mortgage rates should also slide slightly, though they'll stay north of 6%.

Chris:

So as far as I'm concerned, this is a very politically neutral, very fair opinion from realtor.com the modest price positive projections are based on what realtor.com expects to be a healthy economic backdrop, typified by lower interest rates and steady growth.

Chris:

The Federal Reserve will likely cut rates in December and then a few more times in the first half of the year, the firm said.

Chris:

Now, if you listen to us, a.

Said:

Few times in the first half of the year is a bit aggressive, wee.

Chris:

Bit that's why we covered the show in the beginning.

Chris:

Why Jerome Powell, he's already backing off at Stance.

Said:

Yes.

Chris:

And I'm already feeling very uneasy about the December 18 cut.

Chris:

So if that does not happen, then this prediction seems to be a little aggressive.

Said:

I agree.

Chris:

I agree.

Chris:

So now you kind of see why we went to the show the way we went through.

Chris:

We talked about Jerome Powell and the numbers that we're looking at and some of the reasons why he felt and said the things that he said.

Chris:

And now here we are relating that back to housing because it's important, because a lot of these housing assumptions are based on things that we think might not be accurate based on what we are hearing today.

Said:

Well, and to your point, and to, I don't know if this is necessarily their point, but a big part of why inflation is where it is today has to do with housing costs.

Chris:

Oh.

Chris:

Is the number one laggard, which is keeping up the number above the Fed's target is housing.

Said:

So if the Fed knows that, okay.

Said:

And they have to be very careful, they don't cut rates too quickly because it could cause a resurge in inflation.

Said:

Right.

Said:

If they do too quickly.

Said:

That's the whole point why they need to take a slow, measured approach.

Said:

But they also know in order to get more activity in the market, one of the components that they need to try and have a positive impact on is mortgage rates.

Said:

Right.

Said:

Even though they can't, that's not, doesn't, when they cut rates, does not mean mortgage rates comes down.

Said:

It has to do with the 10 year treasury and a lot of things get impacted by the ten year Treasury.

Said:

Right.

Said:

It's, it's, it's basically, you know, economic outlook over the next 10 years.

Said:

And so many things influence it, everything from what's going on in the economy to geopolitical conflicts.

Chris:

So we have not discussed this prior to the show, but that actually touches on.

Chris:

One of my strongest predictions for this show is that I like to think of the ten year treasury and the two year treasury, the two treasuries that I focus on for inversion purposes, as your near term gauge of society's feeling and your long term gauge of society's feeling.

Chris:

It's not like the vix, the volatility index, where it measures the overall volatility in the market or the fear gauge if you want to call it that.

Chris:

But to me, these are symbolic of how comfortable people feel near term and how comfortable they feel long term.

Chris:

To me, I think people are very worried about what Trump and his Presidency might do.

Chris:

There goes the podcast advertising again, near term.

Chris:

And I think that concern and that fear is going to keep people more confident in the longer term.

Chris:

The ten year treasury pushing that up and they're going to push that up and keep mortgage rates high.

Chris:

Which is I think, part of the reason why realtor.com is suggesting that over 6% is going to be where we're going to be at for a while.

Chris:

I think it might be higher than that.

Chris:

I really do think we're going to be in the mid 6% to maybe even sevens again because people are going to be concerned about the near term because all these changes, while there might be well intended, they might be very, very effective.

Chris:

I don't think people are going to go, that's amazing, man.

Chris:

I'm really confident in tomorrow they're going to say, that's good.

Chris:

I'm hopeful in the long term.

Chris:

But right now I'm just going to wait and see.

Chris:

And I think that the Treasuries are going to be your best indication of that.

Said:

They are.

Said:

And so if the Fed knows that housing has a huge impact on inflation and they know that.

Said:

Okay, in order for this housing problem to, you know, become a little bit better.

Said:

Right.

Said:

You're going to need to provide more inventory at some point on some level.

Said:

That is part of the problem.

Said:

There isn't enough inventory to.

Said:

Because there's a certain amount of people out there that are willing to buy and there needs to be way more inventory so that prices can come down.

Said:

Right.

Chris:

Yeah.

Chris:

But it's also not, it's a pendulum.

Chris:

It's not just an automatic swing to the side.

Said:

Absolutely.

Chris:

So the pendulum is already swinging because people don't feel it's a good time to buy.

Chris:

Rates are high.

Chris:

They're not buying as much.

Said:

Right.

Chris:

So homes are sitting in the market longer and that, that's the pendulum swinging to where you have supply creep back onto the market and more homes in the market.

Said:

Exactly right.

Said:

And as of right now, you got 21 and a half percent of current homeowners with a mortgage have a mortgage interest rate below 3%.

Said:

You have 35% of homeowners with a mortgage that have a mortgage interest rate of between 3 to 4%.

Said:

That's 50% of the people right there.

Chris:

Yeah.

Chris:

It's crazy.

Said:

It's crazy.

Said:

So unless you can find a way to slowly bring mortgage rates also down, while this is what, this is what Jerome Powell meant today when he was talking about trying to find that neutral rate.

Chris:

Yeah.

