Why Housing Prices Can’t Fall

0:00There's two thoughts on housing. You have a lot of people have housing that because we have such a strong time and such a strong market there. Houses are very valuable. It's a big part of their net worth. I don't want to knock those numbers down because I want them to continue to have a big value for theirs. At the same time, I want to make it possible for young people out there and other people to buy housing. In a way, they're at conflict. In other words, you create a lot of housing. All of a sudden, it drives housing prices down. So that's the president on video saying the quiet part out loud. I don't really think he was supposed to say that. I don't think I've ever heard another politician say that and relax. This video is not about him. It's about what he said. It's about the fact that what he said is one of the biggest problems at the core of the entire economy that almost never actually gets addressed. Housing has become completely unaffordable and you cannot make housing more affordable without knocking home prices down.

1:02Sounds pretty simple, right? Well, the problem is knocking home prices down would flat out destroy the life savings of tens of millions of people. This is a paradox that exposes one of the most misunderstood and deeply broken parts of our entire financial system. And in this video, I'm going to break the whole thing down from what the problem is to how we got here and how we solve it. Real quick, you're watching The Sad Stacker Show, a Bitcoin show for people who think deeper about money. I'm your host, my name is John AKA The Sad Stacker. If you want to learn to stack smarter and better understand and grow your conviction in Bitcoin, you hit the subscribe button. And let's look at what the sat dragged in. So this is the core contradiction that underpins one of the most broken parts of our entire economy. And nobody wants to admit it. We have a housing affordability crisis. I'm personally talking about the US, but I'm sure it's probably true wherever you live too, if it's outside the US. And politicians will always talk a big game

2:02about wanting to make housing more affordable, wanting to build more affordable housing, wanting young people to have a shot at the American dream. But of course, it's all complete bulls**t. They don't actually want that at all. I happen to have an economics degree, but you definitely don't need one to see the problem. Home's getting more affordable is the exact same thing as home prices falling. The only people who want home prices to fall are people who don't own homes yet. And who doesn't own homes? Basically, young people and poor people. Now these days, more and more of the middle class too, which we'll get to, but think about it, who owns real estate? A whole lot of old people and a whole lot of rich people. Which of these two opposing demographic groups do you think has more influence and political power? The young in the poor or the old in the rich? And which of those two demographics do you think most politicians fall into? Take one example. The guy you just heard from, Donald Trump, the president of the United States, is a freaking real estate guy. You think he wants real estate prices to come down? Of course he doesn't.

3:04He is absolutely clamoring for the Fed to cut interest rates. Do you think cutting interest rates makes homes more affordable? If you do think that, then you've been sold a complete lie, which I'm about to expose. If home prices rise, the net worth of the politicians, the boomers, the rich, the wealthy, the powerful, basically everyone who has real political capital and influence in society, and also just millions and millions of other normal Americans whose net worth is tied up in their house, their net worth goes up. And if home prices fall, all those people are totally pissed. To be fair, it's not just rich people who own real estate, but the problem is that even for the vast majority of normal people who are homeowners, the majority of their net worth is in their home. That's partly why home prices falling is now quite literally a structural risk to the entire economy. And I'll explain what that means in just a minute, but first we have to explain how the heck we got here in the first place.

4:04Yes, I understand that not every single home price goes up linearly in a perfect straight line. For certain parts of the country or certain short periods of time, home prices do fluctuate temporarily. I know that. But overall, nation wide, home prices cannot fall in any meaningful way or for any sustained amount of time. The question is why the hell not? And the answer is, of course, on one hand, incredibly complicated. But on the other hand, it's incredibly simple. On this side, you got zoning laws, nimbis, building regulations, et cetera, et cetera. And I'm not going to pretend to be an expert in every single one of those issues, but fixing any one of those issues is putting a bandaid on a bullet hole. Those things do matter and they contribute to the problem, but they're not the root of the problem. To understand the root of this problem, you have to zoom out because the real issue is what's called monetization. Sounds like a big fancy buzzword. Don't click out the video just yet. All it means is we've monetized housing.

