The Housing Crisis Explained: Debt, Prices & Why Affordability Is Fading

Mike Mills00:00:00

So, to summarize, crypto's hitting the moon, gold soaring, housing is collapsing, birth rates are tanking, debts exploding. And the most trustworthy video evidence that we got of the biggest scandal in the country is edited like a YouTuber's unboxing blog.More tech, fewer jobs, more homes, less affordability, more headlines and a little less. But it is Mike's mind where logic goes to take a power. Now, bitcoin just hit $120,000. Gold is spiking.Jerome Powell might be facing criminal charges, and somehow your client still thinks that interest rates are going to get back down to 3%. Welcome to the halfway point of 2025. Can't wait to see what Q3 and Q4 bring our way.So, this is Texas Real Estate and Finance Podcast, the show for realtors, lenders, and anyone trying to decode the headlines, dodge the hype, and maybe, just maybe, get a deal done without losing their mind or their margin.My name is Mike Mills, and I'm a North Texas mortgage banker with Geneva Financial and your guide to the absolute circus that is today's housing market. So without further ado, let's dive into the chaos. This is your Texas Housing market update for the week of July 21st.What sort of fund do we have in store for you today? Well, mortgage rates are back into the sixes, but the national debt is in the trillions. So, yeah, don't celebrate just yet. We're breaking down. Why?Price and not rate is the real affordability villain. And, no, Jerome Powell can't save you because he might not be there in a few weeks.You see, fraud charges and his best friend Trump are nipping at his heels. And then in the insanity that is Mike's mind this week, it's crypto searches, housing collapses, AI agents, and F footage edited by Premiere Pro.Because, of course, it was. This week's AI tip is all about autonomic AI agents, the kind that might steal your job or just schedule your open house better than you do.It's another week for real estate chaos, unresearched conspiracies, and economic numbers that just don't add up. But we're living in the Upside down, aren't we? So nothing should be unexpected. Let's get into it.But before we do, it's that part of the show where I pretend like I'm completely comfortable asking you for business and pretend that you're already thinking, man, this guy should do my mortgage.So if you're a realtor who wants a lender that actually brings some value, and a few crazy ideas from time to time or or a buyer who's tired of robots and rate run around. I got you. I'm responsive, no bs. And yes, I am still human, at least for now. My contacts in the show notes. Or you can just message me like it's 2007.I'll probably reply faster than the group text does. And hey, this podcast is a one man show so if you're enjoying it, drop a like a review, a share, whatever helps the algorithm. Gods bless my feed.I greatly appreciate it. I plug over let's get back to the show. First up, time for the question that I get more than my kids asking me what's for dinner?Mike, what are the rates?Well, grab your popcorn because it's like binge watching the ups and downs of a daytime soap opera on a lazy Wednesday afternoon According to Mortgage News daily, as of July 21, 2025, the 30 year fixed conventional mortgage rate is about 6.78, the 15 year fixed conventional mortgage rate is about6.04%, the 30 year FHA rate is 6.35%, the 30 year VA rate is about 6.36% and the 30 year jumbo rate is around 6.9%. Now to be clear, these are average market rate index numbers for Mortgage News Daily and may not reflect the specific rates that you qualify for.Mortgage rates vary wildly depending on your credit score, loan type, down payment, and more. So talk to a licensed mortgage professional like me or your local lender. Disclaimer activated. Now I know you see the good news.Most average rates are starting with a six instead of a seven. That feels good. We are headed in the right direction. But there is a little bad news.They've also climbed from where they were just a few weeks ago, and that's not a trend that we want to see continue. Although today things are moving in the right direction.Again, to say it's been an up and down roller coaster would be an understatement, but it's all relevant. Also, bear in mind that these are averages. Plenty of people are still getting rates over 7% due to credit, loan types, etc.And yes, many are getting below 7% also. So it's kind of a mixed bag. But here's kind of the gut punch.While rates get all the airtime out there on the Internet and in the media, they're not really the root of the housing crisis. The unaffordability, the decline in ownership. That isn't really a rate story, or at least not the whole story.See, we've been hanging in the mid 6% to 7% range for three years now, despite all the predictions and promises that just wait. Rates are coming down and rates are still hovering around 7%.Heck, I've told clients that, you've told clients that we've all hoped, but here we are still near 7%. Why is that? Well, the answer lies in the most boring yet