The $84T “Wealth Transfer” Coming for the Housing Market

Will the housing market surge for the next 25 years, or is the silver tsunami overblown? In this episode, the hosts of “On The Market” delve into the potential impacts of an $84 trillion wealth transfer on the real estate landscape. As millennials stand to inherit significant sums, will this money flow into real estate, and could it shake up the housing market? As they explore these trends, they also weigh in on the ongoing debate: will aging boomers lead to a market crash or a boom? Tune in to find out how interest rates, mortgage rates, and housing prices may evolve in the coming years.We got another week and another slew of important headlines that investors need to understand to help our audience here at On the market make sense of what’s going on. We got our full panel here today, Henry Washington, Kathy Fettke, and James Dainard. James, how you doing man?I’m doing good. Sunny Arizona. The heat went from one 15 to 98, so we’re doing pretty good.How do you live in one 15? How do people live in Phoenix? I just don’t understand it.You know what? If it’s like 1 0 5 or less, it’s great. 1 0 5 to one 10 a little warm one fifteen’s hot.Kathy, you’re the weather. I want to be in Southern California. That’s what actually makes sense.I mean we had a heat wave this week of like, I don’t know, 95. I was dying.Well, hopefully you survived.We do have ac. I’m very happy to sayHenry, how are you doing? I’m fantastic but glad to be here. It is actually unseasonably cool here, so it sucks for you guys.Alright, well enough about the weather. Let’s talk about the economy and the real estate market. We’ve got four headline stories for you today. Kathy, you’re up first lead us off.Well, I just couldn’t resist this article from Housing Wire just came out as titled the 25 Year Housing Surge and Why the Boom is Just Beginning and I thought this was a really interesting piece because I just noticed some comments on the last YouTube show I did and people saying, oh, we’re ready for the crash, don’t buy anything now. And I was sort of arguing and then I thought, what am I doing arguing with people? Why do I do that? Anyway, so this was kind of an interesting perspective, some of which I agree, some I don’t. But the big point they make is that there is an 84 ilion that’s T trillion wealth transfer coming over the next 20 years and this is a huge deal that people need to pay attention to that as the older generation passes on, they pass on their wealth is well and who’s going to get it?
Many much of it is going to go to the millennials and because millennials are buying homes later because it’s been so cost prohibitive, it’s been difficult when they inherit that money, where’s it going to go? Probably real estate. So keeping that in mind, the articles basically saying this is we all know a huge generation of people who are going to inherit a huge amount of money and very often, especially by the age of 38, which is the median home buying age today, it’s six years later than normal. Because of that, they’re going to probably be buying homes. Not to mention that there’s pent up demand everywhere. Apparently seniors are also buying property, so they’re competing with the younger group because they do have all this money and people like to own real estate whether they’re renting it like we do or they just want to have their second home or maybe their third home. The article also goes on to say that properties are 2% more affordable than they were a year ago because of interest rates coming down a bit and home prices coming down a little bit and as a result there was a surge of mortgage applications.I think this logically makes sense, but people have been calling for this silver tsunami or this wealth transfer for a decade now, and I think the thing that I find so interesting about it is half of the population seems to point to aging boomers and say it’s going to crash the market and then the other half seems to say, Hey, look at all these aging boomers, it’s going to make the market explode. So there’s just completely contradictory reads of this situation and just in my experience when these things tend to happen, it’s usually something much more boring, neither usually happens and things kind of just continue to go the way that they used to be.There’s one part of the story that I’m like, this is just bad math that they did that a lot of it’s based on and they talk about the massive number. They say there’s 73 million millennials and as they inherit this money that’s going to be 38 million prospective buyers. So basically saying that half of all millennials are just going to go buy a home when many of them already do and some of them just will never. So it is just like no.Yeah, I was reading that part of this too and it’s just if you look at the source article, they’re extrapolating what people say they would like to buy a home that year and so they’re saying, oh, 37 million people would buy a home in a year. The record in a single year is six and a quarter million. So just like, let’s put this in perspective, it’s not going to grow 600%. That’s just not going to happen. There’s not inventory for it. Most people can’t afford that. So I think that part is a little crazy. I just think sometimes these articles cherry pick demographic trends
