Trump Just Signed An Executive Order To Pop The Housing Bubble (Uncut) 03-27-2025

Donald Trump has said he wants to make housing affordable again the Trump campaign recognized very much that we need to bolster Supply in order to help improve affordability in the housing market in fact he’s actually signed executive orders trying to get home prices to come down day one he put over over a hundred executive orders and one of them was focused solely on housing but will this pop the current real estate bubble a bubble that’s even bigger than what we had in 2006 and could that possibly also trigger a

recession I’m going to do my best to answer these questions for you in three simple fast Steps step number one let’s go over this new housing indicator nobody’s talking about this in fact you’re only going to find it right here on the George gamon Channel and I am calling this not the buffit indicator but the G indicator for George Gavin indicator that’s right and the buffet indicator as you know is the market cap of the stock market relative to GDP so it’s expressed as a percentage so as an example going back

to the 1980s the market cap for the stock market was about 30% of GDP my memory sares me right editor you can fact check me with the chart but now it’s right around 200% indicating that the stock market is wild ly overpriced and most likely in a big bubble so I wanted to do the exact same thing with the housing market why not so here we have the total value or the market cap if you will of the United States housing market residential we go back to January of 2000 all the way to December of 2024

on the left we go from 0er up to 50 trillion dollar so if we go back to 2000 a time when we were not in a housing bubble we see that the GDP of the United States was 10 trillion that’s what this number is right here and the market cap of the housing market was also 10 trillion okay so that means our G indicator would be 100% here’s the math right there to prove it if doing the math right I’m probably doing it wrong but then we go over to the bubble you guys know prior to the GFC 2006 that’s when home prices were at

that Peak before we started to see the crash to where they bottomed out in 2012 but at this time the GDP of the United States right around 14 trillion but the market cap of housing was H call it 23 trillion right here so that gives us a g indic indicator of 164% then we go to the bottom the lows in 2012 and there we’re around 112% around 16 trillion for GDP and 18 trillion for the total value of the housing market but you guys know what happens next we move on to where the chart goes completely parabolic and I

always say if we were in a bubble right here in 2006 where home values we’re right around 23 trillion what on Earth are we in right now when home values are right around 50 trillion sin quenta for all my Spanish I’m working on my Spanish as you could see but $50 trillion the housing market cap so now we’ve gone from 164% in 2006 when we were in the last housing bubble to what we are today 166% and that would be $50 trillion housing market cap versus a $3 trillion GDP so the reason I’m going over this

first is to show you the problem we have and I think it’s admirable that Donald Trump wants to bring down home prices they’re obviously way way way too high when you look at any metric not just the G indicator but all The Usual Suspects such as home prices adjusted for inflation and my favorite the price to income ratio because at the end of the day believe it or not we use our incomes to make that mortgage payment so you’ve got a couple very important variables interest rates and incomes so if you see

the prices really exceed the income levels at a certain degree that dog don’t hunt it is unsustainable as they say about the United States debt but I want to focus on the key here and that’s the 166% which gives us an indicator as to how overvalued the market is or maybe even more importantly how dependent the United States economy is on home prices being at these nose bleed levels in other words the United States economy is completely dependent on a housing bubble a housing bubble that Donald Trump wants

to pop step number two so we know what the problem is but what is Trump’s solution let’s go right over to navigat housing.com where they summarize the intentions of his executive orders to bring home prices down now you’ll notice I said to bring home prices down I didn’t necessarily say to make how housing more affordable that is a crucial crucial distinction more on that in just a moment so first and foremost reducing regulatory burdens the memorandum directs federal agencies to identify and eliminate regulations that

unnecessarily increase the cost of housing construction the administration aims to lower construction costs by streamlining these regulations making homes more no no no not more affordable bringing down home prices that’s the key expanding Home Supply so obviously if we have fewer regulations you’re going to have more Supply uh and at a much lower cost but the details here part of this housing affordability reform addresses the shortage of available housing the memorandum emphasizes the need to increase the

housing Supply this may involve incentivizing the development of new housing projects encouraging Innovative construction methods to expedite building process and then number three here we’ve got promoting efficient land use pretty self-explanatory I know he has talked about using some of the land that the government owns for the development of new housing projects and then encouraging the private sector participation obviously we have to have the private sector if we want to make this sustainable and if we want to have

a solution where the benefits are going to outweigh the cost that’s for sure can you imagine if DMV was in charge of all the new housing development in the United States that wouldn’t be too good but what I want to focus on is the difference between how the government has made housing affordable in the past compared to what Trump is trying to do now so in the past we didn’t really try to bring down home prices all the government did is try to create Financial tools or make homes more affordable through financial

engineering so they wanted home prices to continue to go up but they wanted the down payment or the monthly payments to remain the same so you basically get all these government subsidies and you have all these programs that are basically creating economic distortions one of them I mean the elephant in the room is Fanny and Freddy and the 30-year fixed rate mortgage my point there is we’ve never taken this free market approach where we’re actually trying to make housing more affordable by bringing down

