November 15th, 2025 - The 50 Year Mortgage

The Van Wie Financial Hour, hosted by Steve Van Wie and Adam Van Wie, along with Joey, delved into various financial topics, including market volatility, the impact of mortgage terms, and investment strategies. They discussed the importance of involving the next generation in financial planning, addressing a caller’s question about engaging family members with financial advisors. The discussion also covered recent market trends, investment opportunities, and changes in Medicare and tax policies.

Transcript

Steven H Van Wie 0:00

It's Saturday morning, it's 10 o'Clock. This is the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 0:05

I'm Adam Van Wie.

Joey 0:06

And I'm Joey Loss.

Steven H Van Wie 0:07

We are all here. Although that didn't sound really great to me.

Adam Van Wie 0:11

I. I promise he's actually right there.

Joey 0:13

I'm right here.

Steven H Van Wie 0:14

Oh, you mean killer. Killer Joey is here. Talk about a takedown.

Adam Van Wie 0:19

I know. I was gonna say we. That was two weeks in a row that he went after someone and, and boom, boom, that guy's gone. All right.

Joey 0:27

Yeah.

Steven H Van Wie 0:28

I know that nobody out there understands a word we've just said. Which means you have to keep listening. Because we're going to find out exactly what all that meant real soon. Might be in the second segment. You never know. Depends how things go. Let's just say the boys carrying a lot of influence lately in the financial world. So that said, like to welcome everybody back. All the regulars, you know, you know the rules. You keep listening, we keep showing up and everybody's happy. If you're new to the show and they found it by accident or somebody told you about it or whatever, try to stick around for the whole hour. We always promise you learn something along the way. Today I'll double down on that promise. I have come to play today. Lots of information and some color on the side. So. In fact, I've already warned a few people to be ready because people are just not on top of everything.

Adam Van Wie 0:33

Right.

Joey 0:36

Yeah.

Joey 1:28

Yeah, I have no idea what's coming. But you were coming around with some spice before the show started coming. Excited to find out what that is.

Steven H Van Wie 1:35

Telling nobody how, why, what or where.

Adam Van Wie 1:39

He definitely woke up and chose violence.

Joey 1:40

Yeah, it feels that way.

Steven H Van Wie 1:42

You know, if you're looking for something to complain about these days, you don't have to look very far. No, the level of stupidity and so on are always there. Anyway, I digress as I am so want to do. And we'll get into it. We will have a trivia question again, as always, at the beginning of the second segment. And in the meantime, this was a week that did not feel good to me and I put some numbers together and I was kind of pleasantly surprised.

Adam Van Wie 2:17

Yeah, it was a volatile week for sure. It actually ended a bit higher. I also did not expect that. I knew it wasn't going to be a total disaster because the first part of the week was pretty good. But especially if you the. Well, two out of three indexes were up. The Dow and the S P. You saw small gains 0.3 and 0.1% the NASDAQ was down just a half a percent. So really not bad considering everything that happened. Thursday was just such a bad day. It felt awful. It kind of erased our memory of Monday, Tuesday, Wednesday.

Steven H Van Wie 2:51

Yeah, that was the problem. It was sequencing. If it started bad, got better, I would have felt exactly a lot better, even though the numbers would be exactly the same.

Adam Van Wie 3:00

So it really felt like a much uglier week than it was. But the whole trading pattern was just. There was nothing that caused Thursday. I kept looking and I couldn't find a single event to point to. It was just kind of a. Everyone decided to risk off on Thursday and they risked off in a big way on everything.

Steven H Van Wie 3:16

Well, I'll tell you what it was. They all of a sudden discovered that the world was unaffordable.

Adam Van Wie 3:22

Okay, that's it. All right. Well, especially when you're, when your bitcoin hits a bear market, it becomes even more unaffordable. So that's what actually happened this week. And that's just something that actually happens pretty often. I went back and checked the chart. The 20% drawdowns on Bitcoin are like semi annual events. It's not like a large cap dividend stock. It trades a lot more like a very volatile small cap stock. And so those drawdowns, they tend to last a bit longer than the bull markets in bitcoin. So the average on a drawdown on a bear market is 7, 70 days. And the average bull market for Bitcoin is 40 days. That's it.

