Demand Springs Back for Winter Deals, But First-Time Homebuyers Vanish

0:04We are in the traditionally slow time of year, but the housing market is anything but boring right now. Now, inventory is shifting back towards where we were a year ago. Bidding wars are popping up in some pockets and disappearing in others. And mortgage rates are keeping buyers and investors on their toes. Everyone's trying to figure out what comes next. And today, we'll help you do just that. I'm Dave Meyer, alongside Kathy Feke, Henry Washington, and James Daynard. Today in On The Market, we're breaking down the headlines and trends shaping the end of 2025 and what they could mean for your investing strategy.

0:39You're listening to On The Market. Let's jump in. Kathy, Henry, James, welcome to the show. Thank you all for being here. Kathy, how are you? I'm doing great. Happy to be here with you in December. Henry, how are you? Fantastic, man. Thank you for having me. And James, what's going on, man? I was just flying all around. Landed late last night and then up early in the morning. I'm ready to go. All right. Well, let's jump into our headlines today. We have great stories about December housing market trends. We have updates on how investors are feeling about the market in 2026. Some interesting data about DSCR loan delinquencies, something we're all going to watch out for.

1:21And that headline that everyone has seen about first-time homebuyers, we're definitely going to start talking about that as well. Let's start with you, Kathy. You're bringing some broad December housing market trends for 2026. Tell us what's going on. Well, it's very interesting. And this is an article from Housing Wire, Logan Modashami. And it is basically what he's been saying for a long time, that if and when mortgage rates come down, even if it's a little bit, the closer they get to 6%, that will bring more buyers in. It will make it more affordable for not everyone, but for a few, for some people who've been on the sidelines who now can qualify because maybe their wages have gone up, home prices haven't gone up as rapidly.

2:04And in some cases, in some areas have come down a little bit. And then when you add a slightly bit better mortgage rate, you've got buyers. So that's what we've seen. We've seen pending home sales really increase just in November and possibly again in December. So I brought two articles. One is from November 17th. So it's a little bit dated, but the title is Despite Economic Uncertainty, Weekly Housing Demand is Up Double Digits Over 2024. Increased 15 % year over year, and it was 33, 34 % just earlier this year. So the big headline, as we've been talking about, was all this excess inventory. And there was this fear that, oh boy, we're going into, we didn't have that fear, but a lot of people had the fear that we're going into a 2008 situation where there'd be just massive amounts of inventory.

2:56The way that Logan Motoshami has looked at it is like, more inventory is a good thing, not a bad thing. It's been too low. More is better. And then because there was more, prices came down a bit and now it's affordable and it's reversing. So people are diving back in. Again, not everybody, but enough people. And so inventory is being gobbled up in certain areas. So 15 % more inventory than last year versus what was 34%. So then he writes another article, December housing data provides early signs for the for 2026 next year, which is what so many people want to know, what is this going to continue.

3:35And basically, he says, usually what happens in December is a sign of what's going to happen next year. And usually, November and December are slower months. But that's just kind of not the case. So the early signs are with these, if mortgage rates stay low, then we'll see more of the same. However, he also writes in the article that Jerome Powell doesn't really want that. He doesn't really want people diving into the housing market because that could drive prices up, inventory levels could get low again. So he said, be careful because they're probably going to cut rates in December, but then Jerome Powell is going to say something like, yeah, but I don't know, We're going to see something that will scare bond investors so that mortgage rates might actually go up to slow down all these buyers.

4:23Because what he says, the market reacts to so quickly. And so he could control it almost as like not even so much through rate cuts or rate hikes, but through what he says. But it's interesting, James, because you were just saying before the show that inventory is just not out there. You know, we have a lot of flip volume always coming through our office. And so we're comping houses, all different price points. and i will say for the last two weeks every time we go to comp a house we look at inventory and there's nothing for sale there's little pockets there's there's a lot more density but the last three homes that we were actually listing for the million dollar zombie flips we sold the first one in the first five days and then the last three that we pulled up that we're getting ready to roll out two of them had no homes for sale on a half mile radius zero wow which is even lower than, I mean, even 2020 in some of those neighborhoods.

