JPMorgan’s $750B Housing Market Gamble: The Bold Move That Could Shake Your Financial Future

James:
Today we’re comparing notes on headlines catching our attention and what it could mean for investors. I’m James Dainard, filling in for Dave today, joined by my good friends, Kathy Fettke and Henry Washington. So let’s just jump right in. Henry, what do you got today?

Henry:
Well, I picked a story that was very near and dear to my heart, top of mind, something I am always thinking about. The headline is the market may have already peaked for 2026 and the summer isn’t even over yet. This is an article found on usnews.com, and it’s talking about what’s happening in the real estate market in terms of sales. So the article goes on to talk about that existing home sales fell 1.7% in July to a seasonally adjusted annual rate of 4.06 million. Even as the median home prices have climbed to a record for the month, the national median existing home price rose 2% year over year. That’s up to $434,000 in July, making that the 37th consecutive month of annual price gains. So housing prices have gone up and the market seems to have already peaked in terms of sales price. And now that we haven’t finished summer yet, but we’re moving into what would normally be a winter slowdown anyway, could be just a not pretty time in terms of real estate sales in the country.
And as I was researching this article, I came across another article that talked about how first home purchase sales are down, but luxury home sales are up. And I think all of this is tied to affordability. Interest rates peaked over the last month, and that’s caused a slowdown in the market for people who are just barely priced into the market. But there’s also a lot of people who have made a lot of money or are making a lot of money in stock market gains. And so the wealth gap is pretty substantial. And so the people who have more money are buying more luxury homes. And in my market, I’m seeing exactly that. And why do I know that? Because I’m trying to sell my house right now, my personal house. And every house in my neighborhood in the luxury market, when it goes up for sale, it is under contract in less than 30 days.
Wow. But when I’m selling my flips, I am seeing longer times on market. It’s a little harder to sell them. There’s more competition. And so I think all this just plays into affordability. But I was very curious, James, is that the same thing you’re seeing in your market? Your market’s substantially more expensive than mine, but you’re doing deals consistently.

James:
Yeah, it’s flat. Things are sitting on market. I mean, it depends on what it is. There’s velocity in every city.
So I think one of the most important things that we’ve been going over the last 90 days is where’s the velocity at in every zip code? Because it doesn’t matter if it’s luxurious or it’s a first-time home buyer, there’s a price point that’s moving in that pocket. Everything is not selling, but there’s a lot of things that aren’t moving. And so we’re really locking down by zip codes, price points, where’s the velocity? And that’s what we’re really targeting. For example, in North Seattle, if you have a house that’s 1.5 million and it’s a good street, that is selling and it’s going to sell on the first weekend. If you’re 1.7 million not selling, your market times are going a hundred days. And so you really got to look at every type of price point. Kind of look in 10% blocks and then focus on that because it tells you where to be aggressive, not to be aggressive.
I mean, it’s not enjoyable in the summer when you’re sitting on, I think I got like 18 for sale. I would say I’m clicking off two to three a month. But one thing I do want to stress is this was no different last summer. Last summer was terrible. And so what I’m hoping is we actually did see a little bit of an uptick in momentum the last two weeks. I think we sold five new construction of ours, a little bit more starter units. I sold a couple different flips. And it’s funny, the ones I thought wouldn’t sell sold, and the ones I thought would sell –

Henry:
Story

James:
Of my life.

Henry:
Story of my life. Same thing here. Just when I think I’m a real estate expert and can predict what’s going to sell and what’s not, I am absolutely not that because I have houses that I’m like, “This one’s going to be a tough sale under contract in 30 days.” And I have houses that I’m like, “Oh, this one’s going to fly off the shelves. Sits.” So don’t ask me. Maybe I just don’t know what buyers want anymore.