important metric to the overall health of our economy.Everything hinges on the 10 year treasury yield. It's the linchpin for mortgage rates. It's also a barometer for the value of US debt on the open market. Guess what?Our debt has ballooned to roughly $36 trillion. That's up 1.3 trillion just this past year.And soon it could possibly climb another 4.1 to 5.5 trillion with the one big beautiful bill that Congress just pass. And because debt is blowing up, the 10 year yield remains elevated.And that keeps mortgage backed securities low in demand because the 10 year treasury and mortgage backed securities track very closely. If the 10 year yield goes up, mortgage backed securities yields have to rise as well in order to compete.So as long as the debt stays high, rates are not going to drop. The new administration sold us on spend less and grow revenue, but instead we've kind of doubled down on debt.Sure, we're still counting on the growth piece, but that bet looks a little shaky now. Many out there are saying that if Powell steps down and Trump installs someone new, then Fed cuts will happen and mortgage rates will fall.Here's the truth. President can't fire the Fed chair.And even if Powell resigns, which looking like he might, and a new chair comes in, cutting the Fed funds rate doesn't guarantee that mortgage rates fall. You're just lowering rates for the big banks to borrow money from each other, not necessarily mortgage rates.In fact, many are betting that if Powell gets fired, you'll actually see treasury yields spike up again with the expectation that debt is going to further explode because money will be cheap again to borrow. You see, in 2008 and again in 2020, mortgage rates only dropped because the Fed also bought mortgage backed securities.Not just because they cut the fed funds rate. See, they artificially created demand for for those mortgage backed securities to help drive mortgage rates down.So without that continued buying of those mortgage backed securities, the rates have and will stay stubbornly high. See that buying it sent rates plummeting which exploded home prices and caused the inflation that we are still fighting today.And right now the Fed's doing the opposite. They're raising Rates to slow inflation and selling mortgage backed securities, which is throwing housing affordability into absolute chaos.And even if the Fed does cut and start buying mortgage backed securities again, that alone won't fix affordability. Because only two things matter when it comes to getting the housing market affordable again.Lower home prices and tame down debt in order to bring treasury yields down.So in this market today, housing's unaffordable rates are higher than anyone's used to in recent history, even though we are just about average as far as mortgage rates are concerned historically. But when you add on higher taxes, higher insurance, and that is a formula for a housing market that has come to a complete halt.Let's do a little math on a real world cost scenario. Let's take a $400,000 home that someone puts 20% down. Whether they can do that these days is irrelevant. It's just easier for math purposes. Okay?In that scenario, a half a percent rate drop saves you about $107 a month on your monthly mortgage payment. But a fifty thousand dollar price drop saves you about $260 a month. And obviously that's way more.Now, if you can combine both a fifty thousand dollar discount plus a 1% rate cut, now you're looking at somewhere in the neighborhood of about 400amonth in savings. And that is huge.But we are not gonna see home prices drop that dramatically unless there's either a serious economic collapse or, or we massively increase housing supply. You know what, if you already own a home, are you really that excited or fired up about a 20% home value drop? I don't think so.But that's what it's going to take in order for affordability to really take hold and for more buyers to come into the market. Will it happen? Probably not. Look, this segment is always about interest rates. Where they are, why they're there and where they're headed.And while that's important, high rates are not the reason that people aren't buying homes. The Fed can't fix that.Not without doing exactly what they did before, which would put us right back into the same, or probably even worse position five years from now.So if you want more buyers and more affordable housing, we have to push the government to encourage builders to build, baby build, and stop spending money that we don't have. So interest rates can actually come down on their own in a natural cycle.Because right now, without catastrophic intervention, massive new construction, or dramatically reduced spending, this is the market we got and the one that we're going to have for the foreseeable future, so you better get used to it. All right, so I'm just chock full of good news today. Now let's talk about a little housing data.All right, so today's episode is all about affordability and how that has changed. You know, remember when you were buying a house in Texas a few years back and it felt