Steven H Van Wie 3:25

That's all it takes.

Joey 4:08

The complete opposite of the equity markets. If you look at one of those charts that shows bulls and bear markets, it's like 80% bull, 20% bear.

Adam Van Wie 4:10

Yeah, exactly.

Adam Van Wie 4:17

Oh yeah, definitely.

Steven H Van Wie 4:18

I think the market goes up 70 or 75% of days. Trading days. Yeah, not bitcoin.

Adam Van Wie 4:25

The other thing is when you, in bitcoin that you can see is that the, in the equity market they always say it takes the elevator down and the escalator up. Not necessarily true. On bitcoin it can take the elevator up too. It's, it's just really, really volatile. And that's what happens when there's literally nothing backing the value except a bunch of people saying, yeah, this has value. I'm not saying that's necessarily a bad thing. There are lots of examples of that in life, like fine art. But at the same time, it makes it a lot harder to put a true value on something. When you can't run a discounted cash flow model and say this is what the future earnings are going to be worth to me today. So just kind of keep that in mind. If you're a bitcoin investor that you're going to have to suffer through these bouts of volatility. It's not going to be fun. Could it be a buying opportunity? If you're a long term bull on it, then sure, why not? But I, I, I still don't understand how people agree on a value of bitcoin. I just don't get it.

Joey 5:26

The phrase that they use in the bitcoin community is diamond hands. And that just means you don't sell during these long bare periods. That's not a recommendation, that's just what they say.

Adam Van Wie 5:29

What does that mean?

Adam Van Wie 5:33

Okay.

Adam Van Wie 5:37

Yeah, that, that sounds like the bitcoin community. Then you don't have to sell either.

Steven H Van Wie 5:39

How about if you don't ever buy.

Joey 5:42

Then, then in a way you still have diamond hands.

Steven H Van Wie 5:45

I have never, I have never missed an up or a down ever.

Joey 5:49

Steve has never sold bitcoin. Once he's got diamond hands, gold and.

Steven H Van Wie 5:51

Yep. No.

Adam Van Wie 5:54

Silver is another asset that seemed to only go up until this past week or two. A lot of, lot of pressure on the prices of those two precious metals. Definitely lost some momentum recently. So we'll see what happens with that. Pretty, pretty lofty in the, in the price side of things right now.

Steven H Van Wie 6:15

So we've been calling that for quite some time now while it's been trickling upward. And I've been feeling like we might get proven wrong. But you know, if you look at the history of gold and silver, you're not going to be proven wrong.

Adam Van Wie 6:27

No, it's a commodity. Of course.

Steven H Van Wie 6:29

When it goes down, it goes down. And then, and only then should you look at beefing it up. In my opinion. That's just me.

Adam Van Wie 6:37

Exactly. In somewhat better news, oil is also in a downtrend. I know that's not great for oil investors, but it certainly is great for people who drive cars.

Adam Van Wie 6:48

There was some concern this week because there was news of a Ukrainian attack on a Russian port and the thought was that if they did enough damage to that port then that would disrupt some of the oil supply chain. Doesn't seem to be even a blip in the price really of oil. I think it's back down under 60 now and it's in a pretty solid downtrend. OPEC has been signaling slowing down production. That's due to an expected surge in inventories next year, which should also be good for prices. Prices. So, so if you're, if you drive and you like to buy gas. That's. You're probably pretty happy to hear all of that news. Earning season's coming to a close.

Steven H Van Wie 7:29

Wait, you don't have to like to buy gas? You have to have to buy gas?

Adam Van Wie 7:33

Well, yeah, I guess. Yeah.

Steven H Van Wie 7:35

Well, if you have to like it more when you buy cheaper gas. But again, I digress.

