FREE MONEY For First Time Home Buyers? (WATCH THIS)

Michael Zuber (0:00)

Alrighty, folks, I don't know if you were with us last week, but Taylor was like omniscient. He said, if the 10-year note blows through 5%, watch out, something might break. Well, if you're not paying attention, in simply seven days, the 10-year note as of right now is 5.27, up another nine basis points. So we're gonna talk about that. We're gonna talk about what historically has happened when the 10-year note races ahead because something always breaks. We will talk about Torsten Slocke and his thoughts on a bank run caused by AI.

We will talk the big week. We got two massive numbers this week. We got PCE, we got jobs, and of course, we got the Fed meeting coming up. And if we have time, we'll talk about a diesel export ban because again, all of this stuff is going on right now. Taylor, just wow, so much stuff going on.

Taylor (0:52)

There's a lot, and I'm not gonna get into any of this because I'm gonna fire one back at you.

Michael Zuber (0:56)

Oh, really? Okay.

Taylor (0:57)

This is your area, not mine, my man. Home Ownership Promise Act.

What do we have going on here? You got to break this down for me because I was scratching my head and thinking, and I'm like, you know what? I'm not gonna put too much time to this. I'm just gonna ask Michael.

Michael Zuber (1:13)

There you go. So this is another attempt by the government to, let's just call it reinvigorate, restart the housing market, right? Housing market in general has been in a recession, arguably for three years, probably going into a depression with rates over seven and a half now heading to eight. Home builders, it's all bad in real estate. And government officials realize that their constituents can't afford homes. So instead of fixing the supply problem, which is hard and convoluted and tough to do, they are going after the easy side. So, the Home Ownership Promise Act is well intended, I suppose, but going to be financially destructive. So, what is it in a nutshell? First and foremost, any first-time homebuyer at any income level could qualify. So, there is no income threshold.

Second, it could potentially give a down payment all the way up to 50 grand.

All you have to do is save 10 grand. So, as I've read the act in its current form, for every one dollar that I save, the government kicks in five with a max of 50 So, if you do the math, I save 10 grand, the government gives me 50 Now, why is this financially destructive? Well, what we have today, in my opinion, is a supply problem. The low end of the housing market doesn't have enough inventory. People are stuck, no trade ins, stupid landlords like me, we own a lot of that stuff, and we've owned that stuff for a long time.

And they're not building more, right? It just hasn't been built since the 1950s. So, if this gets approved, we are going to see rabid dogs hunting for low end homes. And the last caveat is, you need to buy below the median. So, you're not going to be buying three, four, five million dollar mansions with this money, but you're going to force everybody to the low end, and there's just no inventory. And my rough calculation, Taylor, says this will increase prices by 10 to 15% almost immediately.

Taylor (3:38)

Just in the low end, are you saying?

Michael Zuber (3:39)

Yeah, below the median. Below the median is going to pop.

Taylor (3:43)

So, they will match your $10 with $50, and you need to buy below the median. What's defining the median?

Michael Zuber (3:53)

The local median average. So, that will probably be the MSA, right? Gotcha, gotcha, gotcha.

Taylor (3:59)

Because I was just looking at this and going, listen, if you're putting down 60, which is 10 get matched with 5, 50, at 5%, it's a $1.2 million house.

But you're like, no, no, no, no. But that might be the case in St. Fran, by the way.

Michael Zuber (4:12)

No, for sure. I mean, there's plenty of markets with seven-figure medians.

Taylor (4:15)

Yeah.

Michael Zuber (4:16)

And this will be the worst at the lowest price points. Think about a market whose median is 250

And you just unlock all of these folks, they have three grand saved up. So now they have 18, three plus 15 And there's 12 listings. It's just going to create a just like bidding. Feeding frenzy.

Taylor (4:41)

Oh, feeding frenzy. Yeah, this is every government, basically project that they begin working on and embarking on, stimulus checks like well-intended, but also they flush inflation in the market in 2022 that was the highest we'd seen in decades.