Kathy:
It’s crazy. I mean, we have a subdivision we’re building in Oregon, and we actually have the city come to us and say, “We need more housing. We want to help you come up here. We’ve heard your reputation.” And we did. We got some land. We got a great deal on it. This is the one where we just optioned the lots. We didn’t even have to buy them, built the homes, and they’re sitting. Same thing. And the offers we’re getting are brutal. It’s something you and I would offer. They are low ball offers. We had one regular sale recently, but same thing, like five brand new homes just sitting on the market and it hurts. It’s painful. But then we have a big subdivision, the one I’ve probably talked about before. It’s north of Tampa. And that’s where we bought 4,200 lots back in 2012, I don’t know, for 10 cents on the dollar, but it’s a lot of lots.
And that one has just been consistent. It’s done great. Maybe because it’s, I don’t know, it’s Florida, it’s inland. Could be that people are moving from more expensive areas like Miami has gotten so expensive, they’re moving inland where there’s not as. I don’t know, but that one’s doing great. So as we always say, every market is different, but I also have my finger on the pulse of buyers. And we just saw massive buying at Real Wealth, one of the best months that we’ve had. So what’s that? Just all over the place.

Henry:
Yeah. And it’s so weird. James, you mentioned that we had a similar time last summer. And I agree with you from a velocity perspective, but this summer feels a little different. And here’s what I’m seeing in my market, because again, real estate is local. Last year when I put a good product on the market, it was done well and priced right. It’s still sold. This summer, that’s not always the case. Sometimes that’s the case, but sometimes it’s not. And I think affordability is really playing more of a factor this summer than it has last summer. Because the trend that I’m seeing in my market is when we start comping these houses before we put them on the market again, and actually when we’re buying them, because I comp them twice. I comp them when I buy them and then I comp them right before we put them on the market so that I can make sure that we price it right because the market shifts pretty quickly sometimes.
And what I’m seeing in comps is homes that are unrenovated, but livable and clean have far less days on market than homes that are flipped and look super pristine. And I think that’s just the affordability. I think people are much more willing to buy a unflipped home where they can put their own touch on it and get in for a lower price point than houses that are looking awesome because they’ve been flipped. And so we’ve had to adjust our strategy where we do kind of a two-pronged approach when we’re buying deals right now. I comp deals where I can just clean them out, turn around and sell them as they sit, and I comp deals as a flip. So I’m using the flip as my plan B now. Plan A is just to get it clean and livable and get it on the market and see if we can get that deal churned faster.
And we’ve done it a few times now and it’s worked out really well. But all of that to me is just a problem with people’s affordability.

James:
We’re seeing the same thing. There’s grandma’s house, which is your clean, dated house, well-kept and well taken care of, but these aren’t fixer properties. The windows are okay, the roofs are okay. There’s about a 20% delta on that price. If that house is selling for a million dollars in our neighborhood, it’s going to trade for 850 as is in that kind of dated condition. And it’s pretty consistent across the board. Same thing if it’s worth 500, they’re selling for like 380. And so we have problems making that pencil because we have to buy them so cheap that we just can’t get them for that pricing.

Henry:
Yeah. Well, again, I think because real estate’s so regional, my market doesn’t have those kinds of spreads. For me, it’s the percentage-wise, it’s not that big of a deal. So as an example, we just bought one for 130. Now, original, the flip plan is to spend 60 on the renovation, sell it for 275. But instead of doing that, we’re going to spend three to 5,000 on the renovation, just cleaning it out, cutting back some of the shrubs and the bushes in the backyard, professional cleaners, stick it on the market for $200,000. So yeah, I could sell it for 275, flipped or I can spend nothing, sell it for 200, and I’ll actually make pretty close to the same amount of profit.

James:
Yeah, look for the velocity. Because people are rain clouds right now. They’re like, oh, market’s so scary. I got
Some messages from somebody. They’re like, “Hey, do you want to come to this conference?” I was like, “No.” And they’re like, “Well, it’s just important to get everyone together to huddle and talk about what’s going on with the market.” I’m like, “Are we in the same market?” The market, it’s not like it’s 2008 or nine. I mean, this is just flat. And I think the key today is you got to reduce your holding costs on everything, whether it’s new construction build, whether you’re going to dispo, how can you get that monthly debt down? Whether you’re refinancing them into DSCR loans, can you refinance that product? Right now, I’m about ready to refinance all my flips into more DSER because then it just knocks two points off my interest carry. And you just got to look at how can I stop the bleed? And it’s not just for flipping.
Any type of project right now, the bleed and the expense of the debt is what’s really beating up the deals because it’s just taking a lot longer to sell.