And they say like, oh my god, millennials want to buy a home, gen Z wants to buy home. That’s true, but that’s looking at one side of the equation. It’s not looking at the supply side of the equation, it’s not looking at the patterns in how long people are staying in their homes, people aging in place. It’s just like I get the idea that there could be tailwinds for the housing market for the next 25 years. That might be true, but I don’t necessarily think we’re going to see some enormous boom in the housing market for the next 25 years because if anything, the demographic trends are actually going in the other way in my opinion.But boomers are living longer and so that is a factor and they do have a lot of money that they can pass on and maybe just buy their kids a house if they have that much money.You know what, the biggest things that I think is a concern for me on this article is the average first time home buyer age keeps creeping up to 38.It’sCrazy what’s it going to be next year? And that tells us that it is not affordable to own homes at a young age and that’s the big concern. If this trend continues with credit card debt, all these things racking up on people, the buyer pool could be really small and that’s what could cause the issue in the markets.Yeah, I agree. One of the articles I was researching for this episode was actually about how there’s only two states where the median income supports people to be able to afford to buy a home in that state. God, can you guess which two states?Ohio?No,Arkansas.Nope. It’s going to beMichigan date with a good economy Indiana, Virginia.Nope. Nope.Shit, we suck at this.I’m just guessing now when I say it you’re going to be like, oh yeah, okay, Louisiana and West Virginia.I meant West Virginia,But that’s a serious problem. It’s terrible. No one terrible one can afford inventory That’s growing up right now. Mean especially if you’re in the first time home buyer lower price points, your buyer pool shrinking and that’s not good. Yeah,I mean that seems kind of normal for California if you’re lucky if you could do it by 38 and often never, but in areas where the home prices are two, three, 400,000, it is more shocking.Yeah, I mean it’s bad for the housing market. I just think it’s bad for our society in general. This is one of the things that underpins the American dream being able to afford a home and people can’t and it’s a big problem. I think it will get better, but it will get better because home prices are probably going to stagnate for a while at least in real inflation adjusted returns. And I mean to me that’s the best case scenario. I know a lot of people think there’s going to be price booms or there’s going to be a crash. Personally I think it’s going to be a lot more boring and we’re going to see things kind of stagnate, but that’s what we need for the long-term health of the housing market. We need affordability to come back and there’s really only one way that that happens in a healthy way and if home prices stagnate and wages continue to go up, to me that’s probably the best case scenario to unwind what’s a challenging situation we’re in right now because otherwise what do you do? You have a crash that’s no good or you have some sort of melt up where prices just keep going up more and more and that makes the problem even worse in the future. So I know some investors say, oh, that gets scared by that, but I actually think that’s what we should be hoping for is this kind price stagnation for the next couple of years.
So there’s a lot of really good information here and I do think there’s a lot of, I agree that there is a lot of reason to think that the housing market’s going to keep going, but I think there are some big questions about how that actually materializes and what’s going to be driving it. But I think we’ve sort of centered on an important point here about housing affordability, which Henry, I think your story has something to do with that, right?Absolutely. So my article is titled Five Ways the Trump Administration Could Use Declaring a National Housing Emergency to help home buyers.
Essentially it just kind of breaks down talking about what happens if a national housing emergency is declared. It essentially gives the president some decision-making powers that he doesn’t have to go through the normal routes of getting approvals from Congress and such in order to do things. But it talks about five things that he could potentially do and how it might impact the market. And so briefly I’ll cover them. One is to free up the federal land for housing development, which we talked about. There’s about 850 square miles of land that he could make available for housing development, but I think we’ve talked about on a previous episode that that’s notGoing to do anythingSuper feasible in order for it. That’s not all developable. There’s tons of reasons why you may not be able to do that.I think Kathy said it last time, she was like, there’s a reason there aren’t houses there.Another thing is increased flexibility in zoning and lot sizes. Now this I like that one. It’s similar to what they’ve done with this A DU strategy across the United States. Yeah, I think that that could be super helpful. I think part of the reason why people don’t build affordable housing is because they can’t make money building affordable housing. And so if you change some restrictions, maybe the land gets a little cheaper, there’s more opportunity for you to make money building housing that people can afford, then maybe it becomes more profitable. We’ve always talked about if affordable housing’s going to a thing, it’s going to take the local government, the federal government builders and regular mom and pop investors like us to all come together to build affordable housing in a way that it’s sustainable.Honestly, I usually favor local and state regulation of building and things, but there’s so much nimbyism and stuff. I almost think regulation across federal guidelines or something makes sense because you’re always going to have these municipalities where people just refuse to allow zoning.
