Housing Demand Grows as 10 Main Cities See Value Drops

Dave:
Housing demand is up, however costs are dropping. Mortgage charges have been a bit of bit higher, however layoffs are throughout us. The the wrong way up financial system that we’ve been in for years is rolling on, however we’re right here that will help you make sense of it. Everybody, welcome to On the Market. I’m Dave Meyer, joined by James Dainard, Kathy Fettke and Henry Washington at present to speak concerning the newest information and try to instill some sense, some narrative that is sensible about what’s occurring. Kathy, I feel I’m gonna name on you first ’trigger you bought an uplifting story right here concerning the housing market within the financial system. Share it with us.

Kathy:
Sure. Everyone may use a bit of excellent news. So that is an article from Housing Wire. It’s housing demand now displays a constructive development. And that is written by Logan Mo Shami, who I do know all of us comply with. He tracks weekly knowledge. And what he says on this article is a lot of the info that we see in headlines is dated. Mm-hmm . It’s two to a few months previous, particularly the case index that will get headline information and individuals are speaking about one thing that was three months in the past and we’re not in that market now. So his weekly tracker is tremendous useful. It’s extra unstable. ’trigger week to week, if there’s a vacation or one thing, you’re gonna see skewed numbers. However nonetheless there may be lots of vital data. Extremely suggest it. The one I wanna deal with is the part of this text that’s housing stock. As a result of the headlines are speaking about all this stock.
We’re always speaking about it being a purchaser’s market and the shift and so forth. However that’s dated information. And what’s extra present is that the housing stock knowledge confirmed 33% yr over yr progress earlier within the yr. And that’s the story individuals are speaking about. However now it’s right down to 16% yr over yr progress. So what we’ve seen in the previous few months is clearly mortgage charges have come down a bit, and we’ve talked about this for a very long time, that as quickly as mortgage charges come down, there’s an entire bunch of individuals that may enter the market. It’s doesn’t make it extra reasonably priced for everyone, however it makes it extra reasonably priced to some individuals who have been simply on the sting and given the huge variety of millennials on the market in that home shopping for period within the mid thirties, give them a bit of leeway they usually’ll take it. Proper. In order that’s what we’re seeing. And we’re simply going right into a season the place there’s much less stock anyway as a result of it’s the vacations. You don’t actually wanna present your own home, um, throughout Thanksgiving or Christmas. So stock ranges are inclined to go down anyway. And since mortgage charges are decrease, Logan was type of nervous like, dang it, I’d preferred the upper stock. That is higher, more healthy for the housing market. And now we’re type of going again to much less stock.

Dave:
Nicely I’m so glad you introduced this story right here Kathy, as a result of it’s in all probability one of the vital misunderstood elements of the housing market proper now could be you see on social media on a regular basis. Yeah. There’s no patrons, nobody’s shopping for properties. That’s not what’s

Kathy:
Occurring. Yeah.

Dave:
Really we see that residence gross sales is up a tiny bit yr over yr, however while you take a look at mortgage buy purposes, it’s up yr over yr. Sure. From this time final yr. And it’s as a result of charges have gone down. And I do know it doesn’t really feel like charges have come down that a lot, however they have been at 7.2 in January and now they’re at 6.2. Like that issues. One full p.c that issues, that’s lots of of {dollars} a month. So individuals are noticing that and coming again into the market, the explanation gross sales costs are dragging is due to stock. However as Kathy identified, we’re getting that correcting type of vibe the place individuals are realizing it’s a foul time to promote. In order that they’re not promoting. Uh, and in order that’s why we’re in all probability in a standard kind of correction, however that isn’t as a result of there’s nobody shopping for. Individuals are nonetheless shopping for properties on the identical price they’ve the previous few years. It’s just a bit bit completely different vibe.

Kathy:
Such as you stated, it’s elevated a bit of bit. Um, I feel, I feel it was 4.02 million or one thing. Gross sales quantity. Yeah. Which is up, it was, it was below 4 million.

Dave:
It was,

Kathy:
Uh, earlier than. So yeah, simply it, it’s completely different per market and that’s the place individuals are like, in my market, my stuff’s not promoting. I imply, I simply talked to somebody who stated I’ve, he’s had his flip in the marketplace someplace on the East coast and for a very long time and it’s not promoting. Uh, so that might simply inform me it’s not priced proper. Proper.

