This Could Open Up Homebuying for Millions

0:00If the housing market feels sort of hard to read right now, you are not alone. It kind of is. Some metros are loosening up, others are tightening, sellers are testing prices, and buyers are testing patience. That's why we're here on On The Market to help you make sense of it all.

0:22Hey everyone, I'm Dave Meyer. Welcome to On The Market. I'm here with Henry, Kathy, and James to talk about the latest data and headlines from the housing market. James, how's it going? Congratulations, Seahawks, making it to the NFC finals. Oh, yeah. My voice is just recovering from the last game. That was a great game. Kathy, how are you? I am doing great. We have a big live event tomorrow, so I'm going to have a busy weekend and taught my grandson how to ski. So that was super fun. Nice. Henry, thank you for taking time away from Barefoot Country Club to join us today. I know you were at Pebble Beach just now.

1:00I was. I was playing pebble at Barefoot Country Club. So yes, you're welcome that I stepped away. But don't worry. I will be back in the country club here shortly. All right. Well, we do need to get into our headlines because there is a lot going on. And I'm actually going to start today because I have good news and I want to share it with everyone. This is an article from Redfin. And the headline is monthly housing costs start the year down 5%, the biggest decline in over a year. The median U.S. monthly housing payment dipped to 2413, still very high in historical perspective. Don't get me wrong, but it's got to bottom out somewhere, right?

1:41It's good to see things starting to move in a positive direction. That means 5.5 % from a year ago. Now, I just want to make clear what I'm saying. I'm not saying that prices, housing prices fell 5.5%, but the combination of lower mortgage rates, they're about 1 % lower than they were a year ago. Market generally is flat. In some markets, it's going down. And wages have gone up. And when you combine those things, housing affordability has gotten better six months in a row. And we're starting to see that improvement increase. And I'm excited about that. I got to be honest. I know different people have different feelings about the market right now.

2:19But I generally think that any improvement to housing affordability is a good thing for investors. It's a good thing for homebuyers. It's a good thing for our country in general. And so I'm pretty stoked about this. And I think it's going to bring a little bit of life into the housing market. Maybe not a ton, but I still think that there's a reason to be optimistic that this is going to continue. Are you guys seeing any, you know, improvements or change in attitude or sentiment about affordability where you're operating? I just want to say, I hope it lasts. That's the thing. It feels like it might just be a pocket of time because when you look at the GDP now, the Atlanta Fed that kind of gauges where the GDP is right now, it's really strong, like in the fives.

3:05And if that's the case, then you would probably see rates go up again. That's true. So yeah, it's a pocket. It's a window of time. If you're trying to get in, this might be a really good opportunity right now because we don't know what the future holds. It's always that missing the window where people are like, I'm waiting it out, waiting it out, waiting it out. And then they rush in because they feel like they start to miss it. I mean, Dave, you're in Seattle now. There's not a lot of homes for sale at all. Dude, in the neighborhoods I was looking, I was like four or five properties since New Year's have been listed.

3:39It's crazy. There's nothing. Like every time I go comp a house, we're listing 10 houses in the next couple of weeks as we held some back. Listed five this week. We have 10 more coming up. And this is going to be like my test of what's going on with the spring market, lack of inventory. Do we see some sort of chase? But I mean, we did put one on market two days ago, and we had it listed for$825 for 60 days. Took it off market in December, just relisted. Full price cash offer. Wow. Okay. Oh my gosh. Wow. That's pretty good. I would say that would be on the higher end of this neighborhood. It's in SeaTac, Washington, which is going to be not like a really expensive part.

4:17But I mean, 835 grand in C-Tax expensive. That's a lot of money. Yeah. Yeah. So we'll see. This is like the test quarter. If it doesn't go hot, then we're in for a long, flat real estate market is how I look at it. Yeah. Are you guys seeing low inventory? Because it is like everywhere. I'm checking all sorts of neighborhoods and I'm like, where are the houses? This is like, why isn't anybody talking about this? And I don't think the data has quite came out yet. I'm going to be excited for the end of the month. But there's nothing in a lot of neighborhoods where I'm like, well if someone wants to buy a house it's gonna be mine because there's nothing else here i was just doing some research and new listings are at the lowest point they've been in two years so it's like it's just kind of a weird situation where sellers don't want to sell still there's thinking that there's no buyers which is not really true mortgage demand is actually up like pretty significantly year over year but just less people want to sell into this market right now The lock-in effect still is there.