It doesn’t have to be blanket the same for everyone, but some incentive or I don’t know what it is, but something that’s going to help this because you said it with affordable development. Like Kathy, I know you’ve tried to do that and struggled with that before. I was just looking into, I own a property in an area with severe affordable housing shortages and I wanted to convert a structure I have into affordable housing and I can’t do it. It just doesn’t make any sense. I have a structure that people could live in and they won’t let me do it. So these kinds of things, it just stalls progress. So I don’t know if it’s going to happen, but I actually kind of think something like this makes sense.And in a lot of places the powers literally in one or two people’s hands, they just decide likeThe countyClerk, yes,
I have a deal right now. I bought a house. It is on 1.75 acres or 1.65 acres, something like that, but the house is literally sitting all to one side of the acreage. So there’s a big over an acre spot to the south side of this house, and I could absolutely split that lot without having to do any site development work. And then you’ve got this whole nother lot that can be built or developed on, and I called the city and the lady basically said, nah, if you had two acres, I’d let you split it, but I’m not going to let you split an acre in less than two acres. It’s just her decision. She’s just some lady, it’s so annoying at the city and we need housing here. We have people that are moving here, 33 to 40 something people a day move here and we definitely need the housing, but people are just like,I don’t feel like it. It’s so frustrating. And then for builders, it depends on the municipality, but oftentimes you are required to build 30% affordable and that is just going to be a loss. So you have to make the profit somewhere, and in our case, we lost so much building the affordable units because costs went up so dramatically that there was no profit. And again, what builder’s going to do that even when it’sRequired? All right, well, it was number three. Number three is the obvious lower mortgage rates. So Trump, we know he is pressuring the Fed to cut the rates. However, because the rates are tied to the 10 year treasury yield, that doesn’t necessarily mean that the rates are going to drop to where people want it to be, might not move the needle like people expect. Number four is another interesting one is cutting the closing costs. So right now closing costs currently run between 2% and 5% of home value on a 300 K home. That’s about six to 15 K in upfront costs, so having some power there to potentially cut that cost for people, that’s not a ton of money, but anything helps itBe aLittle more affordable. That’s what my question was going to be. That’s how ISounds great.Yeah, sounds great in theory, but a lot of that cost goes to the abstract companies who are doing this work. How does that happen?Yeah, they got to get paid praises still need to happen.Well, they’re pretty sure there’s going to be Trump title and escrow.You know what? That’s the joke, but I would not be surprised, but it’s not funny. That would not be surprised if that actually comes to fruition.Yeah, I mean all these things make sense actually. I will say if you’re listening to this, a lot of states and municipalities do have programs where you can apply for grants for closing costs. That is a good thing. You can maybe create more grants, which I would imagine might work. I don’t know if that’s truly making housing more affordable. It might even push up housing prices and make it less affordable for people who don’t have grants, but I do think if they could pull that off, that could help a little bitOr you could do what he’s doing. You could do what he’s doing and just affect the job market. So it slows down and then rates go down, but that’s another story we’ll be talkingAbout. Well, that is my story. My story is all about the labor market, so we’ll get into that oneCosts. It’s all about market timing right now. Who wouldn’t take a full price offer on the property if they paid all their closing costs for their buyer all day long? The closing cost factor are market conditions. If the market’s slow, the seller’s paying for it anyways typically.That’s a really good point. All right, what’s our last one, Henry?And the last one is adjusting capital gains exemption for inflation. So right now, if you sell a house and you’ve lived in it to out of the last five years, you don’t have to pay capital gains up to 500,000 for couples 250,000 for singles, but since those haven’t been updated since 97, they’re saying they could raise that exemption up to a million dollars and essentially freeing up capital. My wife’s going to be so mad.Oh yeah, you guysWould be moving all the time. This is so silly though. I am not saying you shouldn’t change it, but this is not going to make housing more affordable. That’s just like a different problem, right?Oh, that’s just giving you more money that doesn’t make the house more affordable.Yes, it’s a different thing that’s helping the rich. If anything, it’s just helping wealthy people have more capital to buy other homes.It’s helping the boomers that we were talking about who bought their house for a lollipop and then they sold it for $3 million. Now those boomers can go buy another house.They get a million of itTax free.IMean,I think that housing affordability is a national crisis. I do think this is a bad problem. I don’t really see how it gets better by really any of these things because yes, they’re saying lower mortgage rates, that’s not necessarily going to happen. The federal government can’t dictate that unless they change the entire system. And there’s even things like IPOing, Fannie and Freddie that might push up mortgage rates. There’s all sorts of things that are going on, so I would like to think this would work, but unfortunately I do think it’s going to have to just be the free market working this out over time and that might take some time.