Dave:
. Yeah. It simply feels draggy in lots of markets and I feel we’re gonna mm-hmm . We’re gonna, we’re gonna discuss that. However I do assume that’s encouraging. And what we’ve seen so, a lot within the final two or three years is that demand is far more rate of interest delicate than it’s throughout regular occasions.

Kathy:
Sure.

Dave:
For most traditional eras, rates of interest fluctuate by 0.25%. Doesn’t actually change something. Or 0.5% doesn’t change something. Now individuals are like, oh, I’m gonna soar on this week. You understand, there’s stock charges are down. Final week it was 6.1%, like when you jumped in, that’s one of the best price we’ve seen in years. Yeah. You understand, and, and there’s higher stock. You will have higher negotiating leverage. That is the client’s market. It’s not nice for sellers, however patrons are, I feel, gonna begin coming outta the woodwork ’trigger there’s gonna be higher alternatives to purchase.

James:
You understand, one factor that does drive me bonkers is when folks begin speaking about developments and it’s been two to a few months. . Yeah. . Like, it’s like what development is that? Like that’s, that’s a blip. As a result of what I do know is at the start of the yr we have been purple sizzling that first quarter, a lot of patrons and it wasn’t even simply issues have been promoting, there was simply lots of showings occurring. We had some tariff information come out, market froze up. And now charges like Dave simply stated, is like practically half level, three quarters level decrease. Proper. So like, it’s not simply all charges, it’s, it’s additionally simply, I feel only a psychological concern factor.

Dave:
Mm-hmm .

James:
However you recognize, I really feel like stock goes down as a result of individuals are type of on this panic as a result of they’re like, I’m gonna miss the moat. I’m gonna throw my home up on the market. After which they’re canceling too fairly a bit.

Dave:
Mm-hmm .

James:
And there’s lots of canceling stock coming off, however it’s only a sluggish thick within the mud grind market proper now. However I imply, it simply, for me, it’s not development till it goes previous. Like, like now we have to see what if we go into first quarter in 2026 and it’s sluggish then that’s a development to me. However I really feel like with the seasonals and the three months of knowledge, like they only type of gotta trip the waves and to stop panicking as a result of we don’t know what we don’t know.

Kathy:
Yeah. I simply, I really feel like, what I hear lots and I see within the notes of, of those exhibits that we do is folks saying, oh effectively you recognize, you’re giving unhealthy recommendation and we’re in a bubble and there’s gonna be a housing crash. And the considering is at all times, effectively, costs are so excessive, it have to be a bubble. And that’s not the fitting considering. It, it is sensible as a result of in 2008, costs have been excessive after which they crashed. However that didn’t must do with excessive costs. It needed to do with mortgage charges adjusting they usually have been on brief time period charges. Unexpectedly their fee doubled in lots of instances they usually couldn’t afford the fee. If that didn’t occur, we wouldn’t have had the crash. So we don’t have that proper now. Mm-hmm . We have now excessive residence costs, related type of difficulty, however most individuals who personal these properties are on mounted charges. Most individuals, the bulk are in mounted charges. In order that they’re not having any of that value stress normally. In fact, multifamily, industrial loans, completely different story. They did see their funds double. However that’s the distinction. It’s not a bubble simply because costs are excessive. And that’s what so many individuals are caught considering.

Dave:
All proper. Nicely I I thanks for sharing this one Kathy. I feel it is a actually vital context for everybody. Particularly after we go into these correcting markets. Individuals begin to panic. But when, when you actually perceive, you recognize, markets and costs, they’re depending on each provide and demand. And for an actual crash that you must see demand deteriorate. You want provide to blow up. That’s what, when a crash occurs, we’re not seeing both of these occur. We’re seeing demand comparatively secure provide has elevated, however it’s already beginning to degree off. Uh, and so these are indicators that though we don’t know for certain, more likely that we’re in a correction than in a crash like we’ve been saying for a very long time. However the knowledge does actually bear that out. Let’s transfer on to our subsequent story, which I’m going to share ’trigger I feel it’s type of associated right here as a result of I do know lots of people who’re saying, I’ll get into the market after we get mortgage charges down to five% or 5 and a half p.c . And really Zillow, John Burns actual property, they’ve finished all this analysis that exhibits like when will the market like actually get again to regular ranges of quantity, which is like 5 and 1 / 4 million as a substitute of 4 million. They usually say 5 to five.5%. So the query in actual property has typically been when are we getting there? How are we getting to five%? And Financial institution of America simply put out a research saying they’ve perceive they assume there’s a path to a 5% mortgage price, however it’s not fairly . This isn’t a great wanting factor proper

Henry:
Right here. Oh no.