5:18But this is new, right? Because it seems like a month ago you were saying the opposite. Well, it's a seasonal though. So I think that's what it is. It's like, you were just saying when Jerome Powell speaks, everyone is like on pins and needles. And I think buyers, there's so much FOMO and fear in the buyer market that, you know, it's like, right now what we're doing is we're seeing this kind of push of sales because I think people are like, oh, the spring's coming. And if we don't buy right now, it could jump. There's like so much prediction going on because we are definitely seeing way more activity than we typically see.

5:51When we're listing a home in December, you're just kind of praying you got one buyer going through there that's serious. Typically, if you get a buyer on your house in December, that feels locking in and that's a good buyer. But there's not very many of them. Now, I think the buyers are trying to get a jump start into the spring and they're looking now. And I do think it's also who is looking for a home now. A lot of times the spring's hot because people want to buy a home transition for a new school year coming in, in the summer, basically. Now a lot of buyers don't have kids. And I think it's just you buy when you buy.

6:24And so combination of FOMO and the demographics who are looking, there's just a little bit more activity. And there's just nothing really to buy. I don't think there's that many more buyers. There's just that little of options. I think it's just a normal reaction to the conditions we're in, right? We've been in more and more of a buyer's market all year. And all the crash people point to that and say like, oh my God, inventory is up 30 % year over year. It's just going to keep spiraling and it's going to be up 100%. There's going to be more and more inventory. The exact opposite is happening. Sellers are rational and they are reacting to poor selling conditions and they're not listing their homes for sale.

6:59People are saying, oh my God, there's going to be so much more inventory. I just looked it up when you were talking, James. for the last couple of weeks, new listings in Seattle are down year over year. Yeah. The pricing is soft, but people just aren't selling because they don't want to sell into the soft market. And so I think that that bodes well for home prices staying solid. But I actually don't know if we're going to continue to get more inventory into next year if people just don't want to sell right now. So it'll be an interesting thing to see. But I actually think when you look at the market right now and look at the data, it feels like we're in a pretty balanced market.

7:37There's not a strong buyer's market, not really a strong seller's market right now. It's just a slow market with not a lot moving. Yeah, my market is doing, I don't know, kind of the opposite of what James is saying. He's talking right now and I'm like, man, I wish that was what was going on where I'm at. But we're still pretty slow. I mean, I've had two houses on the market. One is going on 90 days on the market. The other one is going on about 60 days on the market. Now we did receive an offer yesterday that we're going to accept. And then I got a backup offer coming in. So it's like just now two offers came in on one of those flips, but it took 60 days, which is probably pretty normal.

8:17That's probably normal. I just don't like it. I just don't like it. I want someone to buy it in two days. But inventory is up here. We're around four months of inventory, which in our market, it doesn't signal a buyer's or a seller's market, but it's a pretty normal market. And so, you know, real estate is always going to be local and regional. So you've got to follow your metrics because what James and I need to be executing in our markets is completely different, even though we're doing the same thing. And it depends on what the supply is. Like, yes, we're seeing more sales, but we are also not seeing sales in certain segments.

8:57Townhomes, tight sites, things with high density, not trading. They are sitting stale. And that's what we've seen a lot of that inventory come off the market because developers are given in a breather. And so you really want to look at what's your price point? What's the affordability sector? Where's the velocity? But then what are you selling and how do you position it? If I had a bunch of townhomes to sell right now, I'm not putting them on right now. I'd wait until the beginning of the year. Interesting. But if you've got a single family house that's good, livable, and low inventory, put that thing on.

9:24Who cares, right? You know, get an early Christmas present. Well, I've got a single that's been sitting for 90 days. So somebody come back me an offer. A low ball? You'll take a low ball? I would take an average ball. So much of this is timing. I mean, me and Dave just had a house sit on the market forever. 100 days, more. 100 days. But every time we comp this house, we're going, this is a great value for this home. Yeah. And it comes down to, so we've got this little surge in activity. And I will say the buyers looking now, there's a little bit different because the buyers looking in August wanted 5 % to 8 % off your list price.