Adam Van Wie 7:38

Yeah, I'd rather pay two bucks than four bucks.

Steven H Van Wie 7:41

And it looks like you might be doing that before too much.

Adam Van Wie 7:43

Yeah, it's possible. Like I said, earnings season coming to a close. Just a few retailers yet to report, and then one big one, Nvidia, that's next week. So I all eyes will be on Nvidia this week. Let's keep our fingers crossed that they have a good report because a bad report could really set us up for a not great action in the market next week.

Steven H Van Wie 8:04

Yeah, NASDAQ's kind of teetering, wondering which way to go. The things that were so hot are, are losing their luster right at the moment. It's nothing I would worry about because tech is where it's at in the long run. All right, we got to take a quick break and pay some bills. We'll be right back. Don't go anywhere. This is the Van Wie Financial Hour. 

Steven H Van Wie 8:23

Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 8:26

I'm Adam Van Wie.

Joey 8:27

And I'm Joey Loss.

Steven H Van Wie 8:28

And I remind everyone that the lines are open 904-222-8255.

Steven H Van Wie 8:35

And you can use that to either take a shot at the trivia question I'm about to give out or, or you can just call in and tell us you want to talk about a certain topic. I will be getting into mortgages probably in the second half of the show because there's a lot going on in that arena right now.

Adam Van Wie 8:53

I think he just refied into a 50 year. Yeah.

Steven H Van Wie 8:56

It was such a deal at your age.

Adam Van Wie 8:58

It makes total sense. Why not?

Steven H Van Wie 9:03

We'll get there in a few minutes. Anyway, I want to talk about mortgages in the real estate market. Of the entire value of residential real estate in this country. What percentage of it is owned free and clear, meaning it doesn't have a mortgage on it. The percentage of unmortgaged residential real estate in this country, it's just a percentage, which means it's between 1 and 100.

Adam Van Wie 9:28

I want to say it's at a recent high or all time high, something like that.

Steven H Van Wie 9:33

And it should surprise no one when you think about what's been going on.

Adam Van Wie 9:37

Yeah, yeah.

Steven H Van Wie 9:39

Demographics for cash. Yeah. And it can be corporate, it can be individuals. It doesn't matter. People are buying with cash. So you're right, the percentage of.

Adam Van Wie 9:46

Yeah, I don't know the answer. I just read something recently that said that that was a trend and you got to be.

Steven H Van Wie 9:52

Yeah, plus or minus half of a point. It doesn't say Bob on my screen, but I bet it is. Yes, it is. It says the farm. Good morning, Bob.

Bob 10:04

Good morning. I'm out here waiting on my free government grocery store and bus transportation.

Steven H Van Wie 10:09

You're not holding your breath, are you?

Bob 10:14

Yeah, I got to hold my breath. Hey, quick question for you guys.

Bob 10:20

Our family is scattered all over the United States. Our immediate family. And as we're getting older,

Bob 10:31

how important is it for you to bring people in not in terms of succession, but in terms of planning and have them see what you're doing with us? You know, at some point we're all going to depart. And as we're getting older, I thought maybe I'd try to schedule something where I could bring our children in that are going to be succeeding us and see, you know, what they're doing, have a peek at what we're doing. It's. It's kind of hard to explain that over the phone. I don't know if you guys ever do that. I don't know how important you consider it. I was just interested in having your thoughts on it and maybe calling and scheduling something.

Steven H Van Wie 11:14

The most experienced person about that kind of thing sitting at this table is Adam. So, yeah, I say, why don't you address it?

Adam Van Wie 11:22

Yeah. We have a lot of clients that are multi generational.

