Weirdest Housing Bubble Ever: Will Your State Crash? | 3.9.25

Summary

Morning Wire Podcast Summary Episode: Weirdest Housing Bubble Ever: Will Your State Crash? | March 9, 2025
Hosts: John Bickley (Editor-in-Chief, The Daily Wire) & Georgia Howe
Guest: John Rubino (Financial Analyst and Author)

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Introduction

In the March 9, 2025 episode of Morning Wire, hosts John Bickley and Georgia Howe delve into the complexities of what guest John Rubino terms the "weirdest housing bubble ever." With trust in mainstream media dwindling, this episode offers a distinct perspective on the current real estate landscape, highlighting unprecedented trends and regional disparities that could signal an imminent market crash.

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Current State of the Housing Market

Georgia Howe opens the discussion by highlighting recent interest rate drops to their lowest since October of the previous year, which have ignited a 20% surge in mortgage applications. Despite this uptick, housing affordability remains a significant issue for many Americans.

"Interest rates dropped this week to their lowest point since October last year, sparking a 20% surge in mortgage applications."
— Georgia Howe [00:03]

John Rubino explains that while traditionally a housing bubble sees prices perpetually rising due to fear of missing out (FOMO), the current scenario is atypical. Despite sky-high prices, the market is "frozen," with home sales stagnating at levels reminiscent of the 1990s, even though the population has surged by 50 million since then.

"Normally the way a bubble works is that the price of something starts going up and it keeps on going up. But houses have become so unaffordable that the market is kind of frozen..."
— John Rubino [01:08]

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Unique Characteristics of the Current Bubble

Rubino emphasizes that the median age of homebuyers has surged into the 50s, starkly contrasting with the typical early 30s buyers of the past. This shift underscores a broader trend where only individuals at the peak of their earning potential can afford homes, leaving younger generations sidelined.

"The median age of home buyers now is in the 50s. It used to be 30 or so... now the only people who can afford to buy a house are basically people who are at their peak of their lifetimes of earning."
— John Rubino [01:08]

He attributes this anomaly to inflation, which has effectively debased the currency, making houses—traditionally seen as stable financial assets—escalate in price faster than wages. This dynamic disproportionately enriches older generations who own significant financial assets, including real estate, stocks, and gold, while younger generations struggle to achieve basic homeownership.

"We have basically screwed over younger generations while enriching the already rich. And that's what inflation does, and that's why it's so insidious."
— John Rubino [01:52]

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Regional Differences and Market Impact

John Bickley brings attention to the stark regional disparities within the housing market, noting that states like Florida and Texas are experiencing an overabundance of housing supply, whereas other regions continue to face shortages.

"Florida and Texas have an overabundance of supply, whereas other places have a persistent shortage."
— John Bickley [05:13]

Rubino explains that the saturation in these hot markets is a precursor to their inevitable decline. As inventory builds up without corresponding buyer demand, these regions are poised to experience significant price corrections.

"The bubble markets, the really hot markets, are the ones that break first."
— John Rubino [05:27]

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The Case of Austin, Texas

Austin, Texas, is spotlighted as a leading indicator of the impending downturn. John Rubino describes Austin as "ground zero" for the housing market's decline, noting a price drop of approximately 15% from its peak.

"Austin has basically been the hottest city in the country for the past decade or so... I think it's something like 15% from the peak."
— John Rubino [07:05]

He predicts that other overheated markets will follow suit, with potential declines ranging between 30% to 50% in the next couple of years, especially in areas where home prices have become wildly unaffordable.

"In many other places where home prices are wildly unaffordable, they're going to tank... 30, 40, 50% declines are going to seem normal."
— John Rubino [07:05]

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Factors Contributing to the Bubble's Uniqueness

Rubino identifies several factors that differentiate the current housing bubble from previous ones:

1. Rising Ownership Costs: Beyond high mortgage rates and inflated home prices, homeowners are grappling with increased costs in insurance, maintenance, and property taxes.

   "The cost of homeowners insurance is spiking and home maintenance is much more expensive than it used to be."
   — John Rubino [08:17]

2. Demographic Shifts: Baby boomers are downsizing from large homes, adding to the surplus inventory as they exit the housing market.

3. Corporate Ownership: Entities like BlackRock and Airbnb have amassed significant numbers of single-family homes, contributing to market saturation when they begin to offload properties.

"Wall street, you take Airbnb and boomers, put them all together, and you have this massive tidal wave of homes that are going to hit the market pretty soon."
— John Rubino [09:17]

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Corporate Ownership and Market Dynamics

The involvement of corporations in the housing market introduces a new variable. While not yet dominant, corporate ownership is growing, and combined with the impending downsizing of the baby boomer generation and the unraveling of short-term rental investments, it's set to exacerbate the inventory glut.

"It's a very big one. And like you said, it's a very new one... a lot of them are going to have to dumped onto the market."
— John Rubino [09:17]

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Areas Insulated from Price Drops

Not all regions will experience drastic declines. Rubino points out that areas which did not experience significant booms initially are less likely to suffer severe price drops. States like Missouri and Ohio, where housing remains affordable, are relatively insulated.