The one thing I would, again, this can’t be fixed by the federal government, I don’t think. Maybe someone has an idea, I don’t understand, but the thing that’s not on here that needs to be on here is lowering the cost of construction. Really, really the problem is no one can build affordable homes efficiently, and I know that’s difficult because labor costs are up and material costs are up, but until it’s cheaper to build stuff, we’re going to have this problem. We need construction cost relief somehow, but I digress. All right, well, let’s take a quick break, but we have two more stories when we come back. Stick with us. Welcome back to On the Market. I’m here with James, Kathy and Henry sharing stories from the last week that have caught our attention so far. We’ve talked about the housing surge that some see coming. We’ve talked about Trump administration potentially declaring a national housing emergency and some ideas that are being floated there to improve affordability. What do you got, James, for your story?So my story, I thought it was very fitting zombies.Oh, this is your brand now. Yeah, you’re going onBrand. As soon as I saw the word zombie, it’s just in my brain all day long. Speaking of which, we bought some nasty houses this year.For anyone who doesn’t know, James has a TV show called Million Dollar Zombie Flip. That’s why he’s on brand here.This article, zombie foreclosures are creeping up in these five states. And you know what? One thing I really do appreciate about this article by realtor.com is they didn’t make it seem like it’s exploding or up 300% in the world’s ending. I think the key word of this is this creeping up and what this article talks about is it talks about how zombie foreclosures, which are just vacant homes and foreclosures have been rising in some states like Washington has risen over a hundred percent. Now, this is still not a lot of homes. We’re talking about an additional 50 zombie houses in the market.I like that about this articles. Yeah, they’re up in Colorado, 115%, which sounds scary, but it went from 27 homes to 58. People look at these, they’re like, oh my God, the market’s crashing. It’s like, dude, that’s 31 more houses in a state with millions of homes. Wow.What I really took away from this news article was there’s a slow trend going on because I’ve been talking to a lot of REO brokers that sell a lot of REO properties and for the last 12 months, and I haven’t seen it yet, but I’m starting to see a little bit of it, is they’ve been saying that they’ve been working on a lot of files, like hundreds of properties, but nothing’s coming to market.
And so they’re going through, they’re doing these things, they’re securing, but they’re not coming out. And that was interesting to me when I keep hearing this because the thing that we’re looking at, especially as flippers and we’re building out our strategy over the next 12 months is how many buyers and what’s the absorption rate in the market, which we know is cooling down right now, and then what inventory is coming out that we weren’t expecting because anytime, especially in 2008, that was the issue. There wasn’t enough buyers and there was way too much inventory. Now, we’re not going into 2008, but it’s something to pay attention to because as we’re underwriting how we’re going to purchase over the next 12 months, we have to factor these costs in and the foreclosures are on the rise, which is going to cause more inventory, but also more opportunities.
And then it’s how do we look at these opportunities to make sure that they’re still profitable or they cash flow? When I was researching this though, a lot of this inventory actually is in the first time home buyer market, and so what Kathy touched on first time home buyers are getting older, there’s less of ’em, there is more inventory coming up. Bank owned REO, there’s more people on all time high credit card debt that now are taking their properties and they’re trying to get more affordable, and that’s what we have to watch out for as we’re looking at any type of property, whether it’s we’re buying to resell, where is the most inventory coming in? We might want to avoid those areas or increase our returns or increase our timelines because that’s what’s beating up investors right now. They under judged the cost of the debt and how long they have to hold onto these things before they sell ’em.