9:58And we sold two homes in the last week where we were like around 2.5 % off list. That's a good sign because buyers that are looking a little bit more serious rather than opportunistic too. All right. Well, let's take a quick break. We'll be back with more headlines right after this. Billion-dollar investors don't typically park their cash in high-yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income strategy is available to investors of all sizes, thanks to the Fundrise Income Fund, which is more than$600 million invested and a 7.97 % distribution rate.

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12:35Welcome back to On the Market. I'm here with Kathy, Henry, and James giving you the latest headlines. We talked about some December housing trends, what we're all seeing in our markets just before the break. Henry, let's move on to you. I think you're covering a story that has been talked about a lot on social media recently. Yeah, absolutely. So I am here talking about if the first-time homebuyer is vanishing. And this is definitely catching my eye because I market mainly to first-time homebuyers because because typically that has been the largest pool of buyers. And it's a safer investment strategy, typically, because the price points are lower.

13:15And so a lot of flippers look to buy properties and then market them to first-time homebuyers. But what this article is saying that, and it's from the NAR, the National Association of Realtors, their data shows that first-time homebuyers now make up a record low, just 21 % of all home purchases. And this is what really caught my mind. The typical buyer right now is age 40 years old. It's insane. It makes me want to cry, really. Wow. That's so depressing. It's awful. It's the worst. And it's typically been somewhere in your 20s to 30s where you're able to make that first home purchase, right? It's the white picket fence.

13:56You start your family, you buy a home. but that affordability seems to have shifted. And now it's taking people in their forties to be able to purchase a home. Also down payments are up. They're higher than we've seen in decades. Around 10 % is that median price of what people are putting down. I was looking at this the other day. In 1991, the median age of a first-time home buyer was 28. That feels right to me. I don't know. That's about when I bought my first primary. I was 29. And that felt about right, just like in terms of my maturity level to be able to actually manage being a homeowner.

14:39Then it went up to, I think even in 2020, it went up, but only to 33. And then just in the last couple of years, it's just absolutely exploded. And I mean, housing market aside, this just feels bad for society. I feel like this is breaking the social contract that housing is this unaffordable. And although there are things you can do about it, it doesn't seem like there's going to be a quick fix for this. You know, I'm going to give a different perspective here because what happened over the last four or five years, or I should say from 2020 to 2022, was too quick of appreciation, obviously. Some markets were appreciating prices went up like, what was it, 25 % or something in some markets in one year.

15:22And that was a policy issue. That was keeping rates low too long. And all of us could see it like, you know, don't you see it's because rates are low, the prices are going up. So it's a catch up game. And so for me, we're just in this awkward phase where prices have already done what they should have taken five or six years to do. And at the same time, you've got this massive millennial generation who would be normally at first-time homebuyer age bumping into this. So they're coming in when the appreciation happened already. So I would say give it three or four years and things might normalize.

16:03We'll see. But it's temporary, I guess is what I'm trying to say. And I think the concern is more like long-term implications as well. Because if people are having to enter the home ownership market later, they're giving up equity that people have normally been able to start building when they're younger. I think the article says on average, they're losing about$150 ,000 in equity by entering the market later. And the people who are transacting now, because they can afford it, are leveraging the equity they have that they bought their homes when they were cheaper. And so the transaction volume is coming from people who have equity.

16:41And if younger people now aren't able to get that equity, how does that trickle down later? Does that compound the affordability problem? Because now this middle class, this second tier home buyer, this 50 to 60 year old who's now making up the majority of second home purchases won't have that buying power because they weren't able to enter the market until later. So if If something doesn't adjust, we could see a compounding effect. And it's yet to be determined how that's going to affect the housing market in the future. But I did have a question. I want you guys to guess. If the median home age for first-time buyers is now 40, what do you think the median age for repeat buyers is?

