Is it 2007 again?

Many experienced trauma during the GFC—losing homes, jobs, families

Now, we have housing PTSD

As veterans returning from war hear fireworks & flinch, thinking, “bomb!”

Today, we flinch at the rapid home price appreciation since 2020

Feels familiar

1/7 But what if it’s not a bomb this time?

What if, instead, it’s fireworks? 💥

The fireworks of an exploding money supply and currency devaluation combined w/massive pandemic demographic + geographic shifts colliding with tight housing supply

2/7

EVERYTHING OLD IS NEW AGAIN

Let’s take a Time Machine back to 1980, shall we? 🗞️

By January 1, 1980, Heroic Fed Chair Paul Volcker had hiked the Fed Funds Rate to a whopping 14%

30 year Mortgage rates would peak near 20%

But home prices wouldn’t come down

Huh?

1/4 Stubborn sellers were holding out, there was a large upcoming young demographic, and supply was lagging demand

Oh, and a Blondie ruled the Billboard Top 100, but her name wasn’t Taylor

Is this 1980 or 2024?

2/4

AirbnBusted!

h/t @BowTiedBroke For more details on this crazy story, follow @BowTiedBroke

https://twitter.com/bowtiedbroke/status/1766190969110626805

Let’s talk about Seller Financing

AKA: This Housing Cycle’s Subprime

🚨 🚨 🚨 🚨 🚨

A five alarm 🧵

1/8 What is Seller financing?

Seller financing is when the seller of a property works out loan terms with a buyer, without rigorous underwriting standards from a traditional bank or lender

It’s sometimes called a wraparound mortgage

2/8

There are 3,329 homes for sale in Austin

There are 12,127 Airbnbs in Austin

🚨 DO YOU GET IT YET?🚨 Data sourced from Zillow and Inside Airbnb

Your MLS may show slightly higher or lower results on the number of homes for sale depending on the zip code lines they draw for Austin

I also excluded individual rooms for rent—these are entire dwelling Airbnbs only

“Commercial Real Estate weakness is completely separate from Residential Real Estate”

WRONG.

IT’S TIME TO TAKE A CLOSER LOOK AT BLACKSTONE

Here’s a 🧵 explaining why:

1/9 In March 2020, NYT Magazine published an article that went largely unnoticed due to an emerging pandemic

Let’s revisit it.

Starting in 2010, Wall Street began buying over $60 billion in foreclosed residential housing from American families

2/9

archive.fo/2020.03.04-152…

As $CS tanks,

Let’s talk about banks and vacation rental property loans

10 billion+ in investment property loans w/out taxpayer backing

Who are the big lenders?

Visio Lending
HomeXpress
theLender

What banks dealt w/the securitizations?

CREDIT SUISSE 🚩 & BARCLAYS

1/4 Let’s take a closer look at the, um, underwriting “standards” for these AirBnb and STR home loans

“Less underwriting”

“No income verification, no job”

“Based on projected rental income”

2/4

HOT TAKE:

Conventional Boomer wealth building wisdom is woefully misleading for millennials & Gen Z

I’ll break down 3 examples:

1. To build wealth, go to a good college

2. To build wealth, get married

3. To build wealth, buy a house

1/7 Basically, boomer gurus (who built wealth being gurus, not by doing the above items) work backwards w/statistics showing the majority of old wealthy people have done these things

Therefore, these are the things you must do to build wealth

It’s called survivorship bias

2/7

I received a DM yesterday from a fellow DFW resident who brought to my attention a unique example of hidden leverage in the SFH short term rental mortgage industry that is “hiding in plain sight” amongst all these high quality Freddie/Fannie loans

1/6 This person was approached by a SFH RE investor 18 months ago. The investor managed 400 homes and wanted to get into the STR space, but had already maxed out his ability to use conventional low rate 30 year Fannie/Freddie loans.

Enter: The Wrap Around Loan

2/6