Dave:
Yeah. They stated the trail to five% mortgage charges is that if the Fed does mortgage backed securities, quantitative easing. Oh,
And I’m gonna be sincere, I really feel fairly validated about this ’trigger I’ve been saying this for some time. The one means you’re getting down that low is quantitative easing. Yep. For those who’re not aware of quantitative easing because it’s principally when the Federal Reserve buys mortgage backed securities or purchase authorities bonds, which is for all sensible functions printing cash, they take cash outta skinny air they usually purchase mortgage securities they usually purchase bonds. And this has been an vital half, particularly after the monetary disaster of stabilizing the market. Like they’ve finished this to good impact up to now. I feel most individuals looking back would say they in all probability did a bit of an excessive amount of of it following the COVID downturn, which contributed lots to the unaffordable ranges that now we have in housing proper now and inflation. And so I agree with this. I feel it’s gonna be actually onerous for mortgage charges to get to five% except they do that.
I suppose my considering is the chance of this occurring to me goes up. I’m curious what you guys assume, but when the labor market deteriorates and President Trump has acknowledged many occasions that he needs mortgage charges to return down, that’s a device after he virtually definitely will change Jerome Powell in Might of 2026. It is perhaps a device he can affect. And I feel the chance of that is going up, which might imply extra mortgage charges, but in addition comes with a number of different trade-offs. So curious when you guys assume that is even within the realm of risk.

Kathy:
It, it already is. The Fed has already stated they’re going to cease their quantitative tightening.

Henry:
Mm-hmm .

Kathy:
Which is promoting off the stuff that they already purchased. They already did this. That is why charges have been so low. It’s known as monetary engineering. It’s humorous cash. It’s not nice for the inhabitants as a result of the Fed goes in debt over this, which is principally, uh, US who has to pay it again. Um, however it’s what they do behind the scenes and um, you recognize, it’s nice for many who personal belongings.

Henry:
Mm-hmm

Kathy:
. Prefer it, it’s nice for owners. That’s why we hold seeing housing go up and up and up from all this monetary engineering and humorous cash and low-cost cash and simply creating out of skinny air. While you’ve obtained an asset that’s actual, that turns into extra helpful just because it takes more cash to purchase it. So nice for actual property, I suppose not nice for the financial system.

James:
i’ll, I’m at all times on the lookout for the place the juice is and for some motive I’ve a sense subsequent yr all these items are gonna get pushed by they usually’re gonna pump some juice within the financial system for the elections.

Dave:
Yeah.

James:
And like I really feel like we’re type of within the mud proper every now and then we’re gonna take off after which I don’t know what’s gonna occur after that. I, you recognize, I feel within the brief time period it may have a really constructive impact for actual property buyers in the long run. It’s in all probability not a great factor. It’s not in all probability, it’s not a great factor. like we will’t hold printing. We’re gonna hold devaluing the greenback after which I’m gonna be actually wishing I listened to Dave about shopping for gold and Bitcoin and all these different commodities

Dave:
Stuff.

James:
However

Dave:
Dude, my gold portfolio

James:
Is crushing

Dave:
Proper

James:
Now.

Kathy:
. Oh man. Me too. My concern portfolio is working. Worry portfolio

James:
Is on hearth proper

Kathy:
Now. . That’s

James:
Why I feel like even proper now I’m considering pulling some homes off the market as a result of it’s simply sluggish. There’s lots of concern, lots of bizarre issues occurring after which simply dropping ’em within the sizzling spot as a result of actual property’s about timing. Yeah. And truthfully, I do assume subsequent yr there’s gonna be some juice pumped on this financial system and that’s while you’re gonna wanna dispo off something you don’t need anymore.