5:16And I think buyers are being more picky. They're negotiating harder, which they should. But I think sellers just aren't interested right now. And so there are some markets where I think there's good opportunity because affordability is improving. But even if affordability is improving and no one's listing their homes for sale, I don't think it's going to really create some great buying conditions, unfortunately. No, I do. I think over the next two to three weeks, we'll see how much actual inventory was being sat on. And people wanted to wait through that kind of December months. And that's what I'm also curious about.

5:56Because I was talking to a couple of my photographers, and they definitely have shot some houses. So I'll be curious to see what comes on. One thing that seems to be happening is like affordability is improving. But do people know that? I feel like no one recognizes that. And it's not enough to get people off the sidelines. And so we probably need several more months of this and people to really start to see their monthly payments go down more than$100 a month to change their mindset about whether or not this is a good time to buy. I am hopeful we'll continue on this track, but no one knows where mortgage rates are going.

6:32So this could, as Kathy said, be a little pocket right now where you can get a slightly lower rate. And in some markets, it sounds like when you're market, Henry, at least there's some inventory to buy. Yeah. Now it's down from where it was like two months ago, two or three months ago. I mean, there was a lot of inventory, but a lot of that has started to get snapped up. But I know from investors, we've got more inventory coming on the market because a lot of investors pulled their listings in the winter and are waiting the 30 days so they can relist it and show zero days on market again. That's a good point.

7:05All right. Well, overall, I see this as a good thing. I am hoping affordability just continues to improve. That would be great. But I think right now it's not really impacting behavior yet, but we'll see how that unfolds over the next couple of weeks. Relevant to this, whether things are going to change and if this is just a pocket like Kathy was alluding to, Henry, I think you've got a story that can inform that. Yeah, I do. I have an article from Reuters. The article talks about why the mortgage-backed securities purchase that Trump talked about and which I brought as an article on our last show has not had the effect it's looking to yet on lowering housing costs.

7:45So as we know, President Trump instructed Fannie Mae and Freddie Mac, the government-backed mortgage giants, to buy up$200 billion in mortgage-backed securities. And the goal for that was to push yields down and thereby reduce mortgage rates and make housing more affordable because essentially mortgage payments would be lower. And what the data is showing so far is that it has not significantly lowered housing costs or mortgage rates yet. Nope. For example, like a 30-year fixed rate mortgage moved from 6.15 down to 6.09. So it's a small change and it's good. That will help. But it's not enough to truly move the needle and get people to dive back in.

8:28because now all of a sudden their mortgage payments are more affordable. But what they're saying is the real cause for why this hasn't moved the needle is because there isn't enough inventory for people to buy. It's really shining a light on the fact that, yes, we had more homes on the market a few months ago when the market was air quotes down. But now that rates have come down a little bit and there is a little more affordability, there still isn't enough out there for people to jump in the market and buy something. You just you can't empty the ocean by with a few buckets. You know, it's just cannot manipulate the markets with a few billion dollars.

9:07It's a it's not enough. So, you know, for those who maybe don't understand the idea, it's mortgage rates are set by bond buyers. And if there's no bond buyers, then rates tend to go up. If there's bond buyers, they go down. So if the Fed or president is going to find a way to buy some bonds, it's so temporary, you know, and it's just not going to make a huge impact. It's the global economy that matters. And really, when it comes to bonds, you're talking about people buying U.S. bonds, basically letting America have more debt. They have to have tremendous faith in the U.S. And, you know, there's been a lot of a lot going on that may be shaky for other countries of what we're doing here.

9:53So it's just it's not enough to make it. I read a couple of articles about this, and I think it's true. The analysis was that of buying mortgage backed securities would lower mortgage rates by about a quarter of a point. So 25 basis points. And we did see that. That was like pretty accurate in the days after this was announced. And that impact and benefit is very likely still there and has made a positive impact on mortgage rates. The problem is there are many other things that are going on that are pushing mortgage rates back up. You guys mentioned geopolitical uncertainty. That's absolutely happening.

10:33If you look at the dollar index, it's going down. The dollar is weakening. You would expect these things to happen. I'm not going to get into the Japanese bond market, but there are things going on there. and you would be surprised how much that impacts what's going on in the United States, but it does. And so I think the thing is mortgage rates did go back up, but I would say without the bond purchasing, they'd probably be a quarter of a point even higher than they were today. So like they've gone back up to six and a quarter without that bond buying, they'd probably be six and a half. But I do think we've probably seen all the benefit we will see from this.

11:07And this is why I've said, I think there's a high chance we do real quantitative easing this year because I think the president has been very clear that he wants lower mortgage rates. And as we've been saying, it's the only way we're really getting it. I don't necessarily think that is a good decision. Quantitative easing is buying more mortgage-backed securities or treasuries, but by doing it by printing money, it would work. It would drive down mortgage rates. It would, but I just, it's not good. I really personally think if the market needs to correct, the market needs to correct. Like you can't just keep kicking the can down the road.