5:05You see, housing by itself is just a utility good. It's just shelter. It should be priced solely based on supply and demand for its utility of providing shelter. But of course, it's not priced that way. Because for most Americans, their house isn't just where they live. It's their savings account, their retirement plan, their largest single asset, and for a huge percentage of the country, most of their net worth is in home equity. So as a society, we've taken the basic human need of shelter and we've turned it into a financial instrument. What could possibly go wrong? Monetizing housing means we've taken that utility good, which is shelter. And now we have a bunch of people storing their money in their house, which means houses have speculated value over and above their utility value. It means housing has what's called a monetary premium on top of it. Think of it as two layers of value. One is the value of the house for its utility of providing shelter. And the other layer on top of that is the monetary premium

6:06that it garners just from being a store of value. And all this is basically because the fiat money that we are forced to use, the government issued central bank manipulated paper and digitally printed federal reserve IOU tokens, they are dog sh** at storing value. Fiat money is completely broken. Nobody wants to hold any of it longer than they absolutely have to. Anyone with leftover fiat wants to get rid of it as fast as they possibly can. They want to buy things that they believe will store value better than fiat will. And they buy things that they believe will have persistent demand into the future. And what's got more persistent demand than housing? In short, we've monetized housing as a store of value because we can't store value in our actual money despite the fact that one of the central key functions of money is supposed to be storing value. So if you could store value in the actual money, you wouldn't need to store it in practical goods or utility goods like housing, which obviously drives up

7:07their price and prices out the people who just need them for their practical purpose. I hope you're starting to see how this all came to be. When you break the actual money and people start storing their money in houses, it distorts the value of housing for its practical purpose of providing shelter. Of course, I know there's always going to be rich people or people who want a second home or a vacation home. That happening few and far between is not a systemic issue. But if you authorize banks to print new money for mortgages and implement zero interest rate policy for over a decade, then of course, you end up incentivizing an entire country of people to hoard homes, flip homes, go into debt up to their eyeballs, throw in corporations and hedge funds and privately everyone in their mother trying to gobble up as much of the housing supply as they possibly can. Anything but hold on to their dirty debasing fiat. Because everyone knows the government will keep printing fiat and debasing the value of the dollars.

8:07So what do you think this all means for regular ass normal people who are just trying to afford shelter? All that artificial demand for people who don't want to buy the house to live in it, but simply to make money off it. They're all working to price out people who just want a place to live. But of course, it does not stop there, not even close. Remember that politicians can't just admit that housing won't be affordable. That would be a debt sentence as a politician. So they have to give lip service to making housing more affordable. So what do they do? Well, they turn to solutions like, let's let them borrow more money to afford their house. Just take on more and more debt, lower the down payment requirement, stretch the monthly payments out, and then people don't even actually need the money to afford the house, as long as they can barely scrape together enough to afford the monthly payment. We'll let the banks create the money at a thin air, and then we'll let the buyer chain themselves to 360 months worth of payments. I just did a full breakdown video on this idea, which you can watch here if you're interested, but suffice it to say, if you can borrow newly created money to buy something,

9:10that thing will always skyrocket in price. Think housing, cars, higher education, even healthcare. People love to think of mortgages as making homes more affordable when it's actually the exact opposite. Mortgages make the monthly payments look more affordable, but what they actually do is make the prices go up and the total overall cost of ownership go through the roof. Just think about it. The more you can borrow, the more you can bid for the house, and the more your neighbor can borrow, the more he can use to out bid you. And of course, the more you borrow, the more you owe an interest to the bank over the life of the loan. Think about the flip side. What do you think would happen to home prices if people couldn't leverage their down payment five or 10 to one, and take out hundreds of thousands of dollars that are created out of thin air in order to buy the house? Of course, in that imaginary scenario, home prices would have to come down because nobody would be able to afford one 100% in cash. And yes, in case you didn't know

