The David Greene Show — Mortgage Monday | Finally! Some Good News! | EP 80

Date: August 18, 2025
Host: David Greene
Guest/Co-hosts: Christian Bachelder

Episode Overview

In this episode of Mortgage Monday, David Greene and Christian Bachelder deliver “finally, some good news” for real estate investors, homeowners, and industry enthusiasts. With inflation data showing improvement, the Federal Reserve is now expected to lower interest rates. The duo breaks down what this means for mortgage rates, real estate affordability, and overall market trends. The conversation is packed with real-world analogies, unfiltered perspective on market misconceptions, and practical advice for navigating real estate in the current economic climate.

Key Discussion Points & Insights

1. Good News on Inflation and Interest Rates

• Context: After years of mostly bad news, inflation finally looks healthy enough for the Fed to consider cutting rates.
• Implication: Lower interest rates anticipated, providing relief to mortgage holders and potential buyers.
• Notable Quote:
  • "Inflation numbers are in, and by however they're measuring them, they look pretty healthy. And what that means is that the Fed can finally lower interest rates without worrying that prices are going to skyrocket." — David Greene (00:49)

2. Understanding the 'Basis Points' Jargon

• Christian defines frequently-heard finance term:
  • “A bip is a hundredth of a percent. So 100 bps is 1%... when you hear dropping rates by 150 bips... that's one and a half percent on the federal funds rate." — Christian (01:54)
• Mortgage rate math:
  • With mortgage rates around 6.5–7%, a 1.5% reduction could bring them to 5–5.5% if fully passed through.

3. How Mortgage Rates Respond to Fed Moves

• Common Misconception: People think mortgage rates instantly track Fed rate cuts.
• Reality: The mortgage market prices expectations in advance, so mortgage rates can move before the Fed actually acts.
• Notable Analogy:
  • “Rates move on news, not on the event… In mortgage lending, the banks are gamblers. They consolidate all of the news … and they predict where rates are likely to go, and that's what sets the rates." — Christian (04:51)
  • “Maybe they've already cooked that into your mortgage.” — David (06:28)
• Recent Movement:
  • "Just today we have about a 15 bip drop in conventional loan pricing… First week of June… interest rate was 6.85. Today… just under 6.5." — Christian (08:16)

4. Projected Path for Rates

• Outlook:
  • Rates likely to move down incrementally—"like an inchworm"—with possible quarter-percentage cuts spaced throughout the year.
  • "I don't think rates are going to drop by 2% a year... But once they start, typically they go, you know, a quarter percent, maybe two times aggressively, three times a year." — Christian (09:44)
• Macro Impact: Lowering the Federal Funds Rate reduces debt service costs for the U.S.—vital for national financial health.

5. Debunking Fears About Rate Cuts Sparking Price Surges

• Caution Against “Marry the House, Date the Rate” Hype:
  • Lower rates won't necessarily lead to an explosion in real estate prices—it’s more nuanced.
• Supply Constraint Insight:
  • Many homeowners are "rate locked" in at 2–3%. If rates drift closer to 4–5%, more of these owners might list, increasing supply and preventing runaway price growth.
  • “Rates coming down may increase inventory, actually having a reverse effect on what you think will happen, which is prices skyrocketing.” — Christian (19:42)

6. Recent Market Turbulence and Resilience

• Perfect Storm Recap:
  • Last decade’s boom was driven by low rates, quantitative easing, tax benefits, and economic optimism (the “kid on sugar” analogy).
  • The recent downturn: insurance hikes, rising rates, job losses, post-COVID uncertainty.
  • "If you bought real estate and held it, you did pretty much fine. But if you made your living from real estate, you took it in the shorts." — David (21:56)
• Key Lesson:
  • Staying the course wins long-term; chasing trends and hot takes tends to backfire.