Kathy:
Yeah. I mean, that’s kind of why I love and probably will continue to do buy and hold so I don’t have to worry about selling anything. I’m just renting it.

James:
Well, Kathy, because you guys buy so much new construction for the buy and hold.Because some price points are dead in the new construction. I mean, you guys have been able to start talking to these builders about dumping off in bulk too.

Kathy:
Oh, we’ve been doing it. We’ve been doing it for years. I mean, builders are distressed. And when you’re a buyer, you want to look for the distress. I mean, you guys know that. So why not? I know this sounds terrible, but why not look for a distressed builder? Because now you don’t have to buy an old property and fix it up. You’ve got a brand new property that you can get for a discount. So that is what we’ve been doing. I literally just was looking at some properties that are highly discounted from builders and they don’t want to reduce their price because then they ruined the comps for everything else they’ve got to sell. So if they can spend a bunch of money and buy down your rate, you can get a really low rate, in some cases, 3%. That really makes it cashflow well in a brand new home.
And a lot of people don’t realize on the buy and hold side, if you have a new home, say in Florida where everybody’s complaining about insurance, the insurance is not high on newer homes because they’re built to hurricane standards. So it’s just a lot lower insurance, a lot lower CapEx over time. And people love to rent new homes, so it’s fairly easy to rent. So for me, it’s kind of a set and forget type buy and hold and I love it. So yeah, to me, it’s a wonderful, one of the greatest opportunities out there. But this is only for people who don’t like getting their hands dirty like me.

James:
No, but you know what though? The new construction, it’s starting to become very attractive for value add investors because you can now buy for less than you can build it for.

Kathy:
Yeah, in a lot of cases. And listen, I’m on both sides of that. I’m on the side of being a builder and trying to sell stuff and having a really difficult time, but that’s kind of how it is for you guys. If you’re in flipping, you got to be able to find the deal so you love a buyer’s market, but then you got to sell it so you hate a buyer’s market.

Henry:
That’s the game.

Kathy:
When are you going to time it perfectly where you’re buying in a buyer’s market that you’re selling in the seller’s market? You just have to figure it out. It’s a balancing act, which is why if you are buying hold, all you really have to focus on is the buy. And then the hold being what are the rents? How are rents doing? Are they going up or down versus I got to think about what I’m selling? Because if you’re buy and hold, if you want to sell, you just sell when the timing’s right.

James:
Well, Kathy, I want to talk about some serious money getting put into the market, but before we do that, we’re going to take a quick break. Welcome back to the On the Market Podcast. Kathy, someone’s about ready to drop some serious money into the housing market. I want to know where the money’s getting spent because I can go follow it.

Kathy:
Yeah, my article today really contradicts the sort of doom and gloom we just talked about. This is an optimistic article, I guess you could say. It’s from JP Morgan Chase. And it’s basically JP Morgan Chase is doubling down on housing. So they see something that maybe others don’t see. Those who are sitting on the sidelines should probably sit up and pay attention. They are deploying 750 billion through 2035. That’s up by more than $200 billion through their American Dream Initiative. This is nearly 40% more than the firm’s housing capital deployment over the past decade. So again, we’re seeing big companies like Berkshire Hathaway investing in builders. You’ve got JP Morgan Chase upping what they’re going to be lending and also coming in as debt and equity to build affordable housing. And you’ve got Japanese companies buying American builders. So these huge firms are a little more positive than we just were.
They see this demand coming, they see this lack of housing and they are all in. I mean, this is huge. My guess is that a lot of times companies will follow legislation and clearly we just had this new legislation really pushing for new housing. And maybe they’re getting incentives for doing it. Maybe they know something we don’t know about the new housing bill getting tax credits, but there’s more momentum towards bringing on that affordable housing and the big players are jumping in and taking advantage.

James:
You always want to follow the money, right? I mean, it’s kind of like, I remember 2008, nine and 10 when Blackstone started buying all the single family or no, it was 2010 and 11 started getting hard.