Said:

He doesn't want to do too much damage.

Said:

He doesn't want to cause a research and spike in inflation.

Said:

But he also realizes housing is a problem.

Said:

And I need to bring these fucking.

Said:

Find a way to bring these fucking mortgage rates back down to get some.

Said:

Because they understand that these home builders out there, they're controlling the supply too.

Said:

They're not going to release all their inventory online at once.

Said:

They're slowly.

Said:

Because they have.

Said:

They have shareholders that they need to keep satisfied.

Chris:

So in colloquially to articulate it in a way that Arun can appreciate because he's had sex recently.

Chris:

If you are overly aggressive in trying to seduce your wife, she could be very easily turned off and it could backfire on you if you were.

Said:

Play it cool, man.

Chris:

If you're playing it cool, but you play it too cool, you could seem disinterested and equally turn her off.

Chris:

There is a sweet spot to keeping her engaged and getting her a little foreplay action interested without being overtly interested in objectifying her.

Chris:

You've got to make her feel loved and wanted, but you also got to give her the opportunity to chase too.

Chris:

And that's how you get your wife pregnant and leave your show.

Said:

Leave your show.

Said:

Yeah.

Said:

And for listeners out there, I've been trying to think of a way, a creative way to tell you guys the gender of the baby because he has.

Said:

He's got two girls, right?

Chris:

Yeah.

Said:

And they just released it online, so I'm not revealing.

Chris:

Yeah.

Chris:

Really anticlimactic release, bro.

Said:

You found out through that.

Said:

I was like, I was supposed to be the one that you were so certain it was gonna be a boy.

Said:

He's actually having a girl.

Chris:

Yeah.

Said:

So he's total Kobe girl dad.

Chris:

Yeah.

Chris:

Three girls plus a wife.

Said:

Yeah.

Chris:

And I'm happy for him.

Said:

I'm happy for, you know, my sister in law.

Said:

I'm happy for my two nieces.

Said:

It's going to be a lot of estrogen running around there.

Chris:

You know, I always knew he was capable of making three girls.

Said:

Yeah, he knew.

Chris:

I knew he had that.

Said:

He's got that.

Said:

He's going to be Kobe, bro, girl dad.

Chris:

I'm like, I'm happy for him.

Said:

Yeah.

Chris:

Clearly he's mastered that more than Jerome Powell's Master the Rate environment.

Chris:

A direct quote from the realtor.com article, by the way.

Chris:

Prices are going to keep rising because we're not going to have a recession, said Ralph McLaughlin, a senior economist at Real.com Fuck you, Ralph.

Chris:

In an interview with Business Insider ahead of the report's release.

Chris:

If you look at the Times that home Prices fall.

Chris:

It's typically only when there's a recession.

Chris:

Very insightful.

Chris:

Thank you so much, Ralph.

Chris:

And only when people are forced to sell.

Chris:

Jesus Christ, Ralph.

Chris:

Thank you, Captain Obvious.

Chris:

You're an economist.

Said:

This guy.

Chris:

I gotta get a job as an economist somewhere.

Said:

But I don't know, I've looked into this.

Chris:

It doesn't pay that much.

Said:

They don't.

Said:

They don't.

Said:

They don't really get the hefty paycheck.

Chris:

They don't.

Chris:

They don't pay banker prices.

Said:

No, they don't pay banker prices.

Said:

Yeah, unfortunately.

Chris:

That's unfortunate.

Chris:

Well, yeah, yeah.

Chris:

I disagree about the current status of the economy, but I'm not in a position to sell it to you like realtor.com is.

Chris:

And well, let's just say realtor.com is operated by News Corp.

Chris:

It's a subsidiary of Move Inc.

Chris:

Market Watch, popular site is a unit of Dow Jones, which is also a subsidiary of News Corp.

Chris:

Wow.

Chris:

It's kind of incestuous.

Said:

Wow.

Chris:

Everybody's related.

Said:

They should be forced to have to just display that.

Chris:

Yeah.

Chris:

And they're not.

Chris:

Some of the very transparent articles will bring that up.

Chris:

But this is why I go to X a lot.

Chris:

I feel like X is the new transparent media and with their ability to fact check your comments and they have like the comment section now below post where people can literally correct the inaccuracies.

Chris:

It's fantastic.

Said:

There's a guy.

Said:

There's a episode that I just started getting into.

Said:

I didn't get to listen to the whole thing that went into Internet censorship and they really went into X and how it's really a Elon self censoring platform now.

Said:

Yeah, yeah, exactly.

Said:

And Elon taking that over is a big pivot in the positive direction of Internet censorship.

Chris:

Yeah.

Chris:

I mean there's some things I don't love about it.

Chris:

Like I don't like the idea that I could scroll by and see porn.

Said:

Yes.

Chris:

Because here's where I look at it is I think if you want to have freedom of speech, then people should be allowed to seek that out.

Chris:

And so I have a filter in mind which filters out that stuff so I don't run across it.

Chris:

But at the same time, if a kid were getting on there and they didn't know about those filters, I just think there's got to be a way to parse that out and then have people be able to see stuff that would otherwise be more extreme material.