11:41And we are seeing affordability improve. It's going to be slow. But like, that's probably what the market needs. It's probably the best for the long term for the housing market. Don't you feel like it was starting to have like a little bit of a positive effect? And then all of a sudden, the Greenland comes out the fighting with Powell. It's just like, I think, I don't know if that's going to get any better. How much did The bond market freaked out when we announced tariffs on the EU over Greenland. But didn't it rate you up with almost a quarter point right after that announcement? Yeah, for sure.

12:12When these things happen, like Kathy said, the bond market is depending on the stability of the United States. And anytime there's threats to geopolitical order, people move their money into gold, for example, which is now at about$5 ,000 an ounce. And you see the dollar weakening. And so, yeah, I think there's just so much uncertainty right now. That's very unlikely to get better. And as Kathy said, the economy, the GDP is going to keep going up. So we're probably not going to see a recession that pushes more money into bonds and brings down rates. So I think we're stuck in the low sixes. Like, I just think that's low to mid sixes is just where we're going to be.

12:52But that's a good place to be. That's where it was in 2017. Mentally, I think getting below six would be really nice for the market, even if it doesn't have like that big of an actual impact. I think when people see that five, they get excited. That's fair. I get excited. Yeah. Just get a five in front of it. I'm happy. All right. Well, we followed our good news about housing affordability improvement with mediocre news that mortgage rates are probably not moving down anytime soon. I think, you know, they're going to be volatile. I think that is kind of the lesson here is like they were 5.99 nine for a day.

13:26If you see a movement of an eighth of a point or a quarter of a point and you're in the market, lock it in because it's probably going to go back up. I think this idea that we're like on this linear trajectory where things are going to keep going down at a steady pace in the mortgage market is just not true. It's going to be up and down. And so if you see an opportunity, take it because you're probably not going to regret it, at least in the short term. And if they do, if we're wrong and they do QE or have 5 % mortgage rates, refinance. It's fine. Yeah, I'm going to be a Dave Meyer right now and say, I think rates are going to go up and stay up.

14:01I hate saying it. I don't like it. I think Trump is going to do everything he can to have that not happen, but he only has so much power and ability to do that. So at least we think. All right. So that's what's going on with housing affordability and mortgage rates, two super important topics for investors. So hopefully that's helpful to you. We got two more stories for you, though, about 401k and a new executive order that might really impact investors in real estate. We'll get to those stories right after this quick break. Managing properties can feel like a full on circus. You're juggling vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident.

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16:59Welcome back to On the Market. I'm here with Henry, Kathy, and James going over our headlines. We talked about improving housing affordability. Great news. Some mediocre news, fine news, flat news about the mortgage rate. I don't know what you want to call it. Let's move on to your headline, James. What do you got for us? You know, actually, I feel like the theme of this show is affordability. And like Kathy said, you know, they're coming up with all different ways to try to get homeowner costs down. The Trump administration has been talking about tapping your 401k as a down payment for your purchase on your home, and you won't have to pay all the penalties.

17:37And so there's a lot of chatter about this, and I really want everyone's opinion on this. Because at first I heard this, I was like, yeah, this could be a good idea. And then I started to be like, is it a good idea? Like, I'm kind of torn on it, right? The article is labeled. Obviously, they don't think it's a good idea. Yeah, it's from Housing Wire. Tapping a 401k for home ownership is risky business, experts say. And a lot of what this article talked about was they think that the stock market would outperform and have more benefit for someone to keep it in their retirement than to take it and put it towards their house.

18:12Also to point out that there's only 40 % of Americans are on track for retirement right now, and that keeps falling behind. It's terrible, yeah. Yeah, that's according to Vanguard, and that's really recent, December 2025. and i think that's just been falling and i think that's not going to continue to improve i think as people are getting tighter and tighter and their bills are getting more and more like everything costs more today right like it's just eating up your ability to save and the idea is to pull out your 401k to be able to afford a house but this article argues that stocks historically have outperformed housing 7 % to 3 % to 5 % annual growth.

18:50And in 2026, home prices growth forecast is only at 2.2. So they're really pushing on this article that on paper, it's going to show that the stocks are going to outperform, but they're also not thinking about a lot of different things like principal buy down, paying down your loans, and also rent decrease and where you're located. You know, I think it does depend on where you are. Yeah. I felt like this thing was heavily written by people that want you to keep your money in the market. Think about all the financial planners who are pissed. Yeah, that's a great point, Kathy. Like this is directly going after financial planners business.