Kathy:
I could actually tell you the date. It was 2012. It’s when Warren Buffet said on national TV, “If I could buy a few hundred thousand houses, I would if I knew how to manage them.” That was the second part, if I knew how to manage them. Instead, he went into creating Berkshire Hathaway on the real estate sales side. But a bunch of institutional investors at that time said, “Well, golly, I’ll learn how to manage them.” And let’s face it, they didn’t know how in the beginning, but they figured it out and they brought in new systems. So I do feel like that’s kind of happening right now. There’s a lot of signals that we should be paying attention to because there’s big money coming in and those people sitting on the sidelines waiting for prices to drop. Do you think Warren Buffet’s company might know a thing or two?
Do you think JP Morgan Chase might know a thing or two? Listen to them. Sure, it’s probably easier for them to make bets. But to me, it does feel like a similar signal that we got in 2012 that we’re getting now.

James:
Part of this is for financing too. Yeah,

Kathy:
They’re going to be lending. Being a lender is one of the more safe positions, but trying to be able to help more people get into housing, be able to buy their own home, but also building, bringing on new affordable housing as debt and equity.

Henry:
I was looking at this article and it got me thinking, so what does it really mean when JP mortgages are deploying more money into the single family real estate space? And when I was reading through it, it looks like it breaks it down in buckets. So it’s saying one of the buckets is they’re going to be lending more money to developers to build apartments. So that increases housing units, increases apartment units. There’s another bucket where they’re going to be writing more mortgages. So this is what I though the article was mainly talking about. So in other words, they’re saying, we’re going to be writing more mortgages. More people should be able to buy a home, get a loan from us. We want to put money out there for people to buy homes. And then the third bucket is investments in affordable housing funds, which is interesting.
I hadn’t thought this was something they do, but essentially putting their own money at risk as an investor and investing in affordable housing funds, which is pretty cool, but that’s a lot of capital to be all thrown at one specific asset class. I mean, I like it. That’s good for me. I’m a single family and small multifamily investor. So to me, that means that the asset that I own has some demand attached to it. Yeah.

James:
It’s funny, there’s so much weird bad taste in people’s mouths about these big companies buying in real estate. They don’t want hedge funds buying up all the housing. And when you really dig into this article, they’re providing a lot of money for first-time home buyers, different types of financing options. And the good thing is, I always look at this as the banks are very quick to change their mind, the big banks. That’s why as an investor, I only work with small banks because once the big bank gets sick of real estate, they don’t really want to give you too much money on it.
The good news is when you are seeing bigger banks, they have a lot of money, they spend a lot of money on research deploying that much capital into the housing market. They’re not really predicting a massive crash because why are they going to provide so much financing for first-time home buyers that are putting down a low down payment if they think their asset’s going to be worth 10 to 20% less in three years? They’re predicting stability is how I look at that. So anytime they’re providing this kind of financing, it makes me feel more confident, especially when you have a flatter market right now. And that’s what you want is you want confidence in this market because when the market is flat, you start to double guess yourself on everything. You’re like, “Is this a deal? I know what a deal is. I’ve been buying deals a long time, but on paper it’s a deal, but is it really a deal?”
And so these are important things to look at because it shows stability coming forward. And so I like these things, just gives me a little bit of that spinach courage to where I’m like, “All right, let’s go buy some stuff.” Well, we’re going to dive into the CPI report and what’s going on with inflation and what that could mean for rate cuts soon as we take this break. All right, we are back on On the Market Podcast and we’re going to jump right into the CPI report. So I pulled the article from Fox Business about the inflation. So CPI report came out yesterday, December 12th, and we had some good news. It didn’t rise very much.

Kathy:
That’s real good news.