Chris:

Like so today when that the United Healthcare CEO got shot, that footage was all over X.

Chris:

And I Saw it multiple times.

Said:

That was very chilling.

Chris:

It was.

Chris:

And the more I think about it, originally the rhetoric was that it was a hired hitman as an assassin.

Chris:

But the more I think about it, the more I'm like, I don't know, man.

Chris:

Would an assassin be sitting in a Starbucks before doing it?

Said:

Bro, we talked about it.

Said:

The DOJ was looking into this guy.

Said:

What are we talking about here?

Chris:

Yeah, the DOJ was.

Said:

Come on.

Said:

This.

Said:

This is like.

Said:

It's a whole.

Said:

Another ball game.

Chris:

Yeah, there's something.

Chris:

Something going on there.

Said:

Yeah.

Chris:

Yeah.

Chris:

I'm gonna refrain from begging bad comments.

Said:

Yeah.

Chris:

All right.

Chris:

Lance Lambert, one of my favorite ex accounts for real estate purposes at News Lambert.

Chris:

If you're interested, Freddie Mac housing market is undersupplied by 3.7 million homes.

Chris:

And it's the.

Chris:

And I'm quoting here, root cause of decreased housing affordability, housing shortage.

Chris:

ing to Freddie Mac economist,:

Chris:

2020 short 3.8 million homes.

Chris:

2024 short 3.7 million homes.

Chris:

And I've got a lovely chart to show with you right here.

Chris:

What you can see is that there's been a small benefit in the last.

Chris:

don't know, two years between:

Chris:

In particular, you've seen about 100,000 home differences of supply, an increase in the supply.

Chris:

So we are seeing a small increase in supply over time.

Chris:

But I expect this to get better.

Chris:

s as a sine wave, and you had:

Chris:

If you want a good visual.

Said:

Exactly.

Said:

But it isn't in a positive direction.

Said:

We're 27% higher than where we were a year ago.

Said:

Also, I got some data on this, too, here.

Said:

The percent of properties taking price reductions right now, 39%.

Chris:

To me, that.

Chris:

That's.

Chris:

Why are people not concerned with that?

Said:

Right.

Said:

39.

Said:

I mean, the average is 30 to 33%.

Chris:

Yeah.

Said:

Okay.

Said:

So it's slightly above the average.

Said:

A healthy market.

Said:

Right.

Said:

I mean, it could be seasonal, though, because if you're one of those people we talked about, I think an episode ago or two episodes ago, the time on the market has increased by 7 or 9 days on average.

Chris:

Yeah.

Said:

So properties are staying online a little bit longer.

Said:

And if that is, in fact, you know, if you're in that position, then you're approaching the holidays.

Said:

Yeah, man, of course I'm going to.

Said:

I'm going to start cutting.

Said:

I don't want to have to deal with this shit throughout the rest of the year, the holidays, you know what I mean?

Said:

I want to hurry up and wrap this shit up.

Chris:

Yeah.

Said:

Because give it.

Said:

Give it another week or two and I'm going to shut the whole operation down and I'll worry about this in January.

Chris:

Yeah, I think that's probably a fair assessment, but I would also say that these are all still red flags that are going to influence the Fed's decision.

Chris:

And as of right now, it does not seem to be a material reason to cut rates.

Said:

Yeah, Friday's a big day.

Said:

By the time this episode comes out, Friday was a big day.

Chris:

So let's get into the meat.

Chris:

Let's bring it all together.

Chris:

Let's get into some predictions here.

Said:

Let's do it.

Chris:

I have one more article to go over.

Chris:

led will home prices crash in:

Chris:

Here's what the experts say, and rather than go through the entire article and I've got some data, we'll go through.

Chris:

he predictions for housing in:

Chris:

And then we'll have a closing thought as to what we think.

Said:

Let's do it.

Chris:

All right.

Chris:

So in October, the median price of a resale home rose 4% from last year to $407,200, the 16th straight month of year over year increases, according to the national association of Realtors.

Chris:

Prices were at the highest level ever for the month of October.

Chris:

That's always good ever.

Chris:

Hence the housing affordability issue.

Chris:

Home prices are falling in some markets, though.

Chris:

So there you go.

Chris:

There's a little frown upside down, to be sure.

Chris:

Home prices have already begun to fall in some markets due to a surge in housing supply.

Chris:

Home prices are falling in parts of the south where home builders ramped up construction.

Chris:

Among the largest 50 markets in the U.S.

Chris:

prices fell the most by 0.3% in Memphis, Tennessee and Austin, Texas in October compared to the months before, according to data from the Intercontinental Exchange.

Chris:

I have no idea what that is.

Said:

Honestly, not enough to tickle your fancy, but it's notable.

Chris:

San Antonio home prices fell 0.1% in October from the previous month.

Chris:

Home prices in those cities were also lower in October than they were a year ago, the data revealed.

Chris:

So there are home prices that are falling and there are Markets, but there's very incremental changes.

Chris:

Right.

Chris:

I think we are at an inflection point.

Chris:

I don't think we can continue on with housing increases.