10:11when the bank gives you a mortgage, they literally just create the new money out of thin air in the form of credit. And then you think about that for a second, if you're the seller of the house, the bank just created hundreds of thousands of dollars out of nowhere and gave them to you in exchange for your house, something just doesn't add up, right? Sounds weird when you put it that way. But surely the banks don't want people defaulting on the loans, so they are very prudent about the risks of how much and to whom they lend out the money, right? Well, that might be true, if banks actually held the loans to maturity, and they had to bear the risk of default, which, of course, they don't because modern mortgage markets broke that incentive structure a long time ago. Now they can just take the origination fees and then package up all the loans and sell them off as mortgage-backed securities, so they're no longer on the hook for the default risk. And guess who owns over $2 trillion worth of mortgage-backed securities? That's right, the Federal Reserve, the Central Bank themselves, $2 trillion worth, and where did the Federal Reserve get the money

11:12to buy all those mortgage-backed securities? They printed it out of thin air, too, of course. So right now, what you should be thinking is, wait a f***ing second, when I take out a mortgage, the bank creates the money out of thin air. Then the banks package up a bunch of those mortgages, sell them to government-sponsored enterprises like Fannie Mae, Freddie Mac, or other dealers or whatever. It's very complicated in between. But somehow a bunch of them end up selling those mortgage-backed securities to the Federal Reserve, and the Federal Reserve pays for them by creating bank reserves, which is another way of saying, newly printed money that they type into existence from nothing. And that, ladies and gentlemen, is how it's done. One of the greatest fraudulent magic tricks you'll ever see right in front of your eyes, systemic price support for the incumbents, and everyone else is royally screwed. Why do you think, in addition to the clip that we saw at the very beginning, Donald Trump also recently started floating the idea of 50-year mortgages.

12:14Because, of course, that's the only way to make housing more affordable, not to bring prices down, but to stretch the monthly payments out to 600 of them to make you feel like the house is more affordable on a month-a-month basis. But what does that actually do? Of course, it allows buyers to borrow more money and bid up the asking price, which in turn will wipe out the supposed affordability. But it will prop up housing prices and create tremendous amounts of exit liquidity for boomers whose entire net worth is in their home, and they want to unlock it before they, you know, you know. But by now, I hope you're seeing how systemic this truly is. The entire economy is built on the house, pun intended, of cards that is the real estate market. Of course, this entire time I'm talking, you should be thinking of the big short 2008, the global financial crisis. We saw all this play out 17, 18 years ago, home prices fell because they were artificially propped up to begin with, and because that bubble

13:16was entirely built on debt, you know, credit creation fueled by central bank money printing, it wasn't built on any real value or real equity. And because of that, it almost collapsed the entire economy. We were told that the only reason it didn't is because the government stepped in to bail out the banks. So the banks, of course, did not have to bear the consequences of the irresponsible risks that they took. And again, the government conjured about $800 billion of newly printed money out of thin air in order to bail them out. So of course, the lesson that the banks and the government and everybody learned from that was, don't over-inflate housing because of the systemic risk that it poses, right? No, of course, that's not the lesson they learned. The lesson they learned was never let housing fall again. Think about the logic of what just happened. They inflated an artificial bubble in housing, and when it burst, they went to zero interest rates for seven straight years, basically artificially held rates near zero for 15 years, which reminds me of a little thing that happened in the 1920s, where there was tremendous credit expansion

14:18fueled by central bank money printing that caused the bubble that led up to the Great Depression when it popped in 1929. And to this day, some Keynesian economists will tell you the depression was the fault of the gold standard because the gold standard didn't allow for the ability to print more money because we need to be able to print more money in order to respond to these types of crises. You know, those crises that we caused with too much money printing and lose credit in the first place because in the twisted world of the Keynesians, the cure for the drug overdose is always more drugs. So here we are in 2026. This is probably coming out on New Year's Day, happy New Year, the housing market and the banks were already too big to fail in 2008. And now, even the president admits it's way too big to fail today. In the US, there are something like 70 to 75 million baby boomers alive today. And they hold about $20 trillion of residential real estate. It's about 40% of all US real estate wealth.