Also, it’s telling me where to target and going, okay, well if there’s more inventory coming up, I might want to buy less rental property in those areas too, because rents could go down as inventory goes up. And so all these news articles that go out, I’m really trying to pay attention and it’s not about the now like, oh, the market’s crashing, more inventory’s coming. It’s going, okay, what do we do over the next 12 months and over the next 12 months, if we think there’s less home buyers that’s creeping up, there’s more inventory, there’s more shadow inventory that could coming to market, that’s where you just want to be a lot more conservative and factor for different costs in your deals. Properties we’re selling right now, we’re still getting close to what we thought we were going to sell. It just takes a lot longer. And so these are really important things for investors to look out for because you don’t want to get trapped in a long hold and more inventory is what causes that.I mean, I think this just mirrors kind of what we’ve been talking about in terms of what you need to look out for. As a flipper, you’re just doing what you should be doing, which is monitoring the market and then adjusting your underwriting. I’m assuming you’re planning on longer holds, right? And that’s really what people need to be watching out for if you’re investing or flipping in this market because it is going to take longer. But we’ve seen the same thing. Things are still selling. It takes a little bit longer, but I mean I’ve only had to drop price on two of my last 10 listings and most of them sold within the first two to three weeks. So it’s just a matter of paying attention to your market, which I think is always what you should be doing, but now it actually can bite you in the butt if you don’tFor sure. I mean, there’s been a zombie up the street for years and no one would touch it because the amount of work to fix that thing up, it would just be so much easier to tear it down and rebuild from scratch. Someone finally did, and it must’ve been a rookie is all I can figure because they had to do so much work and it has been on the market, on the market, on the market and the price reductions and again, just didn’t know the market.That’s too bad. Bad timing. One opportunity on this, if everyone’s listening, I have seen people chase this unicorn for 20 years where they think all this bank owned inventory is back, they’re it shadowed and they’re going to call up the banks and try to chase it down and get these really, really good deals. Don’t waste your time doing that.It’s such a waste of time.That’s what I was going to ask you. Is this even a good idea? People are like foreclosures. I’m like, really? No, because they’re soDilapidated. That’s okay. I don’t mind the dilapidated, it’s just the chasing of them.There’s literally 61 of them in the whole state of Colorado. We can’t be telling. We have tens of thousands of people listen to this podcast. All of them are going to compete for those 31 properties. It’s just ridiculous. And half of ’em probably stink. They’re not even worth it.No, they’re over leveraged. They’re usually not dilapidated. They’re just over leveraged a lot. The dilapidated ones are the ones you want usually under leveraged, but don’t waste that time. I mean, there’s so many other vacant homes, target those. The bank owns one. You just got to let ’em come to market because also if they’re fanning and Freddie backed, they have to sell it within a percentage of appraisal. And so if you want to chase that stuff down, the only opportunity which can work is if you’re going to try to go find that shadow inventory, you want to have your title rep, pull the deed, see who the lender is, and if it’s a non Freddie Fanny loan, then start pursuing it. Local banks, small banks, hard money lenders, great things to go call on that’s going to shrink who you have to call dramatically, but just don’t spin your wheels and go chase the tape of inventory that I’ve seen.The thing that has worked for me in the past is not chasing the foreclosures, but actually finding a good source of, not Zillow, but a good source of pre foreclosure data. Some of these sites have really good pre-foreclosure data and they’ll tell you when the court date is. And so what I would basically do is go put all that data into a spreadsheet and I’d filter it and anything that had a foreclosure date more than 45 days out, I would send direct mail to and I would send a targeted mail telling them I can help save them from foreclosure by buying their house so that they can actually make some money. That wasn’t anything that took a whole lot of extra time on my part. And the people who were interested would call because they don’t want to lose their home and they don’t want to get a foreclosure.