James:
The CPI report came out yesterday, August 12th in July. CPI rose just 0.1% for the month with an annual inflation down to 3.4% from 3.5%. The core CPI at two and a half percent is the slowest it’s been since the post-pandemic surge. So we’re finally starting to see inflation kind of slow down. Now, a lot of what this article does talk about is we’ve seen some slowdown on inflation, but that’s also because energy has fallen in July. The cost of fuel, cast of gas, those things had all kind of dropped down. But they also are predicting that this could make the Fed keep their rates steady and we should not anticipate any sort of increase, which is the biggest thing because the last thing we want is increase going on. Stability works, but we don’t need it to rise. And so we are seeing a little bit of good news on that as far as the inflation goes.
Now, I feel like every month it’s just going to bounce around until this Iran conflict gets sorted out, but it is good news. And what I did see is we saw a flurry of activity the last couple weeks. We did sell more homes I think in the last two weeks than we did in the month before. And part of that has to do with part of inflation hasn’t. I don’t feel like it feels as bad as it did 60 days ago. And consumers are really sensitive to that. When inflation is jumping up, when fuel and gas is at seven bucks a gallon, people get really nervous and the fear kind of locks in and they don’t make a decision. And so as they’re starting to see a little bit of stability in the energy market with food and groceries, that people are starting to move and actually start getting some activity going.
Because even I saw the financial reports for a lot of these tech companies, they posted some pretty good earnings and people made some good stock bonuses. And we’re starting to see a little bit of stability, which is good because it’s all about consumer confidence. There is so many buyers on the sideline right now, they’re just confused in what to do.

Henry:
Who could blame them if the market is so confusing?

James:
Yeah. What we’re hoping for is just stability and inflation. If we can get it to where it stops going on this rollercoaster ride. I mean, what do you think, Henry? You sell a lot of property. When I see stability on those fronts, it’s much easier to move a deal.

Henry:
Yeah. When people are comfortable with what’s happening in the market, then the transaction volume goes up. People take action. And I think I’m curious at how inflation is going to impact interest rates over time because the Fed just chose to keep interest rates where they’re at. But if you look at the vote, it was actually voted on nine to three. So there were three people who voted to actually raise interest rates. And so that to me says that they’re planning on rates going up as long as things remain the same. That’s the forethought I’m giving that. And that’s again, going to cause more of an affordability problem and that’s going to keep more people out of the market, which is going to seem like things are slowing down. But at the same time, housing prices have continued to rise. And so that’s what I mean by it’s confusing is because it’s unaffordable, it’s scary.
We don’t know if interest rates are going to go up causing more unaffordability, but somehow prices keep rising. So somebody’s buying and it’s our job as investors to make sure we stay very local in the data so that we can have a clear understanding of who the buyers are, what they’re buying so that we can position ourselves to be able to provide that product to them because transactions are happening. And I don’t want everybody to listen to all this and think it’s so doom and gloom in the real estate market. People are making money out here in real estate, but the people that are making money are the ones that are studying the data. They’re studying their market. They’re seeing who the customers are that are actually transacting. How are they transacting? Where’s that money come from and what are they buying and how can I provide that to them?
It’s business 101, but it’s harder now. You can’t just buy anything at a discounted price anymore, throw it on the market and make money. You used to be able to just say, “Hey, if I get something at a 30 or 40% discount, I’m going to be able to make money.” That’s just not the case anymore. It’s very, very niche.

Kathy:
Yeah. Inflation is bad. It’s still bad. It has calmed down. But what I want to really emphasize is that the growth rate of price increases has slowed. The prices haven’t come down. So the consumer is extremely stretched. And even though oil prices, energy prices have fallen, they’re still up 14% from a year ago. Now, how many people got a 14% raise? The inflation is still 3% above last year over that. How many people got a 3% raise? If companies aren’t doing as well, then they’re not maybe going to be giving the raises. Or if you’re self-employed, it’s hard to give yourself a raise if you’re just trying to make ends meet. So I think if we look at the consumer, they are stretched. I see it every day. And when I say the consumer, there’s a tale of two worlds. We have some people who are doing just fine and don’t notice the difference in the cost of eggs.
They don’t even think twice about it. But if you are on a fixed income or you are on an hourly wage, you feel it and it’s painful. So just even the concept of buying a house is so out of reach. But they’re focused on rent and that’s hard too. That’s hard too. And for those of us who are buy and hold investors, we’ve got to pay attention to that consumer because that’s our customer. That’s who’s going to be renting from us. And how are they doing? How is their health? It’s tough. It is tough. So the more that we can find those properties, get discounts, find cheap properties and renovate them at a good price, be good at that and provide that affordable housing. We are helping people. We’re solving a problem, which is living. So I like to put that message out there for landlords who are truly providing a service.
I could just speak for us. In some of the properties that we bought, we got them cheap, so we’re able to rent them for less. We’ve always focused on that niche of the worker. How are they going to afford to live and how can we provide that