Henry:
Yeah, that’s a great perspective. I’ve been contemplating doing the identical factor due to the slowdown right here and going into the vacations. Though the Fed did drop charges once more, and I do know that’s in all probability not gonna have an effect on rates of interest like folks assume it’s, however I don’t actually care what truly occurs. I care what folks assume goes to occur . Proper. And other people assume that the Fed dropped charges and that it’s, it’s gonna be a greater time. And so hopefully that injects some purchaser exercise. So I’m gonna give it one other 30 days and see what occurs. I’ve obtained one home particularly that I’m contemplating holding off on promoting. The remaining I feel are gonna just do advantageous.

James:
I obtained 5 ,

Henry:
I imagine you ,

James:
You understand what comes right down to the candy spot of the market ’trigger issues are transferring. However yeah, if, when you’re outdoors that candy spot, it makes extra sense to tug it off and put it again on.

Dave:
I’ll simply say, I, I, I agree with you what you all stated, particularly Kathy, like I feel brief time period it may assist actual property. I feel long run this introduces some actually vital points. At the start, it’ll simply make housing unaffordable once more. Like it will make it reasonably priced for a minute after which it would get unaffordable as quickly as they cease mortgage backed securities, which they’ll must do sooner or later as a result of inflation will get uncontrolled. The opposite factor that I feel will compound that, and that is, I’ve been making an attempt to say this for the final like three to 6 months, I’ve gotten more and more involved that long-term rates of interest are going up long-term mortgage charges not a yr or two or three years, however 5 to 10 years we is perhaps in eight to 9% mortgage price territory. I don’t even know shopping for mortgage-backed safety and new financial provide that in itself may do it.
However contemplating that now we have such a excessive nationwide debt, the temptation to maintain printing cash is gonna be fairly excessive to devalue the greenback to repay that debt. And bond buyers don’t like that. And if bond buyers don’t prefer it, they’re gonna demand the next rate of interest that’s going to push up mortgage charges. And so one of many causes I’ve been saying lots and for my very own portfolio actually been specializing in mounted price debt. Mm-hmm . And never making an attempt to purchase something with variable price debt. I’m truly been spending lots of time taking a look at new offers not too long ago. There’s higher and higher stuff on the market. However I’m simply making an attempt to lock issues in ’trigger I don’t need that adjustable price. Even when there’s a great industrial deal proper now, I’ve been taking a look at mounted price industrial debt though you pay the next price on it.
’trigger I don’t, I don’t belief that in 5 years when I’ve to refi or seven years when I’ve to refi that charges are gonna be decrease. I feel it’s a must to hedge and assume that they is perhaps larger. So that is one thing maybe the largest factor to look at subsequent yr. Truthfully, I I feel that is, could be an unlimited shift within the housing market and would change my private technique lots if this began to occur. So, uh, one thing I simply type of wish to convey up and share with everybody and we’ll control it. All proper. We gotta take a break. However after we come again now we have extra tales about shopping for alternatives in numerous markets throughout the nation and the impacts of a few of these excessive profile layoffs that you simply’ve in all probability been seeing within the information. We’ll be proper again. Welcome again to On the Market. I’m right here with Henry, Kathy and James speaking concerning the newest information. We’ve talked about housing demand, the way it’s up the potential for quantitative easing. Now Henry, you’ve obtained some extra housing information for us. What’s it?

Henry:
Completely. So I wished to speak a bit of bit about, uh, housing costs and when they may drop. So there’s a sentiment that folks assume housing costs are going to drop. And the fact is in some markets costs have come down a bit of bit. And so, uh, I wished to speak about this text from Yahoo Finance known as When Will housing Costs drop Prices have already decreased in some main Metro areas. And I assumed I wish to have a bit of enjoyable with you guys. So we’re gonna have you ever guys guess you all get to choose two cities that you simply assume are on the highest 10 checklist for housing costs dropping and you’ll’t decide Austin ’trigger I do know you’re all gonna say that.

Dave:
And what’s the time interval since final yr?

Henry:
That is value lower since September 24.

Dave:
All proper.

Kathy:
Okay.