like you were bidding on a signed Taylor Swift guitar? Yeah.When there were bids flying all over the place, people paying over, asking. Well, what happened? Well, if you go back to 2019, the Texas Housing market was actually in a pretty sweet spot.We had roughly about 3.1 months of inventory. Homes were averaging about 50 to 60 days on market, and median home prices were about $240,000.Heck, in 2017, rates were around 6 1/2% for a short period of time and really didn't move the needle very much. That market was balanced. There wasn't much desperation, just steady growth with home selling in about two months. But that seems like a lifetime ago.Right now, fast forward to May of 2025 and the numbers are going to paint a very different picture. Texas has about 186,500 active listings. That's a 19% jump just from last year.But if you compare it to 2019's inventory, it's more in line with healthier markets today, not the ultra tight pandemic era. Homes are being listed a little bit longer.Right now we're averaging about 50 days on market, but that's still nine days faster than the pre pandemic norm. You see, back in 19, it was 59 days. So today's 50 days on market just shows that buyers are getting a little more breathing room.But here's what the problem is. Median sales prices have climbed to $350,000, and that's 46% higher than it was in 2019.But overall this year, prices are down only 1.7% when you compare it to last year. So we are seeing a slight reset from pandemic highs, but we are still well above that more predictable 2019 market.What about volume or the number of transactions that are happening?Well, Right now, about 32,000 homes have been sold so far this year, which 2.4% fewer than this time last year, but still only slightly below 2019's volume. So again, it's still kind of healthy as long as you don't compare it to those frenzy years of 2020 to 2022.So it doesn't feel like it, but sales have been steady. When you compare numbers before the Pandemic. And even still, Austin saw 60% inventory jump from pre pandemic numbers.Medium home prices are down 6% in Austin and roughly 30% of homes have had price cuts. Now again, that's a massive shift towards buyer friendly territory. And Dallas for Worth.The days on market are up about 50% compared to last year and median home prices are only flat to slightly down. We're still a far cry away from prices that were in 2019. In San Antonio, one of the slower markets in the country.Right now, it's taking 87 days to sell a house and that's the slowest pace that they've seen since 2013. And inventory is hovering around 5.1 months.That's much more balanced than the low three month levels that we saw before COVID But again, prices are still elevated. However, that does mean that San Antonio might be a pretty good spot to buy right now because you probably get pretty good deal.So I say all this, but what does it really mean? Well, what it ultimately boils down to is that we've moved away from the red hot chaos over the last few years and really started to edge back more.A balanced market, not a crash, but a balance, one that's defined by buyer's choice, a little bit of negotiation, a little bit of sanity. Because right now, at least in Texas, buyers are back in control.Sellers, well, they need to start being real about the risks of having a dusty listing sit on the market for too long because right now more and more people are getting out of the market because prices just have not come down. And even with the lowest transactions that we've seen in a very long time, that average sale price is only slightly dipped.So as we slide into the fall, expect even more cooling. And if the Fed does hint at future rate cuts, we could see a late season bump in activity.But for now, Texas and many other states are dealing with higher prices and fewer buyers. It's not what we call a bustling market, but much of that is compared to what we had from 2020 to 2022. Look, this is most likely our new normal.So now what we have to do is adjust our expectations along with our buyers and our sellers. There's still deals to be had out there, there's still plenty of transaction, but you got to adjust to the new. All right, next up.Welcome back to Mike's Mind, where the headlines are real. The logic's a little questionable and the economy's being held together by duct tape, denial and a deeply discounted Adobe Premiere Pro.So let's Start with the good news. Bitcoin just crossed 120,000 for the first time ever. That's right.While your bank account's earning 0.01% in interest and you're deciding between paying rent and affording cheese, some dude with a cold storage wallet just doubled his net worth yelling hodl. Into the void.It's not just crypto gold sprinting towards 3400 an ounce, just 3% away from an all time high, silver is at its highest level since 2011. Ethereum, the other crypto, is soaring.Even Ripple, or XRP as it's known on the street, which most of us thought was just a discounted soda, is trading above $3.50, one of its highest levels ever. If you don't know about that one, look into it. It's almost