And the ones who are still in denial or in some sort of other situation where it’s not going to fix it, they don’t call you back, but that way you can still target that list without having to chase that because everybody’s trying to chase a foreclosure. Every new investor wants to chase a foreclosure and there’s a lot of work you’ll spend doing nothing. And like James said, the leverage, sometimes you do get ahold of one of these leads and there’s so many liens on that property that even if you paid it off, you’ve still got the liens, eat up your profit. There’s a lot of pitfalls with foreclosures that I think new investors don’t know about and you get yourself in trouble.Yeah, that’s why I made no money in my first year. I spent so much time on foreclosures and I finally get on our contract and they’re like, oh, they owe way too much, dude, you can’t buy. It’s a short sale.And by the time that happens, the lawyers have racked up so much in lawyer fees that you have to pay off as well that that payoff just starts to go up and up.Well, I don’t have time for this. I don’t know. All right. But it is interesting. I think if you are a certain kind of operator, it can make sense. I think my main message to people about foreclosures is just like, please read the absolute numbers. If you see these headlines, please understand what is going on here and that this is not some crisis and the amount of equity people have in homes is just remarkable right now, the chances that we’re going to have a foreclosure crisis market may go down, some things could happen, but the idea that we’re going to have a foreclosure crisis is not really materializing in any measurable way. This is a reversion back to the mean where we’ve had very low foreclosures and things are starting to come back and that’s normal and that’s part of the housing market. And just to remember that. All right, we’ll take one more break, but we’ll be right back.
Welcome back to On The Market. I’m here with Kathy Henry James talking about the latest stories that are making news. And mine comes from this very morning where jobs data for August just came out and it was not very good. The economy still added jobs, but only 22,000. That’s in comparison to last year when we were adding over a hundred thousand regularly. There were some revisions that showed that in June we actually lost jobs in the economy. And I understand there is a lot of skepticism about the jobs data these days, but I personally, when I look at the labor market, I just like to look at all the data. I don’t think any one metric is perfect, but I think if you look across all of the different sources, private sources, public sources, survey data, it’s all showing the same thing. The labor market is getting weaker.
It is not in an emergency status right now, but the trend is very clear. We’re seeing the unemployment rate go up. We’re seeing the number of hiring go down actually this week. This is a nerdy one, but there’s something called jolt, which is just job openings in the United States. And this past week we passed some kind of critical threshold in my mind where there are now more job seekers than there are job openings in the United States. That’s the first time that’s happened in many, many years. And so it just raises the question of one, are we going to see a recession and we’re going to see declines in spending because people are losing their jobs? And two, what does this potentially mean for the housing market? Because this, although it’s not good, I never would want the labor market to decline. It could be good for mortgage rates.
This could lead to not just the Fed cutting rates, which again isn’t going to directly influence mortgage rates, but it could push down bond yields when bond investors do get afraid of recession, which this is a signal of a recession, not necessarily going to happen, but this is sort of an indicator of recession, I should say. It could push down bond yields. We already saw them drop today just from this news. So I don’t know what you guys are thinking about this, but for me, it makes me a little bit worried just about the economy in general, even if it is going to help the housing market.I don’t know about any of this report. Do we ever even figure out if the jobs reports were really that skewed or not? It is like you just get nonsense of people throwing out like, oh, the reports were wrong. It wasn’t growing the way it was, and now it’s contracting. It all sounds like nonsense to me.I mean, every data collection is imperfect, but it has been done the same way for years. So as an analyst, the way you look at that is that the trend should still be right. The absolute numbers may not be perfect, which is always true, but if it’s being collected in the same way, the trend should be accurate. And so what we’re seeing is that there are more job hiring over the last couple of years to now. And I guess this just tracks with also private data. So I know a lot of people are critical of the BLS, but a DP and these other companies do track private payrolls and they’re showing the same thing. Hiring is slowing. And so yeah, I don’t think anything is perfect, but does anyone have evidence that jobs are going up? I haven’t seen any evidence of that.I have in hiring. Everyone keeps asking for more and more and more. I mean, we’ve been interviewing marketing people, we’ve been interviewing trades. It seems like people have enough work to me, what people