The Silent Squeeze: What the Housing Market Isn’t Saying Out Loud

Since 2021, the housing market has gone from euphoria to paralysis.

In the early 2020s, cheap money flooded the system. Interest rates were under 3%. Remote work expanded the footprint of “desirable” zip codes. Bidding wars broke out for even the most average homes. People waived inspections, paid cash over ask, and celebrated 30-year fixed mortgages under 3%. Then the Fed hiked rates. And the music stopped.

Existing home sales have fallen from nearly 6 million in 2021 to about 4 million in 2024—a 33% drop. Inventory, while rising year-over-year, is still 16% below pre-pandemic norms. That’s because millions of homeowners are now sitting on mortgages below 4%, with no intention of trading them for a 7.5% loan and higher property taxes. Roughly 60-70% of all mortgage holders are locked in below 4%. They’re not moving.

That’s the freeze.

But beneath the surface, cracks are forming.

The Great Lock-In

Let’s look at who bought homes in 2021–2022.

These buyers paid near-peak prices, often with thin margins: 5%–20% down. Many homes sold above ask with little room for post-close equity. Even a modest correction of 10–15%—which has happened in several metro areas—means that those who put 20% down are now approaching zero equity. And if the market corrects another 5–10%, they’ll be underwater. So what happens next?

They stay put—until they can’t. Until a job loss, divorce, or economic strain forces action. And that’s where the opportunity begins. I think this is where we are today. The calm before the storm.

The Math No One Talks About

Let’s run the numbers.

A $500,000 home with 20% down leaves a $400,000 mortgage. At 7.5% over 30 years, the monthly interest alone is around $2,500/month. That’s $30,000 per year just burned—on interest. Not equity. Not principal. Just cost of money. Banks love “the American Dream” so much.

The question everyone should be asking is: what’s the difference between that and renting?

Very little—especially if your house drops in value and you can’t move. And for first-time buyers trying to “build equity,” that’s a sobering truth. They can’t even afford the house they want for 5-8 years and when they do, they incur 6% friction cost to transact, 1% to refinance, and have paid 7.5% interest the whole way along. So, unless home prices rise faster than inflation (which they haven’t for most of modern history save ridiculous periods of monetary policy), the return on housing is just leverage.

Bottom line: housing isn’t a great investment. It’s just the only thing the bank will lend you 80–95% of the money to buy.

How We’re Playing It

I have three active plays in this market (I’ve definitely moved from a passive to active investor in the last year, I guess I’m not busy enough with coaching, law school and life…).

First, with one partnership group, we’re redeveloping high-end luxury homes—$3 million properties we’ll either sell or rent for $15,000 a month. These are trophy assets in prime locations, targeting yield through premium tenants or opportunistic exits. While the true exit arbitrage remains to be seen, I’m banking on the rental market to dramatically change in the coming 3-5 years. It has to. 3% cap rates aren’t a thing against 5% 30-year treasuries.

Second, we’re building a real fractional ownership model for second homes. Multiple builds, multiple locations, real use, real equity—targeted at buyers who want access and upside without full ownership headaches. I think this one has the most legs and I’m excited about the Broken Bow development which has just broken ground.

And third—the focus of this note—my partner and I have started quietly bidding on low-end starter homes. We’re talking about $700,000 listings where we come in at $400,000. We don’t expect to win most of them. But in a frozen market with fatigued sellers and no liquidity, you don’t need to win them all. We just need a few. And here’s why:

Some sellers bought in 2003 or 2008. Their mortgage is nearly paid off. They missed the peak in 2021, and they’re tired of waiting. They’re downsizing, moving, or just done.

If they can pull $400,000 out of their house—free and clear—they can put it in the market or buy Treasurys at 5.0%, generating $20,000/year risk-free. Or they can rent the same house back, avoid property taxes and maintenance, and come out ahead. Suddenly, “selling low” doesn’t feel so low.

And when you combine seller fatigue with buyer silence, investors who can pay cash are in a strong position. It’s not about timing the bottom. It’s about understanding who’s already given up. And to be clear, we’re using only equity, no debt, so that we can afford to wait and not be slaves to the bank.

Zooming Out: The Bigger Economic Play

I’ve written for months that we’re in a deliberate slowdown. The Trump administration’s economic policies—tariffs, student loan repayments, restrained spending, regulatory rollbacks—are all aimed at forcing lower interest rates. By slowing the economy, reducing liquidity, and reining in inflation without killing jobs, the goal is to force Powell’s hand.

If they succeed, mortgage rates fall. Housing becomes affordable again—not because prices collapse, but because payments drop. And when that happens, there’s a new wave of buyers, a new rally in asset prices, and a fresh round of real estate regeneration.

But we’re not there yet. Right now, we’re in the in-between. A market where no one wants to sell. Few can afford to buy.

And yet—beneath the silence—liquidity is shifting hands.

So Where Do We Go From Here?

1. More Renters – If you can’t afford the mortgage, you rent. If you don’t want to lose your 3% rate, you stay. Owner-occupied transactions decline. Renting becomes normal—even for families.

2. Secondary Home Focus – In cities like Denver, Dallas, LA, or New York, we may see a shift toward renting where you work, buying where you rest. Lake houses, cabins, and mountain getaways within a 3-hour drive become the new wealth vehicle. That’s how it works in Calgary. It’s how it may start to look here.

3. Investors Steal Homes – Sellers who missed the peak will get worn down. Investors will be patient, liquid, and ruthless. And they’ll buy homes for cash from people who need out.

4. Shift to Hard Assets – Stocks look uncertain. Bonds are capped. Real estate—if bought right—is real, usable, and inflation-protected. It’s not about “beating the market.” It’s about owning something that doesn’t go to zero.

Final Word

When liquidity dries up, markets move in silence. Prices don’t crash overnight. They erode. Owners sell quietly. Buyers bid low.

Equity disappears, not in headlines—but in appraisals.

That’s how bottoms are made. Not with panic, but with apathy. When the urgency is gone. When sellers stop believing a better offer is coming. When they just want out. That’s when “Buffet” investors show up—not to comfort, but to capitalize.

I don’t mean to sound ruthless. But I didn’t make the rules—I just read the math. And this summer, I plan to rip some faces off.

That’s not cruelty. That’s capitalism.