the prices what we’ve done in the past is we’ve just tried to create these programs in order to make the higher prices more affordable in terms of a monthly payment and a down payment and why is this important because because in approach number one the free market approach that Donald Trump is taking prices actually will come down whereas the latter approach that we’ve been doing pretty much since the late 1990s prices will continue to go up and I think everyone is in favor of housing being more

affordable just so long as the price of their home doesn’t go down which takes us right back to step number one and what we were talk talking about is how the United States economy is dependent on these home prices being at these astronomical levels so what happens when Donald Trump and I definitely approve of this approach tries to eliminate regulation increase Supply to bring those home prices back down to a normal level step number three now let’s go ahead and connect some dots so we can come to some conclusions as to what the

probabilities are that if Donald Trump implements this plan we see a crash in the housing market and possibly a recession so we’re going to go back to the good old G indicator that we used in Step number one and actually before we do I want to highlight this number right here because at the end of step number two remember we were talking about Trump reducing all of these regulations and I’m sure a lot of people were thinking to themselves okay well how much could that possibly reduce the price of a house I mean let’s say the

average home price right now is $400,000 so what George maybe it takes off $5,000 at the end of the day that’s not really going to move the needle but check this out regulations add approximately 23.8% to the cost of single family residential real estate and if you think this is a shocking number I would challenge you to sit down pour yourself that stiff drink and look at multif Family clocking in at 40.6% of the cost to build a new apartment complex is regulations but it doesn’t end there with what Trump might do to reduce

bureaucracy editor go ahead and cut to a clip from a recent episode of monetary matters hosted by Jack Farley and he had a guest named Chris whan who is an expert in the mortgage industry and the banking industry industry talking about what he thinks the Trump Administration Doge and Elon Musk might do with Fanny and Freddy what I’m saying is they’re going to go after the entire apparatus of government that has grown to support the private sector so housing housing is the most subsidized part of the US economy

in most Nations around the world if you buy a house you pay cash they don’t have credit for housing the US has used credit to boost housing use that to boost growth really since World War II we went from the military industrial complex to the housing complex that includes the Realtors and the home builders and everything else you look around the country today Jack what do you see you see a lot of spec homes above the average price well above half a million dollars that aren’t selling we built too many of them so we do you know

use credit to Goose housing and uh Trump is dismantling this in fact this morning when I got in front of my computer I found out that a number of my friends uh at the regulator for Fanny May and Freddy Mack were laid off last night and you’re going to see headcount reductions at Fanny May and Freddy Mack probably this week so let’s get back to the G indicator and assume for a moment that Trump is able to reduce home prices by 25% by allowing the free market to actually work so just a rough number

there for the sake of the example but I think it’s actually realistic now he’s not going to eliminate all the regulation but let’s assume he eliminates 50% and you combine that with reducing the government subsidies through Fanny and Freddy and all these other programs and like I said I think that 25% number is actually realistic but let’s remember that home prices are priced at the margin what I mean by that is the value of your home is really predicated upon what the home right across the street sold for it’s

all about the comps at the end of the day so if we have new housing Supply coming onto the market that is 25% lower than the existing housing Supply that’s going to impact the comps bringing down all home prices including the price of your house whether we like it or not so how much let’s say market cap will that reduce from the overall value of the housing market because we have to figure this out because that’s crucial for the purchasing power of the American economy okay well if we cut this number

by 25% start off at 50 trillion that takes us down to 37.5 trillion now they say George that’s never going to happen that’s just a number that’s unimaginable well it’s actually not that extreme when you think that the ratio would just be at 125% remember 2012 we’re 112% and in 2000 we were at a 100% you see that’s the problem with driving these home prices to nose bleed levels is at some point it’s completely unsustainable so this is a lot of fun but this is where the rubber meets the road and you’ve got

to take some of that economic pain to bring things down to a more normal sustainable and fundamentally sound level so let’s put some specific numbers to it here what this would do is reduce the household net worth in the United States by 12.5 trillion do and again that doesn’t even get us down to a level as far as the prices that are consistent with where we were in 2012 and 2000 in terms of GDP and if we’re getting down to these levels in terms of GDP we’re also getting down to more fundamentally sound

levels in terms of price to income ratio ratios the problem is you’ve got to take some very difficult medicine in order to get the housing market and the US economy back onto sound footing and to illustrate this I always like to use the visual of the economy being this inverted pyramid that’s sitting on top of Assets in this case housing so if you were to take that house down in price then the whole economy topples over just like a Jenga puzzle but what we should be shooting for is something let me get my black pen

here that actually is the opposite so we’ve got the house or the asset on top and then this is the economy on very Solid Ground therefore the asset prices the S&P 500 included and the housing market would be on very solid ground as well so will Donald Trump be able to make housing affordable again the right way by bringing down home prices possibly creating a housing crash where the values of homes go down 25% or more the answer is I hope so because although this would cause some extreme problems in the short run

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