Henry:
So the article is basically saying that, uh, the everyday House First sale spent 62 days in the marketplace in September, 2025. And that’s every week longer than it took a yr in the past presently. It additionally talks about, based on the US Census Bureau, that the median residence value in Q2 of 2025 was 411,000. And it’s down from 423,000 at the start of the yr. Uh, and so it’s displaying that the median value has come down and it’s additionally saying that the Nationwide Housing stock is decrease than earlier than the pandemic. And it’s unlikely that we’ll see an enormous soar in listings till mortgage charges fall a bit of extra. It’s simply telling us all of the issues that we’ve type of talked about earlier on the episode. We’ve type of debunked a few of these issues, however there are markets the place housing costs have fallen and I do know that there’s lots of people fascinated about the place these markets is perhaps.
’trigger this might be a spot the place there’s some alternative to purchase. ’trigger lots of these cities are massive cities they usually’re not gonna keep in decline ceaselessly. So we’ve talked about it with cities like Austin, like if you wish to put money into Austin, this can be a time to get in as a result of sure, costs are down. We all know it’s a metropolis the place folks wish to stay. And so I count on that markets like this rebound. So understanding the place these cities are, when you both put money into these cities have an interest, investing in these cities may present you some alternative to get in whereas costs are low. So you may monetize if and when values return up. So with that being stated, Dave, give me two cities.

Dave:
Okay. I’m simply making an attempt to assume. I I gotta assume that they’re in California, Florida, Texas, or Louisiana. These are, these are like my, my massive states for them.

Henry:
Okay. Okay.

Dave:
I do know Cape Coral’s like massive, however I don’t assume it’s gonna be on this checklist ’trigger it’s too small of a metropolis. So my first thought was San Francisco or San Jose.

Henry:
Okay.

Dave:
Like that complete Bay Space.

Henry:
Okay.

Dave:
Then I feel James lives in one in all ’em. Phoenix is my different guess. And I feel Nashville the place like three of them I had up there. I might’ve stated Austin. However these are my different ones.

Henry:
James,

James:
Gimme

Henry:
Two

James:
Cities. Ooh, two cities. You understand what I’m going with those I do stay in ’trigger I’m feeling it probably the most. , relationship may stay in one in all them too proper now. I do know. Oh yeah. If, if we’re going yr over yr. Yeah, as a result of final September was sizzling in Seattle for certain. I feel the median residence value jumped like from like eight 40 to eight 80 throughout that point.

Dave:
Wow.

James:
So I’m going to Seattle and Phoenix. The, the 2 locations I, uh, have most of my cash in proper now.

Dave:
So that is for private

Henry:
Expertise. . All proper. Kathy, what are your two?

Kathy:
Uh, Seattle and San Francisco.

Henry:
Seattle and San Francisco. All proper. Drum roll please. The winner is Dave Meyer. He nailed each cities. He obtained, he obtained San Jose particularly stated San Jose and Phoenix. No, that’s not doing effectively. So that you’re,

Kathy:
Wow.

Henry:
However San Jose was six on the checklist. Phoenix is quantity seven. Primary is San Diego with a 5%, 4.9% value lower since final yr in September 24.

Kathy:
Ooh. Purchaser alternative

Henry:
Quantity two, Miami, Florida, 4.8%.

Kathy:
Yeah, that tracks

Henry:
Quantity three. Kathy, I assumed for certain you have been gonna go hometown. Los Angeles, 4.8% lower.

Kathy:
I didn’t know that.

Henry:
Quantity 4 Austin. Quantity 5. New York Metropolis, New York, New Jersey.

Kathy:
Actually?

Dave:
Yep.

Henry:
I

Kathy:
Didn’t

Dave:
Know

Henry:
That. 4.7%. San Jose, 4.6. Phoenix, 4% Dallas Fort Value 3.3%. Boston, 3.3%.

Dave:
Boston. Okay.

Henry:
Boston 3.3%. And quantity 10 is Sacramento, California with 3%.

Dave:
Okay. All proper. Nicely that was enjoyable. Yeah. We should always do extra trivia.

Henry:
Completely. . So if you’d like a deal in a market that could be rising, you may wish to try a few of these locations and see when you can snag your self one thing.

James:
I really feel like Austin has had zero rebound because the charges have spiked. Prefer it’s the one one which hasn’t gone like this. It simply retains simply type of going like this.