James:
For them? Why this is so important is we’re trying to look at, as investors, we’re trying to look down the road. What is the market going to look like in 12 months? Because when you’re buying deals today, they’re really good buys. We’re buying stuff for substantially cheaper than we were 12 to 24 months ago. And that’s what we have to keep focused on as an investor is, okay, what do we think is going to happen in 12 months? And what is that going to look like? And what this says is the July CPA inflation report shifted the outlook for the Federal Reserve next monetary policy meeting. They were saying that according to the CME FedWatch tool, the market now sees a 61.9% probability of rates remaining current. And that was only at 51% a day ago. And so we want stability. If rates were going to go up in 12 months, I’m going to want to buy even deeper today.
But if I think there’s stability, what I don’t want to do is pass on deals that were great deals, but my fear dictated my decisions.

Kathy:
Because

James:
Fear will make us do bad decisions. It will make us sell something first too cheap. It will make us pass on good opportunities. And these are things that we want to pay attention to because we got to go, what is it going to look like? Because you can’t stop buying when you’re an active. Henry is an active operator. Kathy, you’re in a lot of deals. If you stop and you go on the sidelines, I heard people say this for the last 24 months, “I’m taking a break, I’m going to wait.” You never time it right ever. But if you consistently buy, you can get a consistent average through because you’re going through all the waves. If you pull out, that’s what I’ve learned over 20 years investing is don’t pull out. Be cautious, but you can’t get all the way out the door because if you do, A, you’re out of touch with the market, you’re not in the market anymore, but then you’re jumping usually back in when it’s too late again.
I don’t

Kathy:
Know. It depends on the asset class. I have a lot of respect for people who just sat it out from 2020 to 2024, 25 even because they could just see the bubble inflating and then it was going to take some time for it to deflate. And they’re just now coming. I mean, I know a guy who just kind of sold all his stuff when he saw it peaking and he just went on vacation for a few years. I think that’s okay depending on your asset class, if you’re really aware. But James, that’s not for you. You can’t stop. You not stopping.

James:
James.

Kathy:
We buy

James:
Everything. We buy apartments, we buy dirt, we buy houses. And so yeah, did we buy a lot of dirt the last two years? Absolutely not. We had already bought the dirt, we were getting through the projects, but there’s an opportunity in every market. And that’s where you have to pivot and go, “Okay, well, what I was buying doesn’t work anymore, so now I need to go buy this.” And for us as investors, if you want to be a professional investor to stay in the market, you have to pivot and you got to shift things around. I’m even starting to look at new construction now, which I’ve never bought, but I’m like, oh wow, there’s some really good buys out there.

Kathy:
There’s some great deals.

James:
Yeah. We don’t have identities as real estate investors. It’s like I’m the short-term rental person. I’m the flipper guy. It’s like, no, no, no. How do you spread the money out and balance it out? And you want to do that when you’re seeing reports like this. Now, this is just one month. It’s a blip in the month, but we have to see what happens in August and in September and what goes on with this conflict because I think fuel is up right now. So this inflation report could also look a lot different for August. And so I think these are things to just watch, stay in the middle of and make sure that you kind of adjust your iBox based on actual data like Henry’s saying, not your gut. I’m

Kathy:
Going to be more positive now and say this is great. It’s great that we didn’t see inflation shoot up when it really could have. And that’s what we were hearing in the headlines. That’s why people are freaking out and scared because it was like, I mean, even the Fed was saying we’re probably going to raise rates a couple times because inflation’s looking bad. So I will end this part of the story saying, good, at least it is not runaway inflation.

James:
No, and hopefully it stays consistent. That’s what we’re looking for. Keep dropping. That’s what we want. Well, we got JP Morgan spending a lot of money, inflation’s settling down. See, it’s all sunshine and bunnies

Kathy:
Going forth. That’s a good

Henry:
Day. It’s always a good time to buy in my book, James.

James:
Yeah, exactly. You got to keep buying. You got to keep buying. So thanks for listening to On the Market. We will see you guys next time. Thank