"The places that didn't boom in the first place... are insulated from the worst of the housing bust because they didn't boom."
— John Rubino [10:31]

Additionally, cities benefiting from new economic activities, such as the influx of technology companies to the Phoenix area, will maintain more stable real estate prices.

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Conclusion

In this insightful episode of Morning Wire, John Rubino provides a comprehensive analysis of the current housing market's precarious state. Highlighting unique factors like demographic shifts, rising ownership costs, and increased corporate ownership, Rubino cautions that a significant real estate downturn is imminent in many of today's hottest markets. For homeowners and potential buyers alike, understanding these dynamics is crucial as the housing landscape braces for what may become the most unusual and challenging bubble in recent history.

"Generally, if you've got a house now, your house will be less valuable in two or three years. And if it was wildly overpriced when you bought it, it's going to go down by a lot."
— John Rubino [10:31]

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Transcript

[Georgia Howe]

Interest rates dropped this week to their lowest point since October last year, sparking a 20% surge in mortgage applications. While housing remains unaffordable for many, some real estate experts say we're on the precipice of a market crash, but only in certain regions of the country.

[John Bick]

In this episode, we speak to a former Wall street analyst and financial author about why this housing bubble is unique and what he expects to see in the near future. I'm Georgia Howe with Daily Wire editor in chief John bick. It's Sunday, March 9th, and this is a weekend edition of MORNING Wire. Joining us to discuss what he's calling the weirdest housing bubble ever is financial analyst and five time author John Rubino. John, thanks so much for coming on.

[John Rubino]

Oh sure, Georgia. Good to meet you.

[John Bick]

Nice to meet you too. So you had a recent substack where you said that we are living through the weirdest housing bubble ever and you outline a few reasons for that. Particularly, you point to the age of first time home buyers. Can you unpack why this is such a unique time for homebuyers?

[John Rubino]

Well, yeah. Normally the way a bubble works is that the price of something starts going up and it keeps on going up. And eventually people get so excited by the rise in price that they experience fomo, fear of missing out and they start piling in and you get a lot of action as the price goes up. But houses have become so unaffordable that the market is kind of frozen even though prices are just insanely high. High. And a normal person, especially a normal young person, cannot afford to buy a house. In the United States right now, the median age of home buyers now is in the 50s. It used to be 30 or so 30, 35 year olds. And now the only people who can afford to buy a house are basically people who are at their peak of their lifetimes of earning and have a lot of money saved. So you've got a market where even though prices are at an all time high, the amount of deals being done, the amount of homes being bought are at 1990s levels. Even though we had 50 million fewer people in the 1990s. That's the level of home buying and selling that's going on right now.

[John Bick]

And what are the reasons for that? One thing that comes to mind is there's sort of some consolidation among older people buying multiple homes and younger people buying none.

[John Rubino]

Well, kind of that explains what's happening. But the reason it happened is inflation. We basically debased the currency. That means the price of things when measured in Dollars goes up and houses are one of the financial assets because you use debt to buy a house, which makes it a financial asset. So house prices have gone up faster than the salaries of most people have gone up. So houses get more and more unaffordable with time. And that's not a function of houses changing in any fundamental way. It's the value of the currency going down. And what this does is it benefits the people who were there at the start of the inflation. Basically, baby boomers, my generation, we own a lot of the financial assets, we own the houses, we own the stocks and we own the gold. And all of those things are going up dramatically. So we're getting richer while the younger generations are being impoverished because they can't even afford the basics of adulthood right now. You know, if you're a 30 year old and you want to start a family and buy a starter house, good luck, unless you make a quarter million dollars a year, you know, and very few people at the age of 30 do that now. So we have basically screwed over younger generations while enriching the already rich. And that's what inflation does, and that's why it's so insidious. The housing market is a perfect example of that. So where we go from here, though, I think is the really interesting part of this story, because people are starting to put their houses on the market now, but they're doing it at current prices, which means nobody can buy them. So inventory of homes for sale is starting to pile up. In a lot of formally hot markets like Texas and Florida, you're seeing a lot of people try to sell their houses, but there are no buyers. And so what happens then normally is that the people who are trying to sell their houses, some of them pull the house off the market in disgust and others cut their prices. And this sets off a panic in which people who really need to sell their houses basically have to sell them for whatever they can get for them and prices plunge. And so we're headed for a time like that as inventory builds up dramatically in a lot of formerly hot markets and people get ready to start panicking.

[John Bick]

And are we seeing delisting rates climb? Is that where that comes in?

[John Rubino]

Yeah, delisting rates are starting to climb, and that's a sign that we're topping now that all the things that happen normally at a top are beginning to happen. More listings coming on the market, more delistings as people can't sell their houses. Oh, and there are also a lot of price cuts. You go to Zillow and you'll notice that a lot of houses have already been reduced.

[John Bick]

Now, you and the Wall Street Journal highlighted that there are some very significant regional differences in the real estate market. For example, Florida and Texas have an overabundance of supply, whereas other places have a persistent shortage. What's causing that?

