Hey, welcome fellow listing agents. It's Bob Mangold, the listing coach here with this week's episode of the If You List Your Last podcast. As always, thanks for listening, sharing, and downloading. Now, in this podcast, I'm gonna talk about some of the things that are happening behind the curtain, if you will.
L with the US Treasury and Interior Department, that could have a huge effect on interest rates and new home inventories in 2025, and certainly in 2026, right? So there's some good things happening on the horizon that could help our industry. Now, just a reminder, before we get started, make sure you join our Real Estate Asset Advisor Facebook group, so you can join in on the conversation, share your thoughts, comments, or questions on any of the topics.
I discuss right here on the podcast and you can always connect with me at www.homebosslistinghub.com. Hey, grab a cup of coffee, settle in and let's get to it.
All right, so first let's talk about I guess let's talk about the interior department first. What are they doing? If you've heard in the last few weeks they've been doing what are called land swaps. They're swapping land with state government. And taking over the state land, but reimbursing them, if you will, with federal land.
Now there's also talk of buying more state land, and the sole purpose of doing that is to be able to provide land for builders. To build new homes. That's all focused on housing inventory, right? So there's two things that have to happen to unlock the housing market, right? We're still about a million to 1.2 million units less than a normal market.
The good news, if you're as an agent, though, remember prices have gone up, so you're earning more money on each transaction, but it doesn't take away the fact. That we've lost at least a million transactions. One of the ways that we're gonna be able to do that is to take and start building more new homes, and that was freeing up land.
So both the federal and state governments are working together to do that so that more land is available for specifically four. New home builders to create housing inventory so that over time can add up to, pretty substantial amount. So there's a couple places like Nevada and California where that's already happened, and they've literally freed up thousands of acres to be able to do that.
Now a builder doesn't, just because they have land doesn't mean that they're gonna have houses ready. You're talking probably a year to a year and a half away from that inventory. But again, it's all good signs on the housing market. The next thing that has to happen is that interest rates have to come down so that the people that are sitting on their homes that.
3% interest rate and saying no, I'm not getting rid of this. That they feel confident enough to move. Now, the good or the bad news, depending on your outlook on this, is what's happening to the American consumer. While they certainly have a mortgage at 3%, they're also because of cash, cashflow, inflation, job growth, all these different things, income growth, not keeping up with inflation.
Especially in the housing market, they're racking up a tremendous amount of credit card debt. So we now have record credit card debt at record interest rates. So it's not uncommon for us to see on the mortgage side, people sitting on 30, 40, 50, 60, $70,000 in credit card debt at 30%, right? Then there's student loans, personal loans, and all the rest.
Now, the higher the interest rates go, obviously that impacts their cash flow. That takes them out of the market. However, people that bought homes four and five years ago have a tremendous amount of equity, and I can just give you an example of one client of our team where instead of putting as big of a down payment, they sold their house, had quite a bit of cash left over, but instead of putting down a huge down payment, they paid off all their credit card debt, which was just short of $50,000 when it was all said and done.
Even moving from a 3% mortgage rate to almost 7%, they had an extra $1,400 a month in cash flow. So when you actually break down the debt that people have, when you utilize that equity, even moving to a higher interest rate, but paying off these high interest rate non-deductible credit card. Accounts, their cashflow changes.
People are starting to pick up on that. Now. I'm not so much sure that it's a conscious knowledge as much as it is that they're just starting to look at their finances and go, wow we've got a problem here. The way that you can tell that is refinances over the last 90 days, I believe it was, is up 28.1%, meaning people are refinancing out of those lower rate.
Loans to pay off this credit card debt. So there's all kinds of statistical data, and I would tend to agree with it that if we see interest rates get into the mid to high fives, you're gonna see a lot of inventory loosen up. So what's the Fed doing about it? Or I should say, what's the treasury Department?
The Fed's doing nothing. They're still doing their runoff and things like that. But here's a few things I want to cover so that. Again, you could have intelligent conversations with your clients, but mostly I wanted to do this podcast and I know it's a lot of technical stuff because I want you to have hope.
And understand it. The market is starting to free up. It's not gonna be, another million homes this year, but I would tell you 2026 and certainly 2027, I think we're gonna be back to pretty normal levels by that point. So couple things that are going on. Number one, if you've ever heard the term mark to market, one of the things you hear is that they're talking about, utilizing the gold in Fort Knox, what they did is when they put the gold in there, call it $40, I believe they said the average that they purchased it at, or the average that they own it at, is about $40 a share. Gold is over $3,000 an ounce. It was 3060 $2 an ounce this morning. What mark to market means is they say wait a minute.
We say that our gold assets are valued at $40 an ounce. That's not true. It's valued at $3,000 an ounce. If you were to simply take and change the math, it's literally a math calculation. We're not doing anything else, but we're going, Hey, let's price that more reasonably and say it's, let's say $2,800 an ounce.
They literally would pick up trillions of dollars. That they could A use to pay off the debt. B, most importantly, if they had that money, they don't need to sell more treasuries, take on more debt, because the reason interest rates are high, the reason inflation is high is because we're spending way more money than we have.
We're $36 trillion in the hole. Folks, that doesn't get made up real easily. So by taking and simply revaluing the gold that we own. To something that's more near market level that could have a huge impact on the market. And so as you hear, Hey, we're gonna go in there, we're gonna inspect believe it or not, nobody's ever inspected the gold in Fort Knox.