Adam Van Wie 11:26

That usually starts with the older generation, but they often feel like you do and want to get their kids more involved and eventually maybe even the grandkids more involved. And we strongly encourage that. I think more families need to be open about money because many, many times the burden of care will fall on another generation, especially on kids. And as adults age, if they haven't saved enough or if they just don't have anyone else to take care of them, that where, where else is it going to go to but the kids? So knowing the financial situation of your parents is actually quite important if you're trying to plan out your own retirement and later life, because if you have a situation where you need to be financially responsible for your parents or at least assist them, that should be accounted for and it very often is not. So it can really blow up a financial plan too, for people that are haven't done that kind of thing.

Joey 12:26

I think it's the nice.

Bob 12:27

I'm talking to our daughter about, you know, our trying to clue her in as to where we're at. And she said, you know, dad, that would be really, that would relieve a lot of stress for me. So I'll have to call and schedule something.

Joey 12:43

You know, Bob, I think it's the nicest thing that the older generation can do for whoever they've chosen to be their financial power of attorney. Because what can happen is in an extended care scenario, that child who's spending all this time and effort taking care of the parents, trying to do the right thing. If they have siblings,

Joey 13:02

there may be a lot of money that's being expended on this care issue, this extended long term care issue. And if the other siblings didn't know what the starting point was and that door hasn't been open to having conversations by the end of the whole thing, those siblings can look at the amount of money that's left in the estate that they're getting and then make all kinds of accusations at the financial power of attorney. Child, we've seen it.

Bob 13:25

I never thought about that. That's a good point.

Joey 13:27

It's just unfortunate

Joey 13:30

what money can do to families, even the best families. And I think transparency is the ultimate tool to get keep bad things from happening.

Steven H Van Wie 13:37

Yeah, I've been reporting for a long time that nationally the numbers don't change much. It's about 80% of parents would like their kids to get more involved and about 80% of kids would like to get involved with their parents and nobody will say anything. Yep. You can't break that ice. But let me tell you from the producer side how I see this right here from Think Advisor and the not too distant pass, it says 81% of wealth inheritors say they'll fire their parents Advisor.

Steven H Van Wie 14:10

What would that do to the three of us? Nothing good. So what's one of the greatest preventatives? Get them all together with you and make a transition beginning right now so that they understand that you're there for your meaning. Us three, we are there for the simple reason that their parents trust us. We know what's going on and we can help them with the transition to the kids. And that transition is going to be somewhere north of 7 and possibly up to $17 trillion

Steven H Van Wie 14:45

as baby boomers die. This is really an important issue and I'm really glad that you brought it up.

Bob 14:52

Well, I would just know sitting and thinking and I have time on my hands here at this time of year. Everything's round out. So. But I'll call them and make some appointments. I'll take a swag. At your homes that don't have a mortgage, I'd say 30, 34%.

Steven H Van Wie 15:13

Fortunately, you're low.

Bob 15:16

Okay, good.

Steven H Van Wie 15:17

Okay, well, that is good news. Yeah, exactly. All right, well, I appreciate it. You know, we. We have so many kids accounts when. We'll tell you more about it when you're actually in the office. But you would be absolutely amazed at how often this is happening now. And I do think part of it is because our clients are getting older. They're seeing their kids grow up and have their own families, and. And their accounts are getting pretty sizable because the market and so on. So, yeah, it's a very timely topic, and it can be good for everybody. That's important.

Bob 15:18

I set a low bar, right?

Bob 15:52

Okay, well, I appreciate it. You guys have a great day, and I'll call and make an appointment.

Joey 15:56

Thanks.

Steven H Van Wie 15:56

Thanks. Yeah, I hadn't been thinking about that a lot lately, but we have a few people that are really getting into it. I. I give them a lot of credit. If you're worried about your kids ripping you off, you should probably worry about it more if you. If you don't tell them what's going on.

Adam Van Wie 16:14

Yeah, it's actually been a bit of a theme in our business this year. We've had tons of grandkids and kids, open accounts and start saving. A lot of these kids, too. The crazy thing about minimum wage growth is that these high school kids are the ones who are affected. And so they're making 13 to 25 bucks an hour, and they don't have any expenses. So now they're like, what do I do with all this cash? And they're actually putting it in the market, so. Good for them.