[John Rubino]

Well, there's just been a lot of action in Florida and Texas and a few other states. Those are the places that people have been moving to and where a lot of houses have been built in response. You know, there's a tremendous number of new houses in the process of being built there right now. So in other words, the bubble markets, the really hot markets, are the ones that break first. And where the real action is now.

[John Bick]

Is the migration of people moving to those states slowing?

[John Rubino]

Yeah, it's slowing, but it hasn't stopped yet. People are still moving to states that they perceive as better run, and they're moving out of states that they think are badly run. That's continuing, but it's slowing down because nobody can afford to buy the houses in the hot markets that they're moving to now. You know, for the past 20 or 30 years, if you sell your house in California, you could pretty much go anywhere and buy a really nice house. But now home prices are starting to equalize. They're going up even in. Well, Nashville, for instance, is a super hot market in Tennessee. And a lot of other Tennessee cities are starting to boom, and that always leads to higher prices. And in Florida and Texas, a lot of the formerly affordable neighborhoods aren't affordable anymore. So it's harder and harder to move to these places. Fewer and fewer people are doing it. And again, that's topping behavior. Once we reach the point where that rolls over and people actually start leaving the formerly hot states, that's when the real estate market really tanks.

[John Bick]

Newsweek put out an article calling Austin, Texas, ground zero for the market downturn. First off, can you explain what you've seen there? And also, do you think other hot cities are going to follow? And how long will that take?

[John Rubino]

Yeah, Austin has basically been the hottest city in the country for the past decade or so. But inevitably the pendulum swings too far. And Austin is now unaffordably expensive and the prices of houses are starting to go down there. I think I don't have the exact number, but I think it's something like 15% from the peak. Prices are down in Austin. And you know, there's an old saying that in a bull market, prices go up on the escalator, and in a bear market, they go down in an elevator. In other words, they go straight down when they start to fall. And yeah, we're heading for that in a lot of hot real estate markets where prices just start to gap down. And Austin is definitely one of those places. Some places, for instance, Ohio, prices there just aren't that expensive. So it's not going to plunge there. But in a lot of other places where home prices are wildly unaffordable, they're going to tank. You know, 30, 40, 50% declines are going to seem normal at some point in the next couple of years.

[John Bick]

Now, you argue that the traditional boom bust resolutions aren't going to suffice this time around, in part because other costs are going up. What's unique about this bubble?

[John Rubino]

Well, as you mentioned, there are other costs of homeownership that have really spiked as part of the whole inflation thing. The cost of homeowners insurance is spiking and home maintenance is much more expensive than it used to be. And taxes are going up, property taxes are going up in line with home prices. So owning a home is not only expensive because you have a high mortgage rate and the price was very high, but you've got insurance and taxes that are much higher than they used to be. So first of all, there's a lot of people who are priced out of buying a house. They can't do it. And then there are a lot of people who own houses but can't afford to keep those houses. So add it all up and there's just a massive amount of inventory coming our way.

[John Bick]

Now, I know that in the past few years I had read that companies like BlackRock are buying up a lot of housing, and I imagine that's different from past generations. How widespread is corporate ownership of things like single family homes? And is that a big factor?

[John Rubino]

Yeah, it's not the dominant factor in housing right now, but it's a very big one. And like you said, it's a very new one. Two other new ones are Airbnb properties where people built little empires of condos and rental houses. They're not making nearly as much money off of them as they thought they were going to, and a lot of them are going to have to dumped onto the market. And finally, baby boomers, you know, we're retiring and that three story McMansion with an acre of land to take care of just isn't as easy on our hips and knees as it seemed at the time when we bought it. So boomers are going to have to start selling their big houses and downsizing. So you take Wall street, you take Airbnb and boomers, put them all together, and you have this massive tidal wave of homes that are going to hit the market pretty soon. And it seems to be, you know, reaching kind of peak complexity right now where home prices are starting to roll over. And the next year the story is going to be instead of high house prices, it's going to be all the discounts you can get.

[John Bick]

Wow. Now, do you think there are going to be some areas that are insulated from price drops? I know, for example, in 2008, some places the prices leveled out and other places it totally cratered. Where do you think is going to be relatively stable?

[John Rubino]

Well, the places that didn't boom in the first place. I'm hearing a lot from a lot of people who are moving to, like Missouri, for instance, where prices are still completely affordable. And Ohio, as I mentioned before, same thing. So they're insulated from the worst of the housing bust because they didn't boom in the first place. And then other places that have some city specific or state specific thing going on, like for instance, there's a lot of technology companies that are moving to the Phoenix area and that will help support real estate prices going forward. In other words, they won't crash the way some other places will crash. But just as a general principle, home prices will probably be going down irregularly in different places. But generally speaking, they're going to drop going forward unless some really radical thing happens out there that's not on the horizon at all. So generally, if you've got a house now, your house will be less valuable in two or three years. And if it was wildly overpriced when you bought it, it's going to go down by a lot.

[John Bick]

Well, John, thank you so much for coming on today.

[John Rubino]

Oh, sure.

[John Bick]

That was financial analyst and author John Rubino, and this has been an extra edition of Morning Wire.