like everybody's trying to get out of the US dollar faster than we all got off MySpace.While all this is happening, the 10 year treasury yield is climbing towards 4 1/2% again, even as Trump is out there calling for a 300 basis point rate cut like it's a Vegas blackjack hand. But let's also pause to appreciate the US government's good news.They just posted a surprise 27 billion dollar surplus in June, and that's a huge win, right? And it came mostly from tariff revenue because apparently taxing imports is a new balanced budget plan.Kind of like paying off your credit card by charging your neighbor rent to use your driveway. Hey, so far so good. So I'm not complaining. At least not yet. Mortgage rates haven't dipped below 6% since September of 2022.While we're all sitting around waiting for a Fed miracle, Jerome Powell's just been referred to the Department of Justice for perjury related to a 2.5 billion renovation of the Federal Reserve building. 2.5 billion? If that's true, I guess it's nice to know that they're upgrading their theater while the whole show's on fire.And meanwhile, back in the real world, job postings on Indeed are down 8% year over year now 65% off their 2022 peak because nobody's hiring. In fact, LinkedIn is processing 11,000 job applications per minute right now.It's not a labor market that's sounding increasingly more like a panic button. So what happens when people stop earning income and can't afford homes?Well, you get headlines like this first time home buyers in the US fell to 1.1 million last year. That's nearly half of the historical average. And we're on pace for even fewer in 2025. And where does this massive drop off appear to be happening?Well, it's homes under $500,000. You know, the kind people can almost afford. The builder Lennar had to offer the equivalent of a 13% discount just to move inventory.And Dr. Horton is out here buying rates down like they're playing the prices right. But none of it's working.Because when it costs $127,000 in income a year to afford the average home and only 6 million of 46 million renters qualify, we got a serious math problem, not a motivation problem. It's no wonder that Gen Z and Millennials have lower home ownership rates than boomers did at this point in their life.Or that over 50% of 30 year old women are now childless. That's up from 18 in 1971. So if demographics are destiny, then we are not headed towards the Jetsons.It's more like we're headed toward the finale of the Leftovers. And all the while, we're losing people and purpose. Foreign investors are scooping up US homes like it's Monopoly night. $56 billion worth.And that's up 44 from last year. But sure, let's worry more about the Airbnb noise ordinances than international capital inflating suburban zip codes.Oh, by the way, the average American household Now holds over $330,000 in debt, including 10,000 in credit cards, 59,000 in student loans, and 22,000 in auto loans. But don't worry, Open door stock is down 41%, so at least someone else is losing money.Also, if you need a final metaphor for the state of everything, consider this. The Department of Justice recently released video footage from Jeffrey Epstein cell. Come to find out, it was edited using Adobe Premiere Pro.Multiple clips saved four times. That's not just a cover up. That's what we call a tutorial. So to summarize, crypto's hitting the moon. Gold soaring.Housing is collapsing, birth rates are tanking, debts exploding. And the most trustworthy video evidence that we got of the biggest scandal in the country is edited like a YouTuber's unboxing blog.More tech, fewer jobs, more homes, less affordability, more headlines, and a little less. But it is Mike's mind where logic goes to take a power nap. So we'll see what this holds for us for the rest. All right, on to our AI tool of the week.So the question now becomes, how do you keep moving when such big market shifts are happening right under your nose? Well, this week's AI tool might be your secret weapon and it does just about everything.But it's in your kid's soccer game, which might be on the next programming roadmap anyway. So what is it? Well, let's talk a little bit about AI agents. Not the kind that takes your clients, but the kind that might become your clients.The agents are smart, task driven bots that can think, reason and act on your behalf. Think of them like Siri, but with ambition and a better follow up system.See, instead of just answering questions, these agents can string together multiple actions, can monitor your email for leads, auto respond with pre built messages, schedule showings, write follow ups, even analyze property data to suggest comps or pricing strategies. Sounds like the next Marvel superhero, right? Where do these bots come from?No, they're not on the asteroid right through the solar system right now at hundreds of thousand miles an hour that we can't quite figure out.These are built using large scale language models, LLMs like OpenAI's, ChatGPT or Claude, and then stitched together with workflow tools like Zapier, the Google suite of tools, or your