Chris:

And I'm going to tell you right now, this is the one time where Mark, Zandi and I seem to sync up and be aligned.

Said:

Your boy Zandy, huh?

Chris:

Zandi and I are aligned on this one.

Chris:

And it's.

Chris:

It shocks me as much as it shocks you.

Said:

Do you and Zandi, like, have a secret handshake?

Chris:

No, I just call him Zaddy.

Chris:

He's Addie.

Said:

He is your Zaddy.

Chris:

He's my Zaddy.

Said:

Yeah.

Chris:

True story.

Chris:

When I went to go see him last at one of the seminars that Moody's put on outside, there was a car whose license plate said Zaddy.

Chris:

I took a picture of it.

Chris:

I knew.

Chris:

I knew he flew in, you know, because he didn't.

Said:

It wasn't his.

Chris:

Yeah, Wasn't his.

Chris:

And I'm like, your car's here.

Chris:

e values is what they see for:

Chris:

Yes.

Said:

And we're getting into the predictions right now.

Chris:

Yeah.

Chris:

I would say Apollo has been smoking the crack pipe.

Said:

These are all the big boys that are coming out and saying, like, listen, guys, these are our predictions that we think you guys should take note.

Chris:

This is why you don't do math and economics.

Chris:

Ok.

Said:

Put the crack pipe down.

Said:

Put the crack pipe down.

Chris:

10.8%.

Said:

Let me tell you, if they.

Said:

If they are right, then we are in a world of hurt.

Chris:

Yeah.

Chris:

They're not right.

Chris:

Apollo Global Management is just trying to get their name out there in some kind of extreme PR plan.

Said:

What the fuck, man?

Chris:

Let's just carve them out as what the fuck.

Said:

Okay.

Chris:

Okay.

Chris:

Bank of America, 4.7%.

Chris:

Thank you, Brian Moynihan.

Said:

We already know they operate on old data.

Chris:

Yeah.

Chris:

Captain Tone Deaf consumer strong man.

Chris:

Yeah, they're strong.

Chris:

Super strong.

Chris:

Lots of money in their savings account.

Said:

Yeah.

Said:

It's actually still growing.

Said:

It's crazy.

Chris:

The banking.

Chris:

The banking expert.

Chris:

That is Brian.

Chris:

Brian Moynihan.

Said:

Still has a seat at the table.

Chris:

Yeah.

Chris:

Bright.

Chris:

MLS at 3.1% increase year over year.

Chris:

CoreLogic, very conservative and probably reasonable expectation of 2.3%.

Chris:

And I found corog to be reasonable.

Chris:

Fannie Mae, 3.6%.

Chris:

Next year, they're saying it might be going up.

Chris:

Okay.

Chris:

Freddie Mac, I like them.

Chris:

0.6%.

Chris:

Big fan of Freddie Mac personally.

Chris:

Got a lot of experience with them.

Chris:

Know a lot of People over there.

Said:

Got a lot of homies.

Chris:

A lot of the homies up in the hood.

Chris:

What's up?

Chris:

Freddie Mac.

Said:

Yeah.

Chris:

r is what they're calling for:

Chris:

I think that's conservative.

Chris:

I think that's fair.

Said:

I think it's reasonable.

Chris:

I think it's reasonable.

Chris:

Goldman Sachs, 4.4%.

Chris:

Also on meth, housing wire, 3.5% increase.

Chris:

So you're finding the majority of the people who believe the increase is going to happen is somewhere between, call it the mid twos to mid 4%.

Chris:

That's the majority.

Chris:

So somewhere, 2.5%, to call it 4.5% is where the majority of them wind up.

Chris:

We got more.

Chris:

We got more.

Chris:

Okay, so housing wire, 3.5%.

Chris:

Moody's, a decrease, negative 0.4%.

Chris:

The only one on the list who's predicting a price decrease next year is Moody's Analytics.

Chris:

That's why me and Zaddy are homies.

Chris:

oing to see my prediction for:

Chris:

It's not going to be big.

Said:

It's going to be the one caveat to this that we have to make sure that we mention.

Said:

And it should be known already if you've been listening to the show for any, you know, period of time.

Said:

This is national numbers here.

Chris:

Yeah.

Chris:

The national average, year over year.

Said:

Okay.

Chris:

So don't begin in my DMs.

Chris:

Me like Chris.

Said:

Yeah.

Chris:

My city went up last month, 5%.

Chris:

You're wrong.

Chris:

You don't know what you're talking about.

Said:

Right.

Chris:

You're bad.

Chris:

As Cody Sanchez and Grant Card don't.

Chris:

No.

Chris:

Okay.

Chris:

I'm not.

Chris:

I'm not them.

Said:

Cody said.

Said:

I know.

Said:

So if you got to remember, if national figures are showing an increase of 3 or 4%.

Said:

Right.

Said:

Then in your neighborhood or your local area, region, you're showing a decrease of 10%.

Said:

That means somewhere else it increased 13%.

Said:

Okay.

Chris:

Yeah.

Chris:

We doing the math?

Said:

Yeah, this is the maths here.

Said:

Okay.