15:20You tell me if you really think that anyone in a position of power is going to crash that so that whiny millennials and Gen Z's can quit paying rent. No f***ing chance. But right now, there is a problem. There is a crack starting to show in the dam. There's recent data from 2025 that shows there are 530,000 more sellers than buyers in the housing market. The largest gap ever recorded. In any normal market, that would mean prices would already have started falling. But for some strange reason, they mostly aren't. You have stubborn homeowners who watched the estimate of their home shoot up like 40% or 50% during the $5 trillion pandemic money printing bananza. And now, they don't want to sell for any less than top dollar. Many of them probably want to unlock their seven-figure net worth by dumping their overinflated pile of rotting wood and drywall on some schmuck zillennial.

16:22But they don't really have to sell it if it means taking a dollar less than the peak delusional valuations they got used to seeing in 2022. They're probably sitting on a 2% mortgage with massive unrealized gains and they're holding an asset that they've gotten used to seeing double in value over the last seven years. They might as well just wait for the market to recover or for Trump to get his wish of 1% interest rates and 50-year mortgages so some desperate zoomer can take out a million dollars worth of debt to provide exit liquidity for the retirees. That, of course, is where we're heading because falling prices are radioactive for everyone who matters. Falling prices mean falling net worth. Falling net worth means voter revolt. Politicians know this. That's why Trump said what he said. And that's why the only solution will be more financial engineering. Longer mortgages, lower interest rates, more subsidies, more credit expansion, anything except letting prices actually fall. Never mind that sometimes in an actual free market

17:25prices are supposed to fall, especially if they've been artificially inflated to begin with. The bubble bursting is what allows the rotation of the asset from incumbents to new entrants, but the systemic propping up of the price of the asset never allows new owners to rotate in. So yes, building more housing would definitely help at the margins, but actual affordability requires real lower prices and lower prices are not allowed because lowering prices means nuking the net worth of everyone who benefits from the status quo. And at the extreme, it means admitting that the money is completely broken and housing never should have been a store of wealth in the first place. I mentioned the boomers lie heartedly a couple times, but of course this is not about boomers being evil, though let's just admit real quick that there is no shortage of evidence that they did their part to pull up the ladder once they got on the roof, but they didn't break the money in the first place.

18:27They benefited from it being broken to a large degree, but they didn't break it. We're at the point where all inertia and all incentives just point in one direction. The system forces everyone to defend high home prices, homeowners, investors, bankers, politicians, governments, that's where the net worth of tens of millions of Americans is stashed and it's become the bedrock of the entire fiat Ponzi. And nobody wants to be the one that pulls that pin, which brings us to the way out of this mess. I know so far this all sounds like a lot of doom and gloom. We've traced the distortions in the housing market all the way back to dirty debasing broken fiat money. And that means, in my opinion, that every potential fix that doesn't address the broken money at the core is just patching another hole on the side of the Titanic. When people can save in real money without it losing its purchasing power, then they don't need to save in housing and housing can go back to being shelter,

19:29not a retirement strategy. And here's over you to the silver lining, because whether you like it or not, it's already happening. You might be a homeowner who's afraid of it and doesn't want it to happen, or you might be a renter who welcomes it, or you might be a banker or a politician who absolutely hates it, but it doesn't matter. It doesn't matter! Because housing prices are already crashing, affordability is already being restored. If you know how to measure it in Bitcoin, if you shift your lens, you shift your monetary energy away from broken dirty debasing fiat and into hard money, sound money that can't be printed, controlled, or manipulated, then you see the truth. Housing is just a utility good and all prices fall in terms of Bitcoin forever. If you're a boomer whose net worth is in your home, you better watch out. This deflationary black hole is coming for you.

20:31And if you're a zoomer who's still dreaming about the 2.5 kids and the white pick offense, that dream is still a reality if you're saving in Bitcoin. That's why it's so important that you learn to stack smarter and grow your conviction in Bitcoin, which of course is why you subscribe to the channel, and you watch this video right here. You can zap me sat via the Lightning Network using the QR code on the screen and as always, you never forget. Quit slacking and start stacking. Quit slacking and start stacking. Quit slacking and start stacking. Quit slacking and start stacking. Quit slacking and start stacking. Quit slacking and start stacking. Quit slacking and start stacking. Quit slacking and start stacking.