are asking for is higher and higher and higher. And even when we do post job ads, we get a lot of people applying and then they don’t follow through or they got a job immediately elsewhere and they’re gone if there were any good. And so in my market, I don’t know, I can’t find people to workWell, Seattle might be a little bit different. It’s like one of the strongest economies and all of the investment in the entire economy. If you look at where capital expenditures are going in the economy, it’s all to AI companies and what two of the five biggest AI companies in the world are in the city. So I think that might be a little bit skewed, but I know people get so worked up about the politics of this. I don’t think this is a political thing. AI is going to hurt the job market. I don’t see a way that it doesn’t happen. This is just a technological thing that is going on. And you had Mark Benioff, the CEO of Salesforce, huge company yesterday, said that he could cut his customer support team down by 40% already has. This is just the beginning of this. This isn’t a political thing. I’m just saying the job market is going to take a hit because of ai. I can’t imagine a way it doesn’t. And so I just think, I just wonder, it doesn’t seem like anyone’s trying to fix this. It just seems like we’re just waiting to see what happens.It will also create new jobs, but not at the rate that it’s going to eliminate jobs. I mean, I went to order chicken from Slim, and the person taking my order at the Drive-thru window was an AI customer service spot.So it wasn’t a person.It was not a person. And when I noticed it was ai, I tried to throw it off. I was like, you know what? Scratch that. I want you to do this instead with that and this on the side. And it was like, oh yeah, no problem. Got my order. And I was like, and it was nice. You try to change your order at see if they’re nice to you.Oh my God, I love how nice chat GPT is to me, you know, ask questions. It’s a great prompt, Dave. What an excellent question. It’s just always buttering you up. It just blow smoke all the time. But I’m here for it.I do have one article and it is from Unleashed Prosperity. This is Steven Moore who he’s an advisor to Trump. I subscribe to all news. I want to hear what all sides are saying.Same. I do too.And this said, we need accurate and reliable job estimates from the Bureau of Labor Statistics, and we’re not getting them. One of the surveys that just came out, 22,000 net new jobs when another survey, the survey of households was 288,000 jobs. So that’s, it’s a big discrepancy. That’s a big discrepancy. Which one’s? Right? And he’s basically like, which one’s, right? We’ve got to fix this problem.What is the household survey?I don’t know. I’m just reading what he wrote. And then of course, there’s always the job revision. So I mean the surveys, I cannot believe that we rely on surveys for our jobs data in an era of ai. Come on, people. We could do better than this. We’re on the phones calling employers to see if they’ve hired. Please. It’s soLame. I agree. There’s all these different ways that are not good, but there are private, A DP is a payroll company. They actually have this data and it shows the same trend. It’s different number. It’s not 22,000, it was 54,000, but that’s what I mean. The absolute number might not be right, but the trend should be right. And the trend is going down. And so I don’t know if it added, it might’ve lost, but the labor market is getting weaker. I really have seen no evidence that shows that the job market is getting better. But I think Henry’s right that the labor market will recover. I know that there’s a lot of fear, but these things happen. Technology changes the labor market. It’s happened many times throughout history. It will create new jobs. I do think this is maybe one of the bigger disruptions to the labor market that we’ll ever see.
And it might not be directly proportional in the same jobs come back, but even if it does, there’s always just this reshuffling period and it takes a couple of months or years until those new jobs are created and people re-skill themselves. And I just think we’re at that point in the technological cycle that we’re going to go through that, and that is probably going to lead to some economic struggles for the country and for the world. This is not just a US problem, by the way. I think this is just a problem that we’re going to have, and that is probably why we’re going to start to see rate cuts. I think there’s good reason to think that mortgage rates are going to start to come down if inflation stays under control, which we’ll have to see. But I just think this is an important thing for investors to take note of, both for mortgage rates and for vacancy rates and for tenants, for rent growth, these kinds of things.
And people’s ability to pay could be impacted if this continues in this direction. Want to reiterate what I said? This is not an emergency level, it’s just a trend. Things can always reverse, but we are clearly heading in a direction where the labor market is getting worse, and that is something anyone who invests in anything needs to be paying attention to. All right. Well, with that super pessimistic downbeat note, let’s get out of here. Thank you all, Kathy, James, Henry, for being here. Appreciate you coming and sharing these stories with us. And thank you all so much for listening to this episode of On The Market. We’ll see you next time.