Said:

So these are national.

Said:

And for real estate purposes, it is very much a local, regional topic.

Chris:

So Morgan Stanley has an increase of 3% year over year.

Chris:

Mortgage Bankers Association.

Chris:

This one surprised me, only showing an increase of 1.5%.

Said:

So why does that surprise you?

Chris:

Because the Mortgage Bankers association is in bed with the association of Realtors.

Said:

Exactly.

Chris:

And their solution to affordability crisis has always been lower home values.

Chris:

I'm sorry, has Always been lower rates versus lowering the home values because they make money on the commissions from home values.

Said:

It's their job to sell the dream.

Chris:

They're selling that dream, baby.

Said:

So if this is an.

Said:

If.

Said:

There's.

Said:

If.

Said:

If their predictions are optimistic and their optimism is saying one and a half percent concerns me a little bit.

Chris:

National association of Realtors, 1.8% increase.

Chris:

So the two optimistic parties who have access to data and have people who rely on their opinions, Mortgage Bankers association and the national association of Realtors, we've.

Said:

Wanted to kick in the ding, ding for quite some time.

Chris:

I don't like their predictions.

Chris:

Historically, they're at 1.5% and 1.8% year over year increase next year.

Chris:

Okay, so if you're Apollo and you're over 10, what in the fuck?

Said:

Okay.8%.

Said:

Like, it's so obnoxious, strangely.

Chris:

Realtor.com at 3.7%.

Chris:

Wells Fargo, 4.9%.

Chris:

I don't know why.

Chris:

Zillow at 2.6%.

Chris:

Zillow, in my mind historically has also been uber like extreme with some of their predictions optimistic as hell.

Said:

Wells Fargo needs to go touch base with Neil Crayons in the back.

Chris:

Yeah.

Chris:

Wells Fargo, Brian Moynihan and Neil need to sit down and Apollo and get their own little dot plop going.

Chris:

Yeah, yeah.

Chris:

Can I have the green crayon?

Chris:

Yeah.

Chris:

So a closing thought for everyone, which is going to sound a little amorphous, but bear with me.

Chris:

The:

Chris:

The Fed is already backing off of the rate cut rhetoric and economic growth, as far as I'm concerned, has been misconstrued.

Chris:

So I'm very concerned about these optimistic positive trend predictions in the housing market.

Chris:

Regional trends will come into play and they will matter.

Chris:

What you get in Orange County, California versus what you're getting in Oklahoma City, Oklahoma, are going to be very different trends.

Said:

Okay.

Chris:

With labor market data in the Fed policies aligning towards stability.

Chris:

If they do, I don't believe that they will.

Chris:

But if they do, this year presents a nuanced yet optimistic outlook according to all of these people.

Chris:

Okay, I do not believe that to be the case, so I tend to fall into the moody scenario where I think you're going to have a slight correction this year.

Chris:

Small, tiny, tiny, tiny correction.

Chris:

Maybe just under 1%.

Chris:

Right.

Chris:

Negative for the year, year over year, on average.

Chris:

d I think that sets us up for:

Said:

Slow, gradual process here.

Chris:

Slow, gradual process because I don't believe rates are going to come down as much as people are hoping that they will with a new administration.

Said:

So let me ask you a question.

Said:

When and if ever would you say it might be worth considering buying some points to lower your rate?

Chris:

Oh, wow, interesting.

Said:

So typically speaking for everyone out there, if you're buying points, right.

Said:

You're paying to get a lower rate.

Said:

You can actually pay for that.

Said:

Right.

Said:

It usually comes at 1% of the balance of the loan.

Chris:

It varies depending on your lender.

Said:

Varies depending on.

Said:

But it just as a general rule of thumb, if you were thinking of this idea, right.

Said:

If you were going to run through the numbers, that's what you're looking at.

Said:

So if you're getting a $500,000 loan to buy down one point, meaning 1%, you're paying probably around $5,000.

Chris:

So I'm going to intentionally oversimplify this because I think it really, it can be overanalyzed every which way.

Chris:

From Friday, you can try to do the math on the amortization, how long you plan on keeping the property.

Chris:

There's a lot of assumptions that go.

Said:

Into it because there is a way for you to figure out whether it does make sense for you long term.

Said:

You have to factor in how long you're going to stay in the property.

Chris:

Yeah.

Chris:

Is it going to be your forever home?

Chris:

Is it going to be a temporary thing?

Chris:

How long you paying that extra interest rate on it?

Chris:

Is that extra that you're paying over that narrow window of time or longer window of time covering your initial cost upfront?

Said:

Like, would you take away from your down payment just to buy down the point and now have to pay a little bit of PMI, right?

Chris:

Yeah.

Chris:

So PMI, private mortgage insurance.

Chris:

If your loan to value is 90% or more, meaning that you borrowed more than 90% of the worth of the property, you might be required to pay private mortgage insurance to cover.

Chris:

It's a separate insurance policy you're paying for the benefit of your lender.

Said:

In the worst case of it's 20, it's 80%.

Chris:

I think it's 90% or more.

Said:

No, it's 80.