19:27They do not want this to happen. Or all the funds that manage massive 401ks and stuff like there, they would be hurt by this. I think there's truth to both sides of this. It's the way I see this debate that everyone in real estate has about is your primary residence an investment or not. And the answer is it totally depends. If you use your 401k to go out and buy a dream home that is, you know, there's no meat on the bone. You're not equity. You're not forcing any appreciation. How does that compare to the stock market? I think that's up for debate. Like I've actually done the math myself and it really depends, like James said, on location.

20:03It's not clear cut any one way. But if you're going to go out and use a 401k to house hack or to buy a duplex or to do a live-in flip, then it's a totally different question. And so I think as an investor, you would see this really differently. And I think I'd have to learn the details of this. But if someone was like, hey, I want to go house hack. Should I tap my 401k? I think there's a lot of scenarios where I would say yes to that. That's probably a good idea. I personally am skeptical about the stock market returns over the next like 10 years or so. But if someone was going to say, hey, I'm not going to do all of that work.

20:41I'm just going to go buy an expensive house in my neighborhood. Should I do that or a 401k? That I think is risky because I do think people overestimates, the average person overestimates how much wealth like a primary residence brings. And that's why I think people like Robert Kiyosaki and Grant Cardone say, don't buy your primary residence, because I do think people overestimate. Usually it just keeps up with inflation. And so if you're going to do that, it's probably not the best move. But if you're going to do a strategy like we talk about here, then I think it makes sense. Yeah. This article drives me crazy and I could just go on my soapbox here.

21:16Please do. Do it. Okay. So in this, it says home prices grow around three to 5 % annually. By comparison, and the S &P has been at nearly 7 % returns. Okay. Well, let's just assume that people who are taking money out of their 401k are not paying all cash. Let's assume they're either going to do a 3 % down loan or a 20 % down loan. Let's say it's 20%. Now, if that house is making 3 % annually in growth, you got to times it by five. So you're making 15%, not 3%. It's just, I hate it when people compare appreciation of housing with what you made in the stock market because you're not leveraging your stocks generally.

21:59You're leveraging the house. So you've only put a small amount down, but you get the 2%, 3 % on the whole house. So it's just not good math, makes me mad. And I agree with you. If you're going to buy your primary, maybe you're going to do what I do, put an ADU on it, rent that ADU out or house hack, like you said, rent rooms out so that now your return is even higher, or maybe someone else is paying your mortgage entirely. You could keep investing in the stock market. You could take all that money and go back and put it back in your 401k. No one's saying you're not investing anymore. So anyway, drives me crazy.

22:33It's just not accurate. Maybe I have an unpopular opinion about this, but I just feel like it's your frick fracking money. So you should be able to access it when you want to anyway. Now, I understand that corporations match. And so like, maybe you don't get access to the money you didn't put in, but it's your frick fracking money. So if you want access to it, I think you should have it. I don't know. Maybe that's an unpopular opinion about this. I agree. I don't think there's a problem with it. I think people should be able to do what they want with it. But what I really loved about this article and how it was written, this is why I picked this one.

23:04They gave a case study. If you but$100 ,000 at the age of 35, after 30 years, 474 ,000 will be lost in growth by pulling it and putting it in your house. The amount of our population at 35 years old that has$100 ,000 in their retirement account is, according to Yahoo Finance, less than 5%. It's not a whole people. And so like the benefit to this is the people that don't have a ton, if you're buying in some of these more affordable areas, like Henry, your average home in your area, when you're selling for a flips, like what, 250 to 350, right? If you're doing an FHA, three and a half percent down loan, that's something that's actually achievable for people that can have a very big impact that they can get not outpriced out of the market.

23:56And so leaving 10 grand in the stock market versus being able to buy down and get your mortgage below a rent cost, it's kind of a no-brainer. Like, give people access, lock them in, they have affordability. I just, I didn't like this article because I just thought it was very, very heavily skewed, and it was completely negative in all the wrong ways. I feel like Dave wants to fight with me, and I kind of want you to. Why? Like, I think the question with the article is, should people be able to access it and use it without penalty? And I think the answer to that is yes. Yes. Now, I agree with you that it's not smart to access it and go buy a single family home that isn't an investment.

24:36I don't think that's a smart decision, but people make dumb decisions with their finances all the time. I got to think about it more. I don't have a strong opinion about it. I'm not going to argue with you. I'm just like the 401k was like created to help people retire, like whether it's effective or not is a different question or if there's a better system. But the whole idea was to create a tax incentive to people save money that they use later. So changing that and saying you can use it whenever you want is just like different. Like, why are we giving people a tax incentive? Yeah, like, why do they get a tax benefit to just go buy a house?