Nobody's went in there and counted it since 1974. God, we hope it's still there. So that's one of the things that they're doing. Next is, it's called the Treasury General account, and it's the fed's checking account, meaning how much money do they have to pay the bills? The normal balance is about $300 billion, but it currently sits at 600 billion.
And I know as we talk about trillions of dollars in debt, 300 billion doesn't sound like a lot. But what it does folks, is if they drew that down to the more normal level, they wouldn't need to issue as much debt to pay for things, which helps yields move lower. All that happens then treasury issuance. If beset were to start to issue more shorter term debt than longer term debt, that would help raise rates because there'd be less longer term debt.
That has to be absorbed. So that's actually a good thing because if we don't have to absorb the higher interest rate, long-term debt, and we don't have to go so far out, we don't have to pay as high of rates on that debt that we're doing. Again, most people don't even know, on a monthly sometimes, and definitely quarterly basis, we have bond offerings, meaning we have to sell bonds, debt, take on debt to be able to pay for all the things that we're spending.
Then there's dose. I don't care what you think about it. I'm not gonna get political here, but it's real simple. Folks. If they're successful in reducing government waste and spending, it means the treasury has to spend less money. I. In selling bonds, which means we don't have as much debt.
We're not paying as much interest, and I promise you folks, I don't care. I'm not sure how anybody logically could argue with the things that they've been finding in the trillions of dollars now. So you need to be rooting for that. Then there's what's called balance sheet reduction. And all that simply is the Fed has been reducing the balance sheet roughly by 40 to $45 billion a month by allowing their mortgage backed securities and their treasury holdings to fall off the balance sheet as they ma mature or maybe they receive principal payments.
So like on a mortgage backed security, somebody pays off their 30 year mortgage. They let that roll off. What that does folks, is that means they're not buying anymore. So when they announce that they're going to end that runoff, it essentially means they're gonna start buying 40 to $45 billion a month in treasuries, which again, helps rates move lower.
Especially if those savings or that roll off gets directed towards the investments or the reinvestments to go into longer term maturities, like the 10 year treasuries. So now we're using old debt to buy new debt, which is a good thing for interest rates. Now there are certainly some other ways that besson can actually cause rates to move lower.
And potentially unfreeze the housing market, but they're looking at all these things that are going on, and I know people go the Fed fund rate is too high. The Fed fund rate has very little to do with mortgage rates. Tenure treasuries have an impact. But not the Fed fund rate. The Fed fund rate is simply the interest rate that banks charge each other for loaning each other.
Money overnight has nothing to do with mortgage rates. Mortgage rates are dictated by mortgage backed securities, period. That's all it is. The good news is the trend on those. Again, just like everything else, it's like a stock. It goes up and down on a daily basis. But the longer term trend, longer term meaning in the last 60 days has been headed downwards.
Then you'll have days that goes up, but by and large, it's heading downwards right now as I record this, they're in a sideways channel, and I do believe that what a lot of both the stock market and the bond market are waiting for is to see what happens with the tariffs on April 2nd. And again, I know people are all afraid of tariffs.
Folks, we cannot continue to let people or let countries charge tariffs on our goods so that those countries aren't buying our goods. They're more expensive, meaning they're buying their own. That impacts our economy in the us. We simply can't afford to let company or countries charge us 25, 30, 40, 50% tariffs on our goods, and we don't charge them anything.
Meaning their goods are cheaper in the US all we're doing is we're funding their economy. When we do that now, tariffs right now are being used as a threat. And you're seeing some of these countries buckle, right? India announced yesterday that they're gonna take and match. We're gonna drop these tariffs down, and then the US will match those.
Well, India's a huge economy. That was a huge win for us. Again, all of this is not gonna take place over the course of three weeks. This could take three months, could take six months, could take nine months. But everything is trending in the right direction for us to be able to see interest rates come down, to see inflation come down, and the moves that the treasury is making.
Our sound fiscal policies for interest rates. What does that mean for us? It means, over this next say 12 months, I think you'll start to see the real estate business at least move back into higher numbers. Not normal, but hey, if we went from, 3.9 million homes sold last year to 4.2 or 4.3 folks, that's a great move in one year.
And I think we can see that based on what we're doing. And so I wanted to record this today. To give you some hope that it's not gonna stay like this forever, right? Good markets don't last forever. Bad markets don't last forever. The interesting thing is that when you pick up, market share is not in good markets.
It's in the bad markets. When everybody else quits trying or they just throw in the towel and say, Hey, I can't do this. I'm only gonna get less listings. I'm gonna make more money, less money. That's how you pick up market share, not in booming markets like 21 and 22, where the market went crazy. It's very difficult to pick up market share, then any realtor could make money.
What happens now is a lot of realtors are just sitting on the sidelines giving up saying, oh, I just can't do it. And that's how you pick up market share. So look at this as an opportunity, just like buying a stock, right? So last time I seen Nvidia stock today was $115. Folks, if you can buy Nvidia stock for $115, that's a sale.
Buy it. It's the same with housing, it's the same with interest rates. It's the same with our business. This is the time that you focus in order to take and be able to start to build market share. So again, I know a lot of technical information for you, but. I just believe it's important for you as a real estate professional to know and understand these things.
And even if some of it went over your head, folks, go Google some of it or just know that I, I believe that, we're in for a brighter future in the next 12 months or so. So that's it for this show. We'll talk to you next week. And remember if you list you last.