Chris:

It's been a long time since I've been in that scenario.

Chris:

I don't know.

Said:

Sending pmi.

Chris:

Yeah, I apologize.

Said:

When I bought my last place, I decided to not put down 20 because I just had enough to keep a little bit left and I went with 17% down pay a little bit PMI.

Said:

And then when it went up, I.

Chris:

Was able to, after six months, you can get the property, revalue it and if it's.

Said:

They just kicked off the pmi.

Said:

For me, it made more sense to hold onto a little bit of liquidity in the event that I needed it.

Chris:

I think if you.

Chris:

I'm not a big fan of paying down pmi.

Chris:

I'm not.

Chris:

Sorry, I'm not a big fan of pmi.

Chris:

I'm not a big fan of paying down points.

Chris:

I'm not a fan of either one of them.

Chris:

If I had to pick one, I would pick the PMI rather than pay down points.

Chris:

Just because I think if you're that strapped for cash, paying down the points isn't going to help you out, it's going to increase your cash flow.

Chris:

But your problem is down payment money, right?

Chris:

If you have the money to put down and you have the down payment money, I would say you not paying PMI because you're putting more money down to get 20% is more important than lowering your payment on a monthly basis because you've obviously been able to save the money, but it's a cash flow decision.

Chris:

But if you're that incrementally strapped or that paying down the interest rate is that meaningful for you, you might, you.

Said:

Know what the kids like to call it nowadays?

Said:

You're going to be house poor.

Said:

Yeah, you're going to have a house, but then you're going to be so strapped that you're not even going to be able to live.

Chris:

So I don't know.

Chris:

That's a good way to go.

Chris:

And historically Speaking, anything below 8% is still a good rate on average.

Chris:

People don't want to hear that because they're like, it's not 2%, man.

Chris:

It's not 3%, man.

Chris:

6%.

Chris:

Still a good rate.

Chris:

Right.

Said:

But the problem is the rate for the loan, the loan month that you're having to get because the home prices are so high that it's eating into a huge portion of your budget.

Chris:

Which is why for most Americans, I have not recommended buying in this environment.

Chris:

Yes, I know that buying a home builds wealth long term.

Chris:

Blah, blah, blah, blah, blah.

Chris:

It's tough for me to tell people to buy a home when the average cost of a home costs most consumers 42% more than the rent equivalent rent.

Chris:

That's a huge difference.

Chris:

I would tell most Americans 42% more.

Chris:

Your mortgage payment is $1,000, right?

Chris:

Your rent would be $600.

Chris:

That's $400 a month, approximately that you could put into an investment that if it was a long term investment in the S&P 500 would.

Chris:

You'll do a pretty good return.

Chris:

And then if you needed to ultimately buy a property, you're now saving money.

Chris:

Plus you have the benefit of time in the game and those stock assets that maybe you can do that.

Chris:

I think you still wait for a little longer.

Chris:

I think you still hold.

Chris:

If you need to buy a home, you need the utility, then buy a home.

Chris:

And if you can afford the cash flow, buy the home, make it work out.

Chris:

Most Americans don't have the money to put down and can cash for the payment right now.

Chris:

Unless you're comfortable.

Chris:

That's you don't just wait, be thoughtful, invest your money, hold your money, be patient.

Chris:

The time is coming.

Chris:

I just think it'll take a little longer to get there.

Said:

Yeah, I agree, my friend.

Said:

Good show.

Chris:

Is it?

Chris:

Yeah, I felt a little dry.

Said:

I don't think it was dry.

Said:

It was good data.

Said:

I mean, talked about Bezos getting in the ass and all right, we'll spit.

Chris:

On it and call it a wrap.

Said:

That's it.

Said:

Just like that.

Said:

You don't even want to get into Kendrick becoming Drake's daddy.

Chris:

Yeah, I don't really understand.

Said:

You understand, bro.

Said:

You know what he do, you know what he's doing for the listeners out there.

Said:

You know, if you've been.

Said:

If you keep it up with what's going on in the poppy culture.

Said:

Right.

Said:

Kendrick and Drake had a little beef and Kendrick won.

Chris:

I think we can say it's a big beef now.

Said:

It's a pretty big beef, especially with the lawsuits that are being thrown around.

Chris:

Drake is now suing Universal Music Group for defaming him.

Said:

For defaming him.

Said:

For playing a role and not playing.

Said:

I guess there was.

Said:

There was cases of people asking to play Drake and Kendrick songs were coming on, all kinds of stuff like that.

Said:

And they were increasing the.

Said:

The bot numbers for downloads for Kendrick songs.

Said:

Right.

Said:

Which was only pushing, promoting it more.

Said:

And if anybody knows probably how that whole system works, Drake does.

Said:

So he.

Said:

He knows what.

Said:

He knows what they're capable of and what they're behind anyways.

Said:

So that loss is going on.

Said:

And so now Kendrick is going on tour because he just released an album last week.

Said:

He's got, I think, 20 cities that he's touring in the U.S.

Said:

i think.

Chris:

The album's a mixtape, though.

Chris:

It's not on his official stuff.

Said:

It's.