Joey 16:41

Those are fun conversations, too, because, I mean, what. We had one yesterday, and you had one I was dropping, and it was, you know, we just blow past saying something like, roth, ira. And they're like, well, what is that? And you're like, oh, this is the beginning. And then you smile and give them the answer.

Adam Van Wie 16:54

Yeah.

Adam Van Wie 16:56

Like that.

Adam Van Wie 16:59

Exactly. And the young man I was talking to, he. He's not. He said yes when I first said it. And then after, I was like, okay, does that sound like a good plan? He's like, okay, I didn't understand any of that. What did I agree to?

Steven H Van Wie 17:02

He.

Steven H Van Wie 17:13

There was no shame in that, people. You know, back when I was in grade school and high school, we took some version of. I would call it, balance your checkbook, math but finance, no. The stock market back then was for rich people and it actually was because Merrill lynch was charging you $340 to make. And the market wasn't that high. But anyway, it, it is a far different cry today. And I really believe that we dropped the ball. That's why continually on the show will congratulate, congratulate our governor who has put finance and investing back into the schools.

Joey 17:16

Yeah.

Adam Van Wie 17:37

Exactly.

Adam Van Wie 17:55

I don't think it's actually happened yet, but it is slated to happen.

Steven H Van Wie 17:58

Okay. And more states are going to pick up on this and you're going to understand as this happens how good it is for people. I have a related article to the one I was just quoting. New advisors are in short supply as 72% of trainees in our business fail.

Steven H Van Wie 18:21

They're weak on the basics like mathematics and concepts.

Steven H Van Wie 18:28

I'm never going to stop saying this until I'm in the ground. If you are a young person wondering what to do with your life and you like three things, people, money and math, this is a great career. And if you live in a place that's hot and humid and all that, it's an indoor career, I think that counts because I don't like all that stuff. I never did either. But if you, if you want something to do where you can help people, you can get to know people really well and just generally do yourself a favor while you're doing other people a favor. Because I promise you, the more you advise other people, the better off you'll be investing your own money and you'll understand more of it. Think about it now, like, Julie, you got a degree in it, right? When I was getting into this business 24 years ago, there were some online courses, but you really couldn't just go to college, get a degree, degree in financial planning, unless you were very, very fortunate as to where you live now. They're pretty much everywhere. And that's really what it takes to get started.

Joey 19:15

Yeah.

Adam Van Wie 19:34

Still. Not that not everywhere. But fortunately, right here at unf, you can get a, to get a degree in financial planning.

Steven H Van Wie 19:41

Yeah, I think that's just a really, really good start. But if you're going to go into it, then I strongly suggest that you start young, learning some things. And I think that's maybe what Florida schools are going to start out leading our kids to. So it can only get better. But imagine that, you know, if, if your clients start dying and a lot of them are older, you're going to lose most of that kid's business. Not good enough for me. So We've got to do something about it. We'll be right back. Don't go anywhere. This is the Van Wie Financial Hour.

Steven H Van Wie 20:13

 Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 20:16

Hi, I'm Adam Van Wie.

Joey 20:17

And I'm Joey Loss.

Steven H Van Wie 20:18

And I remind everybody the lines are open 904-222-8255

Steven H Van Wie 20:23

where you can take a shot at the answer to this question. What percentage of America's residential real estate is unmortgaged? And we know it's higher than 34%. Had a quick note about the market. Some of what's going on with this little bubble bursting, or at least appearing to in some of the more tenuous spots in the market, there's a stock called smr, which is a small company that is building little nuc plants, the kinds that are going in by the data centers and so on. And they of course became a hot topic when everybody started talking about building these things because we know the grid's not big enough right now and they have technology now to make the small ones localized. So it dropped back 40% this week and everybody's pulling their hair out. So I dug a little deeper. It had been up 1100%

Steven H Van Wie 21:21

and it pulled back 40%, which means that had you put $100 into it as this run up started, which wasn't that long ago, you would today have $660. And I for one will not cry for you. And that's the truth.

