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Speaker 1: Welcome to another episode of the Chicks on the Right podcast,

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where we have friend and sponsor of the show, Zach

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Abraham from Bulwart Capital Management, with us to talk about

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things related to the money world. And there is a

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new report this is hot off the presses from the

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National Association of Realtors, and we've known this, We've actually

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been talking about this on our show a little bit.

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That the median first time home buyer in twenty twenty

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five is forty, which is the oldest it's ever been.

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Like back in nineteen ninety one, people were buying their

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first places in their late twenties, and even in twenty

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twenty it was thirty three, which is seven years younger.

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So why I mean, I know, you know, people are

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drowning in their student loans. They got high rent and

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high costs of stuff.

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Speaker 2: But like, is this.

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Speaker 1: Really going to be the new normal now?

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Speaker 2: Man? I you know, yes and no, I mean eventually

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these things. So you have the you have an incredible

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amount of inventory owned by baby boomers, right, So think

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primary houses, think secondary homes, vacation homes, all that kind

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of stuff. Right, So the baby boomers are the most

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wealthy generation, biggest up up until the Millennials, the biggest

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generation by far, the wealthiest generation in the history of

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the country. So as those baby boomers age right through

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liquidation of the states, through passing on the assets to

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kids who will turn around and sell those assets, you're

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you're gonna, you're gonna, you're gonna get more supply out

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on the market. Unfortunately, and and here's kind of the crazy,

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the crazy place about where we're at. Unfortunately, all of

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this stimulus, right, zero percent infrastrates for thirteen years, and

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you know, all the different things that they've done, the

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COVID and all that stuff, all that stuff has been

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wonderful if you owned an asset. It's been horrible if

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you didn't, right, because all of those things helped to

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hold prices up. And this is where you know, and

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you can see this throughout, at least in my opinion,

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you can see it throughout our culture in so many

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different places. Right where we now are facing problems that

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are direct results of us avoiding the pain of our

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own choices. Right, So make all these bad choices and

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gin up a real estate bubble in two thousand and eight,

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two thousand and nine. We come around after that and

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flood the market with low interest rates push prices back up. Now,

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people I've always said, you know, we've gotten so paranoid

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and freaked out over recessions in this country. One of

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the things we forget about are the benefits of recessions

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and what are they. Well, typically recessions, high earners typically

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do worse than low earners, right, because you think about it, like,

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people don't lose their job in most recessions making pizzas

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at pizza. Right. What happens though, stocks go down in price,

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homes go down in price, use car prices drop. So

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who benefits from all that? It's typically the people at

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the lower end of the scale. Now, when you get

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into really bad economic contractions, usually it's people on the

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lower end to suffer the worst. But usually in a recession,

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the eighteen to twenty six year old.

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Speaker 3: Crowd doesn't get hurt much, right, they're not that expensive,

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they don't cost a lot to keep on Who gets

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cut it's usually the guy with the corner office making

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two hundred and fifty to three hundred grand a year.

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Speaker 4: Right.

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Speaker 2: So, what we've learned is that we've decided that we

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like all of the upside of free markets and capitalism,

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but we want to get rid of the downside. Now

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we're facing the consequences of those actions. And what did

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you hear talk about? Now that we're facing those what

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are you here? What do they discussed? Oh, well, let's

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launch a fifty year mortgage, like I said, they do that, here,

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launch one hundred year more. Again, all of these things

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are about extending and pretending as opposed to dealing with

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the actual issue. So what you need? Ironically, and this

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is scary, but I'm just saying that, you know, this

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is the way the world works, right, you get the

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good times, you get the bad times. What is the

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thing what you need in real estate to make it

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more affordable is you need a the prices of houses

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to drop, right, and you need mortgage rates to drop.

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That happens in a recession.

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Speaker 3: Right.

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Speaker 1: So when people say that, they're like like when gen

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Z is super mad at our generation or the boomer generation,

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it sounds like they kind of have a point, Except

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it's not us that's making the decisions.

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Speaker 4: It's our politicians.

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Speaker 2: Right. Yeah. Well, and we've talked about this a lot

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with clients, because I've had clients call me when I

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make comments like that and they're like, Zach, don't blame

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baby boomer and guys, I'm not blaming you, right, I'm

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saying generally, when you look at the last forty years policy,

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almost all of our policy has been aimed at baby boomers, right, meaning,

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you know, we step in and we bail out banks

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and do all that kind of stuff. Who did that help?

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It helped the people that owned the assets, right, that

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owned the homes. It didn't help people that didn't. So

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you know, I mean, think about it. I know several

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friends who were able to buy their first home post

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eight oh nine because prices dropped so much and they

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didn't lose their job, right, So there again, it's it's

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you know, it's like the Bible talks about there's a

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season for everything, a season for planning, a season for harvesting,

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a season for birth, a season for death, all that

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kind of stuff. When you try to mute out the

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bad parts of the economic cycle, you're going right. And

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it's why we say in economics that every recession is

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the mother of the next economic advance, and every economic

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advance is the mother of the next recession. And without

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that sick locality, you don't get turnal. You don't get

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upward mobility, you don't get the big just keep compounding

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and growing and growing, and there's just there's none of that,

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you know, turnover.