Said:

I think it's viewed as a mixtape.

Said:

But you know how these These.

Said:

These contracts work for these.

Said:

These artists.

Said:

Right.

Said:

They have to make a certain amount of albums.

Chris:

Yeah, yeah, right.

Said:

And by releasing something like this is.

Said:

This counts as one of his albums.

Said:

Right.

Said:

So he can try to get out of the contract quicker.

Said:

Right.

Said:

He understands times of the essence right now.

Said:

It's time to re up.

Chris:

Yeah, Right.

Said:

So anyways, he's got 20 cities that he's touring in the United States.

Said:

Only one city outside of the United States, Toronto, Canada.

Said:

Toronto.

Chris:

Drake's hometown.

Said:

Drake's hometown.

Chris:

Knock, knock.

Said:

Who's there?

Chris:

Daddy.

Said:

Why is he Daddy?

Chris:

Because he's going there on Father's Day.

Said:

God damn, bro.

Said:

What a great chess move by him.

Chris:

I'm your daddy.

Chris:

Drake.

Said:

Where's Drake going to be?

Chris:

Not at the concert.

Said:

All right.

Said:

Toronto needs to show up for Drake.

Chris:

How do you not show up for Drake?

Chris:

Right.

Said:

No, I'm saying Drake fans need to show up because he's having it, I think, at the Toronto Blue Jays, like, stadium, the baseball stadium.

Chris:

I feel like.

Chris:

Here's the problem with Drake.

Chris:

You could love him or hate him, call him an actor child, you know, actor, whatever.

Chris:

That you could say that he's fake.

Chris:

He catches a lot of flack for being biracial.

Said:

Does he?

Chris:

I think that's what a lot of this is.

Chris:

Is like.

Chris:

He.

Said:

Oh.

Chris:

I mean, because he's not authentic.

Said:

He's not like us.

Chris:

Yeah, he not like us.

Said:

Right?

Said:

I mean, the song, not us.

Chris:

Yeah, but you can't deny his impact on the music culture.

Said:

No.

Chris:

He has had a hit single in every damn near year.

Chris:

Last 20 years, number one.

Said:

Number one downloads last year again, that's.

Chris:

A pretty big accomplishment.

Chris:

Love him or hate him.

Said:

No.

Said:

Yeah.

Said:

I mean, he's.

Said:

Dude, he's.

Said:

He's out doing Jay Z's numbers.

Said:

I mean, come on.

Chris:

And somehow he became the villain in all this.

Said:

I don't know how.

Said:

Because that.

Said:

That's what made him so amazing.

Said:

Right?

Said:

Is he found a way to stay on top for so long.

Chris:

Yeah.

Chris:

And Kendrick just said, nope, not no more.

Chris:

I'm not having that.

Said:

Yeah.

Chris:

It's a cultural problem.

Said:

And meanwhile, Andrew Schultz got caught astray on.

Said:

On Kendrick's album.

Chris:

He really?

Said:

You didn't know that?

Chris:

No.

Chris:

Why?

Said:

Because he said something about.

Said:

He alluded to this on one.

Said:

On one of the many podcasts that he was on talking about the beef.

Said:

And Kendrick took exception to it and called.

Said:

Called him out.

Said:

I can't remember the exact lyric, but doesn't call him out.

Said:

But he called him, said white boy comedians.

Said:

Right.

Said:

And anyways, this all happened during a time when Schultz was taping his special.

Chris:

Oh, that's not good.

Said:

So he just had to ignore it all.

Chris:

Yeah, yeah.

Said:

And he.

Said:

He just, like, talked about it today on.

Said:

On an episode on Flagrant that dropped.

Chris:

Why do you ignore it while he was in the special?

Said:

Oh, he's filming a special.

Said:

You know, those specials, you got one shot.

Said:

They don't only do two recordings.

Said:

You can't have anything messed with your head at that point.

Chris:

What about.

Chris:

Why did Kendrick call it Lil Wayne?

Said:

Because there was a huge.

Said:

So Kendrick's doing the Super Bowl.

Chris:

Right.

Said:

Right.

Said:

In New Orleans, Wayne's hometown.

Said:

And everyone thought, like, yo, Kendrick, step aside.

Said:

Let Wayne do it.

Said:

Because they want to celebrate Wayne while he's still, like, he can still do it.

Said:

You know what I mean?

Said:

And why would he step aside for that, though?

Chris:

You didn't have a saying that.

Said:

I mean, he.

Said:

He could be like.

Said:

Because I think it was.

Said:

It was kind of out there that Wayne wanted to do it.

Chris:

Yeah, but that.

Chris:

That's not his.

Chris:

That's not Kendrick's decision.

Said:

No, no, it's not.

Said:

But he could also, like, not take it.

Said:

But it's also, like, now it's gonna.

Chris:

Go to Wayne, though.

Said:

I mean, if.

Said:

If he would.

Said:

If he would have advocated for it, I think there would have been a push.

Chris:

So why not just bring him out as a guest?

Said:

I mean, Wayne has enough hits to where he could do the Super Bowl.

Said:

Yeah, but again, if there was a rapper to do the super bowl, bro.