Dave:
Yeah. Even when you take a look at just like the California markets, they’ve type of been up and down the previous few years. It’s like kind of random. Florida’s been kind of constantly down. Mm-hmm . However this, these are leveling out. Austin is simply getting hammered. All proper. We gotta take yet one more fast break, however after we come again, we’re gonna have extra uplifting information about layoffs. That was a joke. It’s not uplifting, however we are going to discuss layoffs after we come again. Stick with us. Welcome again down the market. We obtained yet one more story for you, James. You’re bringing the, the enjoyable stuff at present speaking about layoffs, however I do admit I’ve been following this very carefully. It’s a bit of bit scary. So inform us what you’ve, what you’re uh, studying

James:
About information article from Yahoo Finance was all, all good issues. It says layoffs hit Amazon’s up goal and it’s fueling extra cuts. And so Amazon introduced over 14,000 layoffs. And this has been a development with simply all massive tech proper now could be simply slowly minimize issues again. And lots of this is because of AI. After which additionally they have been simply being very frothy throughout that hiring course of. You understand, like in the course of the pandemic there was like these tech wars occurring the place there was recruiters they usually have been stealing folks and throwing cash out. And I feel there’s simply lots of bloat occurring to the place they’re beginning to minimize that again. And the explanation I do really feel like that is so vital is as a result of as buyers, I’m actually making an attempt to get deliberate forward for 2026. What do I wanna purchase and what do I wish to goal?
And these should not like low paying jobs. Like lots of people have been speculating that it was gonna be like type of decrease tech paying jobs that have been being changed with ai. The common wage for these layoffs have been about 110 to $135,000. And that doesn’t embody the vesting within the inventory that these folks additionally obtain, which is on common round 20 to $40,000 a yr. And so these are 150 to $160,000 jobs. And plenty of of those tech cities, uh, Kathy, I feel you’ll agree, like there’s lots of twin revenue patrons on the market. Such as you obtained twin tech shopping for. In order that’s a buying energy of three to $400,000 that’s actually beginning to get laid off. And never solely that, it’s making that purchaser pool very afraid to make any type of resolution as a result of they don’t know what’s occurring with the world of ai. They’re very not assured of their job. Whereas within the pandemic, when you have been speaking to somebody in tech, they’re like, oh, I’m getting affords all over the place. I imply, the quantity of individuals I noticed go from Microsoft to Amazon to Apple and like a two yr interval. Yeah. They’re simply transferring, transferring now. Nobody needs to maneuver. I can inform you that a lot. And so, you recognize, I, I’ve actually been digging into the place’s the client pool, you recognize, I’m in Washington, there’s lots of tech occurring that demographic of purchaser, they’re sometimes shopping for 1.2 to $1.5 million homes. And that’s precisely the place we’re seeing the hole in our market proper now.

Henry:
Mm-hmm

James:
. And in order we go ahead, I’m actually making an attempt to plan out 2026, okay, what value factors do I wanna be in? And I would play within the uber costly, but in addition simply I wanna be beneath these ranges. And so I’m actually making an attempt to trace who’s being laid off, what’s the revenue, what’s the affordability and shift my value factors round for flipping or growth. Similar with rents. I do assume there’s lease progress gonna occur in Seattle ’trigger there’s gonna be much less patrons available in the market and the common rents are 25 to 3000 for that kind of worker. And I don’t assume they’re going to sacrifice high quality. And I do assume we may get a bit of little bit of lease progress in that type of b class kind of rents too. So now I’m taking a look at, okay, effectively the place can I get some leases at? Pricing is down that can serve that purchaser pool.

Henry:
Do you’re feeling like that is gonna have an effect on stock from individuals who could have already bought and now could not be capable to keep of their residence?

James:
Um, you recognize, with that purchaser pool, from what I noticed, most of these patrons have been buying and selling up anyhow. So their down funds have been fairly hefty. They weren’t like your low down 5%, 10% down patrons that have been shopping for these 1.5. So lots of these patrons have been placing 30, 40% down once they have been buying and selling up. And so I feel their, their present mortgages are okay they usually’re not gonna be promoting except they get transferred to a special area. However I do really feel like the buyer spending’s gonna drop fairly a bit. You understand, it’s gonna return to love, Hey, I must pay my mortgage after which no matter I left over, I’m gonna go spend cash elsewhere. And so I don’t assume we’re gonna see lots of stock coming there, however I positively don’t assume we’re gonna see lots of patrons in that vary.