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Speaker 4: Yeah, I'm sorry. I was just going to say. But

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from a retirement standpoint, like I look at our kids,

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both of them are older kids. We have three kids.

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Both of our older kids have homes, but like the

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middle one lived in an apartment a really long time,

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like in an expensive apartment. I look at some of

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these kids who are living in apartments. They're literally like

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pissing their money away. Right, But from a retirement standpoint,

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like if you look at these kids and I say, god,

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the kids if they are not getting home until they're forty.

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From a retirement standpoint, and you're the guy, this is

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your thing, you counsel people in retirement all the time.

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Does that hurt people?

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Speaker 1: Like?

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Speaker 4: Are you? Are you counseling people and saying you really

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need to own a home rather than be renting an apartment?

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Like what's better? Or does it really freaking matter at

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this point? Does it matter?

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Speaker 3: Well?

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Speaker 2: I will tell you what. So in most cases I'm

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telling young people to avoid buying a home right now.

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Really yeah, yeah, because what's worse than not owning a home.

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What's worse than not owning a home is getting stuck

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in a home that you paid two much for and

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being stuck for ten to twelve years being underwater and

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you can't refine answer it out of it. Yeah, right,

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So let's first avoid that. And what I would say is, no,

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it's not deathnell to your financial future if you compensate

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for it. Meaning this whole adage that a home is

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your best investment. It usually ends up being where the

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biggest portion of people's net worth is, but it's not

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their best investment. The leverage of the loan is what

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makes it a good investment, Okay, Right, When you actually

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look at the cost of owning a home, the return

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on a home on an annualized basis, it's not very good.

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You're probably looking about a four and a half percent

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in net return, where in the stock market you're looking

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at like eleven and a half. So what I would

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say is, if you're looking at a house right now,

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and to get into a house that you think you

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can that will work for you and you can afford

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let's say a thirty two hundred dollars mortgage, Okay, I

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still remember the days that somebody said thirty two hundred

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dollars mortgage and you were like, oh my god, you're right. Now,

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it's just wild to think about it now now it

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sounds like, boy, what a steal, you know. But so

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you would be better off getting into like an apartment

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where you pay twenty two hundred a month and pocketing

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that money and investing that money and sticking it aside

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and waiting. But I will tell people I made this

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mistake as a twenty five year old. Don't do it

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if you are looking to buy a home or another

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asset because you are afraid that you will not be

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able to afford it someday, don't buy it. Okay, don't

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buy it, because if you have that fear, so does

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everybody else. And what does that mean. It means you're

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in an environment or a marketplace where people are paying

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too much for an asset. And like Warren Buffett says,

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and the supplies to how as well, nothing will define

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the return of your investment as much as the price

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you pay for it. Right, So bottom line, be patient.

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Do not let what you're hearing around you rush you

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into making bad decisions. You have an uphill battle as

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a young person facing what you're facing economically. By going

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and paying way too much for a home, you will

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compound your economic problems. You will not reduce them. The

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other thing that you want to take a look at

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right now is look at the spread right now between

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the cost of home ownership and the cost of renting. Okay,

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I think that that spread will continue to get wider,

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and as it does, look at young people and go,

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I know you want to own, but not at too

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much of a price. And as that spread keeps widening,

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that is your advantage and whatever that spread between your

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rent and what your rent and what that mortgage would be.

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Just the other thing too, to tell you people is this, guys,

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pain is so overrated. Like you look out and you're like, oh,

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it's five years. Just if you can take one piece

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of advice for me, whenever you hear somebody say that,

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tell yourself start doing it today. The five years will

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go buy that.

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Speaker 4: Fast, right it?

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Speaker 2: Just if you can get If I could tell young

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people one thing, because I get it, between the spaces

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of fifteen to twenty five, time goes slow. Yeah, it

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starts moving a lot quicker, guys. And at the end

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of the day. Here's the other crazy thing too. At

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the end of the day, it makes no difference whether

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you buy your first home at twenty five or thirty.

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It doesn't. But what you pay for that house does.

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That makes a big difference. See, and this is free advice.

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Speaker 1: You're stolling out, and people can get more of your

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free advice just by tuning into your podcast or by

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asking for a risk.

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Speaker 4: Review with you. How do they do that?

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Speaker 2: Yes, well, first they can just google us Know Your

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Risk pod cast any place you find podcasts. We're going

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to be on at Apple and all those different Spotify,

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all that stuff. And then just Google Know Your Risk

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or excuse me, Bullwarkcapitalmanagement dot com. Go there, sign up

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for a free consultation. Like you were saying, no obligation

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and yeah, we're not hard to find. Is Google Know

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Your Risk podcast and Bullwark Capital Management. I hope a.

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Speaker 1: Bunch of young people listen to this episode because that's

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the good nuggets in there right.

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Speaker 4: Absolutely, Thank you, Zach, Thank you ladies.

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Speaker 2: You've got investment advisory services offered through Trek Financial loc

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and SEC registered investment advisor. The opinions expressed in this

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programmer for general informational purposes only, and are not intended

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to provide specific advice or recommendations for any individual or

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on any specific security. Any references to performance of security

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so it thought to be materially accurate, and actual performance

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may different. Investments involved risk and are not guaranteed. Past

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performance doesn't guarantee future results Trek twenty four three zero

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eight