Adam Van Wie 21:35

Yeah, 40% pullback does hurt regardless.

Steven H Van Wie 21:39

But their first revenues that are even going to be worth reporting will be in 2029.

Steven H Van Wie 21:49

Now, you want to buy something that's speculative, you be my guest.

Adam Van Wie 21:54

Yeah. I wonder when profitability is forecasted.

Steven H Van Wie 21:57

Yeah, and I will, I will not be suggesting that you're doing something brilliant just in case you ask.

Adam Van Wie 22:05

So I think we need to tell who Joey took down.

Steven H Van Wie 22:09

The man is about to speak.

Joey 22:12

Yeah, so last week we were riffing on Michael Burry because he was taking. Yeah, he. Every couple of years, I think I ran through five different scenarios where he predicted, you know, Armageddon, like market crashes. And then the one he got right was big, right? The one he started with, that built his name was in 2008. He talked about the housing crisis. He took a massive short position. The rest is history. He made hundreds of millions on that trade, went on to become in the American public a very well known name, and then had a movie made about him, I think based on the book. Called the Big Short. I think Steve Carell played him. That's a big mark in a career if you get Steve Carell to play. The problem is after that he made about six or seven predictions of major recessions that this didn't happen. And so every year it feels like we see big headlines or Michael Burry, the guy who made hundreds of millions of dollars back in 2008, says fill in the blank about how bad the market's going to be. And it's just sensationalism.

Adam Van Wie 22:48

Of the same name, right.

Joey 23:19

So we were joking about that last week and kind of walked through his.

Adam Van Wie 23:21

And the week before too, because I was here and you brought it up the week. Yeah.

Joey 23:24

Oh, did I? Okay. Well, news got out and he deregistered his SEC firm this week, which could mean one of two things. One, it looks like he's shutting down. He said some things to make it sound like he's shutting down. The other thing is in March of this year he filed papers that show regulatory assets of 155 million, which if you're over 100 million, that's when you register with the SEC. So either he lost money to pull him below 100 million or he's shutting down. Neither of which sounds great.

Adam Van Wie 23:53

That and also surprisingly small hedge fund. I mean, 155 million is.

Steven H Van Wie 23:59

That is nothing.

Joey 24:00

That is not very big. I know of a firm that's bigger.

Adam Van Wie 24:01

That's tiny. I do too. I'm going to say that in fact.

Steven H Van Wie 24:06

I think you all own one.

Adam Van Wie 24:08

Yeah, that, that might be true. So that's crazy that for the amount of press you he got, you would think he had several billion under management, minimum.

Steven H Van Wie 24:18

Well, it shows you the power of just one man on one radio show, doesn't it? Yeah, yeah. I would strongly suggest that maybe those two things aren't related, but it sure is fun to talk about.

Adam Van Wie 24:30

So crazy.

Steven H Van Wie 24:31

All right, people, I've had it with all of you. You are absolutely nuts.

Steven H Van Wie 24:39

Donald Trump suggests as one of his many, many points of trying to make this world more affordable that we should look into a 50 year mortgage. And hair gets pulled out from D.C. to Wall street to everywhere else. And I'm sick of it. You people are not thinking straight. First off, if a 50 year mortgage is approved, it doesn't mean that everybody has to take one. That is nowhere in the cards. The people who say, well, what we don't need is a 50, we need a 20 year mortgage. Well, you can get one now if you just think about those two things and add in you got the arms, 1, 3, 7, whatever. And you've got 10 year, 15 year, 30 year. The world of purchasing some asset like that and financing it, it's about choice, what fits you. Because you don't like it. That doesn't mean other people shouldn't get it. So who are you? And you've seen it all over the media. Who are you to say, absolutely not? They're going to be paying twice as much for their house. Okay, let me ask a few dumb questions. What's the average duration of a mortgage in real life? How long does it last before it's either refi'd or the place is sold or whatever?