7. Insurance Market Woes

• Christian and David candidly share their failed attempt at launching a new insurance agency, stymied by carriers pulling out of riskier markets such as Florida and California.
  • "We ultimately decided to table it for at least a couple years… there just wasn't anything to offer people." — Christian (16:23)
• State-run insurance is now the norm in those regions—raising overall costs for homeowners and investors.

8. Where Opportunities Exist Now

• Regional Hotspots:
  • Emerging activity in the Southeast (Kentucky to Florida), the Pacific Northwest, and reliable strongholds like Texas and Ohio (especially smaller cities).
• House Hacking Renaissance:
  • Notable trend back to fundamentals: multi-family and “house hacking” investments, especially for younger or first-time buyers.
  • "Whenever things get tougher, people always go back to the fundamentals. And if you look at every single investment strategy in real estate specifically… there's nothing that limits risk more than house hacking." — Christian (26:04)
  • Concrete example: VA loan buyer, 26, getting a triplex in California at a 5% rate with zero down—living for $1,400 month.
  • “It's your trusty, tried-and-true '98 Corolla… You're not going to spend $10,000 on an oil change.” — Christian (27:24)

9. Final Takeaways & Mindset

• Consistency Beats Hype:
  • "You can build a portfolio buying one property a year, putting 3 to 5% down… 30 years down the line… you won't regret it." — Christian (29:07)
• Don’t Race Social Media:
  • "Every time somebody posts… signing… they got another 27 units… you don't see them posting, I just went into foreclosure on 27 units." — David (22:54)
  • Avoid the temptation for showy, risky moves—focus on steady, resilient investing.
• Embrace Fundamentals:
  • House hacking, sustainable investments, and basic financial prudence provide true stability in uncertain markets.
• The Market is a Collection of Forces:
  • "There's never just one thing that determines where real estate goes. It's a whole collection. It's the whole story." — Christian (19:42)

Notable Quotes & Memorable Moments

• “This is the cranky pants era of the sugar rush that we had for the last decade.” — David Greene (13:31)
• "Rates move on news, not on the event." — Christian Bachelder (04:51)
• “Rates coming down may increase inventory, actually having a reverse effect on what you think will happen.” — Christian Bachelder (19:42)
• "If you just did [house hacking]… Those people are in the best position right now.” — David Greene (28:57)

Timestamps for Key Segments

• [00:49] — Inflation news: Why optimism is justified
• [01:54] — Explaining basis points/bps and real implications
• [04:51] — Real market reaction to Fed moves — “rates move on news, not events”
• [08:16] — Concrete interest rate example: June vs. now (6.85% → 6.45%)
• [09:44] — Projected incremental Fed cuts: how cuts usually roll out
• [13:29] — Explaining recent economic whiplash: sugar rush & cranky kid analogy
• [16:23] — Insurance crisis: What killed their startup agency
• [19:42] — How falling rates might actually boost inventory, not just prices
• [26:04] — Return to house hacking: The risk-limiting fundamental
• [27:24] — “98 Corolla” analogy: House hacking comfort vs. payoff
• [29:07] — Why slow-and-steady investing wins (“one a year” strategy)

Original Tone and Style

• Candid, conversational, humorous (“cranky pants era”, “98 Corolla of real estate finance”, “snot bubble prom date”)
• Heavy use of clear analogies to sports, gambling, and everyday situations
• Unapologetically “no fluff, no BS”—willing to call out industry myths and hype cycles
• Supportive and practical: a focus on fundamentals and sustainable wealth building

Summary for New Listeners

This episode is essential for anyone curious about what’s really happening in real estate and mortgage rates in mid-2025. David and Christian offer the good news—relief is on the horizon—but temper it with a level-headed, deeply experienced perspective. Key takeaways include the reality of how rates move, why the market doesn’t behave in simple “cause and effect,” why fundamentals like house hacking matter now more than ever, and clear guidance to advance your real estate investing journey in volatile times.

If you want insight, actionable advice, and a pinch of humor as the housing market heads into a new phase, this is required listening.