Kathy:
Yeah. We’re experiencing one thing that our ancestors by no means needed to expertise and it’s going to be huge transformation over the subsequent 5 years. And anybody who thinks issues would be the usual usual is simply not paying consideration. AI goes to vary all the pieces. And this has been predicted, I’ve been new doing information tales on this for 10 years, that the, truly the white collar jobs are those at that probably the most threat. And it’s the blue collar job up to now, not as a lot. We’re going by main transformation and if you’re not paying consideration, you’re gonna be in hassle. That’s the underside line. It’s a really attention-grabbing time that we’re dwelling in.

Dave:
Yeah. I’m concurrently terrified by AI and likewise assume it’s means overblown. I I simply, you recognize, these are fully contradictory concepts , however I feel it, sure, there may be gonna be lots of disruption within the labor market. There is no such thing as a doubt about that. I feel the concept that AI in its present state ought to be taking folks’s jobs can also be simply flawed. Proper? Like I take advantage of chap PT every single day, it makes errors on a regular basis. I might by no means belief PPT in its present state to do what a human can do proper now. So I feel corporations are in all probability gonna over layoff proper now and assume that they’ll use AI for programs that they in all probability can’t. However long run, I that is clearly going to make an enormous change.

Kathy:
Yeah. Take into consideration a yr from now, 5 years from now, it’s, we will’t even think about. However I feel

Dave:
That’s good although, Kathy. ’trigger I, I really feel like it would drip in a bit of bit greater than folks really feel prefer it’s gonna be this cliff the place it’s like, oh my God, everybody’s getting changed. It would occur a bit of bit extra steadily, which hopefully will give time for the brand new jobs that can are available an AI financial system to, to return in. However simply normally, I feel that is simply unhealthy for the financial system proper now. Despite the fact that like I used to be making an attempt to tug collectively knowledge. ’trigger we’re not getting authorities knowledge proper now on unemployment as a result of there’s a shutdown. However I used to be taking a look at state knowledge and personal knowledge and like, it’s not that unhealthy. For those who take a look at the general unemployment price, it’s actually not altering all that a lot from the info that now we have. But it surely’s excessive profile, excessive paying jobs. And when you wanna go one step deeper, when you take a look at client spending proper now, I feel it’s 50% of all client spendings by the highest 10% of earners proper now.
It’s loopy. And so when you begin to see pullbacks in spending from the highest 10%, company earnings are gonna begin to see that. Like, you’re gonna begin to see that mirrored within the inventory market, I might assume. And so I I do assume greater than it’s actually an emergency, it may need a psychological impact on the remainder of the nation. And as James stated, lots of it’s simply finished about uncertainty. It’s not like lots of these individuals are essentially, you recognize, they’re gonna get foreclosed on or they’re going delinquent, however they may delay making massive monetary purchases simply given. There’s simply a lot uncertainty proper now. It feels prefer it’s kind of inevitable for buying, particularly on massive ticket objects like housing to, to begin to really feel it sooner or later

James:
When the individuals are getting rehired too. They’re simply getting rehired from what I used to be studying. Prefer it’s just a bit bit much less too, proper? So their, their revenue’s dropped 10% or in order they’re getting rehired. So it’s not like there’s simply, they’re all on the meals financial institution line on the lookout for, you recognize, like Proper. They will’t discover work, proper? They’re discovering work. However that’s why it’s so vital to concentrate to that type of median revenue in no matter metropolis that you simply’re in, proper? And what’s occurring round you. You possibly can take heed to all people and the completely different methods, however the place are you investing? The place’s the job progress? The place’s the job cuts? And you actually gotta pivot with that. They usually’re all over the place, proper? Midwest, Ohio, they noticed 40,000 layoffs in 2025 manufacturing company cuts. That’s not the identical revenue bracket, however the place, how a lot are these folks making? After which take a look at what do they purchase? What do they lease? ’trigger there might be a niche within the, in that market.

Dave:
All proper. Nicely this has been an incredible episode. Thanks guys. I, I assumed all these tales have been actually, uh, useful. So simply to summarize, Kathy introduced us a narrative about how housing demand is definitely up yr over yr, however regardless of that we’re seeing costs decline in lots of markets as Henry shared. We’re additionally seeing layoffs, which I feel is a giant factor to look at as we go ahead. I don’t assume it’s an emergency simply but, however clearly if that is the start of a development that’s gonna affect the market. After which after all now we have quantitative easing to look out for within the subsequent six months, which is the massive X issue that all of us get to attend and see if that comes round once more. However this has been lots of enjoyable. Thanks for listening. We’ll see you subsequent time.