favorite CRM, letting them perform multi step tasks that normally take up your afternoon. Now how does this help you? Well, as a real estate professional, your biggest pain points are often the repetitive tasks that you do every single day.Agents like these don't just automate tasks, they will actually initiate them on your behalf. They can act while you're sleeping, driving or showing a property, all without needing your constant input. So this isn't replacing you, this is.It's cloning your least favorite tasks and handing them off to a digital intern who doesn't drink all your coffee or call in sick. Now, where in your business can these agents be used? Well, you can do lead qualifications.You can connect a GPT agent to your CRM, score your leads based on behavior, and have it send follow ups while you work. When that lead is actually ready to talk to a human, boom, they're on your calendar. You can do follow up flows.You can use Zapier and ChatGPT to create a bot that watches lead activity to see when they're ready to respond finally, and sends context aware emails or texts.You could also create a listing manager bot and build a system that auto generates property descriptions, pulls together comps and even drafts Instagram captions using MLS data and market trends.Yeah, you can do all of this on your own, but again, this is about saving your time so you can do the thing that makes you the most money and that is sell. So Mike, you say this sounds awesome, but how do I even get started? Well, I'm not going to lie. Building a custom AI agent can get a little technical.We're talking APIs, workflows, triggers, and maybe even some Python if you're feeling brave. If you don't know what half of that means, don't worry, you are not alone.But the no code world where you don't have to write this programming is catching up really, really fast. And in most cases, it's already here.See, tools like Zapier, Make.com and Pipedream let you string together powerful workflows with little to no coding, and ChatGPT can walk you through step by step how to set them up once you pick the workflow tools. Platforms like Agent GPT, Lindy and Replit Ghostwriter are offering simple agent startups with templates and friendly user interfaces.So no, you don't really need to be a Silicon Valley development bro to build one of these, but you do need to be curious, willing to test a little bit, and okay with breaking a few things until it works. So now what does all this cost? Well, the short answer is it's actually very little money.But it does cost a little bit of time and effort, at least in the beginning.Because right now there are DIY setups that you can start with $20 a month from OpenAI Pro, plus another 20 to $50 for a Zapier or Make.com account and the plug and play tools like Lindy or Cognitions. Devin may soon offer agent platforms starting from 50 to $200 a month.Now, fully custom agents can cost a little bit more and take a little bit more time, but some of that you're already paying for in all the hours that you lose doing all this busy work. And oh by the way, there are tons of experts out there that can help you build, understand and run these things for a one time cost.The gig economy is in full effect in this world. Fiverr and Upwork is chock full of tech savvy contractors ready to help you down this road and they're often at very reasonable prices.So how do you get started on this? Well if you want a training wheels Intro to AI agents, I would recommend starting with Zapier and ChatGPT.It's the easiest way to create basic workflows with natural language triggers like when someone fills out my website form, auto, send a follow up, then notify me if they click the link. Now once you're comfortable there, you can level up to agent GPT or dive into Replit's ghostwriter if you're looking for a little bit extra credit.Look, AI agents aren't coming. They're already clocked in. But you don't have to build the Terminator to help you in your business.Just start small, automate one little annoying task, and let your new robot intern earn its key.Because at this rate, it's really just a matter of time before the local broker competition up the road is running an army of AI agents to swarm the local PTA directory for the next big hot listing. So don't get left behind. Research, learn, Build. Then get ready for your next big vacation with all the free time you find.And oh, by the way, if you want to find out a little bit more, give me a shout. I'm happy to show.Well, ladies and gentlemen, that is a wrap on another week of economic insanity and AI sidekicks and housing drama that makes reality TV look underproduced. Rates are still being kind of rude.Affordability is basically a myth at this point, and the Fed might be more confused than your buyer who wants a three bedroom under $250,000 in Austin. But hey, the market don't stop, so neither do we. So stay sharp, ask questions.And remember, chaos is just another word for job security in real estate. So until next time, be great humans. Just keep grinding. Life is what you make it, so make it great. See ya.