17:23Oh, it's got to be in 60s. No, I bet you it's lower because people are buying and selling so much more now. 45. I think it's 63. three. I'm actually going different. 35. 35. Wow. Yes. No. Because the people that bought and traded. 62. Yeah. 62. Oh, I was close. It's all boomers. It's just boomers. It's just boomers. Yeah. This is just, this is not a surprise. Boomers have all the money. But also they're maybe in transitional times of their life. That's true. They're more, that's a common time to transact. Yeah. That's what I mean about the compounding effect. The boomers have the money because they bought when the market was cheaper, they've been building up equity.

18:03They put down an average, a median of 23 % down payment right now when they're transacting these second homes. And 30 % of those transactions for that demographic were in all cash. Amazing. Wow. That's insane. I also think that young people are just smart. If it's going to cost twice as much to own a property that you could rent for half that, why would you not just rent it? and maybe they're investing in the stock market. Maybe they're investing in crypto. It's just not housing. Because the truth is, if they did buy a house today and their payment is extremely high, higher than it would be if they rented it, and they're not really getting a huge equity gain, I mean, what, prices, values going up 1 % to 2%.

18:47Maybe it's really just not the most, it's not what it was for them right now. Like I said, I think it's gonna shift. We're just catching up to where prices would, They would be here maybe next year or the year after, but they got there faster. So there's a pause. So maybe it is smarter to rent and invest in other things right now for them. I agree with that, Kathy. I also just, I'm going to go, I'm going to be bold and defend Gen Z here because I will say, I think Gen Z is getting screwed economically. And millennials, I just want to call out when we were all 23, do you know what every headline said?

19:23People don't save their money anymore. These millennials, they're acting irresponsible and they have credit card debt and they have student debt. Every generation just shits on the generation below them. That's just tradition. What were you doing in 2010? Everyone does this, okay? Us included. I do it all the time. But I will say, I think there's two things going on with young people that one, do you know the unemployment rate for people under 25 is 10 % right now? That's really bad. That's really bad. So I think chat GPT and AI is not fully disrupting the labor market, but it is really hurting entry-level jobs, which is really tough for that generation.

20:04The second thing is we printed so much money from 2008 to 2022. So much. And all of the gains from that disproportionately go to people who own assets. And that has been very good for real estate holders. Gen Z, those people were in middle school and high school. So like everyone who owned real estate for all of us, it was really beneficial for us that inflated prices of assets, but we weren't old enough to own assets at that point. So there's this disproportionate shift that happens to them where they didn't get the benefit of the money printing, but they're suffering from the increase in asset prices from money printing.

20:38So I'm not defending Gen Z on everything, but I do think there are some structural things here that are working against them. It's so true. And listen, I was defending you millennials back then. All right. Well, this was another good one. All right. We got two more stories coming. We got to take a quick break. We'll be right back. Billion dollar investors don't typically park their cash in high yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income strategy is available to investors of all sizes, Thanks to the Fundrise Income Fund, which is more than$600 million invested and a 7.97 % distribution rate.

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23:53Welcome back to On the Market. We're here talking headlines. Kathy and Henry already shared their stories about December housing market trends and some concerning news about first-time homebuyers. James, what do you got for us? Are we seeing issues in the DSCR loan market? Oh, this is from James Rodriguez. He's a repeat guest on this show. You know, it was a very interesting article because, you know, as rates shot up and affordability and debt coverage was not working out well for your traditional banks, what did a lot of people do that were flippers? They got caught with bad deals or short-term rental buyers.

24:31They started running out of cash. They started doing a lot of cash out refis on their rental properties. and they started also forcing a rental. Like people were too afraid to take the hit on their flip and they just are not covering their cost right now. And so what this article talks about is there's been a slow shift in the amount of defaults. So since 2019, 2022, average volume went from 5.6 billion to 44 billion annually in DSCR loans. Oh my goodness. And what we've seen is there's been a slight uptick in rising delinquencies. So securing the DSLR loans quadrupled in mid-2022 when people were starting to really get caught in that transition.