Chris:

If your hometown doesn't pick you as.

Chris:

That's on you.

Said:

It's not.

Said:

It's not, bro.

Said:

It's not the hometown.

Said:

It you, bro.

Said:

The NFL, the shield.

Chris:

Okay.

Said:

They decide.

Chris:

Okay, well, again, that's not Kendrick, bro.

Said:

No, it's not.

Said:

It's not Kendrick.

Said:

But I think why Kendrick took exception to Wayne is like, wait, all this is going on and you're gonna, like, cry me a river over this?

Said:

Like, this is my time to shine.

Said:

This is my career right now.

Said:

Like, let me have this moment.

Said:

Don't get involved.

Said:

You know, I mean, I get.

Said:

I get.

Said:

I get this is your hometown, but let me.

Said:

Let me live.

Chris:

You don't want to have rap beats with Lil Wayne, though.

Said:

Yeah, he's one of my.

Said:

He's one of my, like, top five.

Chris:

Yeah, he's not gonna.

Chris:

If there's anybody who's going to end your career, Kendrick.

Chris:

That's not the one to go after.

Said:

That's not the one.

Said:

Him and em.

Chris:

Yeah.

Said:

So the kids.

Said:

The kids at my son's age right now.

Said:

They're already listening to Eminem.

Chris:

Eminem.

Said:

Eminem, yeah.

Chris:

But I feel like they're traumatized.

Chris:

So there was a thing that went around social media for a while where I want to say, like, the.

Chris:

Call it the 18 to 22 demographic.

Said:

Okay.

Chris:

Was hearing Eminem for the first time, and they were appalled.

Chris:

Appalled at some of the lyrics.

Said:

Oh, yeah, no, no.

Chris:

It's way more abrasive than they realized.

Said:

All the kids, the parents have them that are listening, they're all listening to the clean version.

Said:

So I drove Adam to practice the other day, and I took one of his, you know, friends with him, and he's like, can we listen to Eminem?

Said:

Welcome back.

Said:

He's like.

Said:

I was like, yeah.

Said:

He's like.

Said:

And as I'm putting.

Said:

I was, like, clean, though.

Said:

I was like.

Said:

And I was like.

Said:

In that moment, I was so proud of, like, yes, Adam, you can be friends with him.

Said:

Absolutely.

Chris:

All right.

Said:

Yeah.

Chris:

It's not the show.

Chris:

It ain't clean.

Said:

Yeah, yeah.

Said:

You can't listen to this one just yet.

Chris:

Yeah, right.

Said:

You got anything else?

Chris:

No, man.

Chris:

I'm tapped out.

Said:

That's it.

Said:

All right.

Chris:

I'm exhausted.

Said:

Odin, you got anything?

Chris:

Ooh, yeah.

Chris:

He's got three kids.

Said:

Soon to be, man.

Said:

All right, good night, everybody.

Said:

Bye.

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About the Podcast

The Higher Standard
This isn’t a different standard, it’s the higher standard.
Welcome to the Higher Standard Podcast, where we give you ultra-premium, unfiltered truth when it comes to building your wealth and curating the lifestyle of your dreams. Your hosts; Chris Naghibi and Saied Omar here to help you distill the immense amount of information and disinformation out there on the interwebs and give you the opportunity to choose a higher standard for yourself. Sit back, relax your mind and get ready for a different kind of podcast where we elevate your baseline with crispy high-resolution audio. This isn't a different standard. It's the higher standard.

About your host

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Christopher Naghibi

Christopher M. Naghibi is the host and founder of The Higher Standard podcast — a rapidly growing media platform delivering unfiltered financial literacy, real-world entrepreneurship lessons and economic commentary for the modern era.

After nearly two decades in banking, including his most recent role as Executive Vice President and Chief Operating Officer of First Foundation Bank (NYSE: FFWM), Christopher stepped away from corporate life to build a brand rooted in truth, transparency, and modern money insights. While at First Foundation, he had executive oversight of credit, product development, depository services, retail banking, loan servicing, and commercial operations. His leadership helped scale the bank’s presence in multiple national markets from $0 to over $13 billion.

Christopher is a licensed attorney, real estate broker, and general building contractor (Class B), and he brings a rare blend of legal, operational and real estate expertise to everything he does. His early career spanned diverse lending platforms, including multifamily, commercial, private banking, and middle market lending — holding key roles at Impac Commercial Capital Corporation, U.S. Financial Services & Residential Realty, and First Fidelity Funding.

In addition to his media work, Christopher is the CEO of Black Crown Inc. and Black Crown Law APC, which oversee his private holdings and legal affairs.

He holds a Juris Doctorate from Trinity Law School, an MBA from American Heritage University, and two bachelor degrees. He is also a graduate of the Yale School of Management’s Global Executive Leadership Program.

A published author and sought-after speaker (unless it’s his son’s birthday), Christopher continues to advocate for financial empowerment. He’s worked pro bono with families in need, helped craft affordable housing programs through Habitat for Humanity, and was a founding board member of She Built This City — helping spark interest in construction and trades for women of all ages.