Joey 26:07

Do you want a real answer? I have one. Seven years?

Adam Van Wie 26:09

Yeah. What is it?

Steven H Van Wie 26:10

Yep. If you take a 50 year mortgage and get rid of it in seven years, have you damaged yourself? Have you damaged. The financial system you did yourself?

Joey 26:21

Yes.

Joey 26:25

Yes. So I was looking at all this data about the 50 year mortgage. So if you had a 30 year mortgage at like something like 6.5% and you owned it for 10 years and left the home, the amount of equity that you would have through the principal portion of your payments through the 10 years would be about 16 and change percent on the home. On a 50 year mortgage, over that 10 year period, you'd have about 4.

Steven H Van Wie 26:49

And I'm going to tell you why that is 100% irrelevant. Okay, ready. Where is equity buildup in your home? Is it in your monthly payment or is it over time?

Adam Van Wie 27:02

Well, in that seven years it is generally through appreciation, not through equity payment.

Steven H Van Wie 27:09

Yeah, it doubled under Joe Biden. What is the opportunity cost of not taking a 50 year mortgage if you can't afford a different one? Years and years until you get your ability to get a different mortgage. Why not? But I'm not done.

Joey 27:28

Me neither.

Steven H Van Wie 27:28

I happen to have numbers that I did myself. This morning I took a mortgage calculator and it defaulted to 6.367%, which I assume is somewhere around the market. More or less up to date, their default was a $400,000 30 year mortgage. And I looked at those numbers. It's 1995amonth.

Adam Van Wie 27:42

Yeah, that seems about right.

Steven H Van Wie 27:56

I went down to a 50 year mortgage and it's 1771amonth.

Steven H Van Wie 28:03

Now you know and I know that if you're $5 short on your cash flow, no banker is going to give you a mortgage these days because they're all regulated by the same bunch of idiots and they can't make exceptions for anybody. So let's say that $200 makes the difference between you buying or not.

Adam Van Wie 28:23

You price this on a, on a what? How many year? But you didn't change the interest rate. That's not accurate then I'm getting there. Okay.

Steven H Van Wie 28:26

50. Same.

Joey 28:33

I think the point stands.

Steven H Van Wie 28:33

Yeah, your, your point is well taken. Although between 30 and 50, I don't think you're going to get much of a change. I don't know, but that's personal. My, my opinion. So it's 200amonth and it gets you into a mortgage. All right, after 10 years, the 30 year, you owe 270. And after that same 10 years, you owe 307. 37 sounds like a lot of money, doesn't it? But wait, you just spent 10 years of your life paying $200 less a month. That makes up 27 out of the $37,000.

Steven H Van Wie 29:15

But that's not even important. What's important is you have 10 years where you wouldn't otherwise be in an appreciating asset. After 10 years, the paltry little pay down that you've done is going to pale next to the appreciation of the house. So let's recap here. It's not that big a deal. It's a choice. You don't have to do it. Why do you all not want some kid to be able to do this just to get into a house? Okay, I think you're shortsighted and somewhere around mean, awful.

Joey 29:52

I can handle that because I'm not a big fan of the 50. And here's why. What happens every time in history when access to borrowed, to lended funds increases? What happens to the price?

Steven H Van Wie 30:05

Have some. There will be some imputed appreciation in home value, right?

Joey 30:10

So suddenly we have a surplus of competition at the $400,000 house level because all these people who couldn't get mortgages now can. What, what happens to price? It just goes up. So will we see 100% of what you're talking about? No, and I don't think you were saying that, but I think that's worth acknowledging is that there's going to be price movement because every time the supply of funds increases, a lot of the.

Steven H Van Wie 30:32

Things I've read from all the naysayers say, it's absolutely insignificant what this would do to help people get into houses.

Steven H Van Wie 30:41

Then at the end of the article it says, and by the way, with all those new people coming into the market, you're going to stimulate an increase in prices of houses. Well, which way is it, guys? Is it important? Is it not important? Is it going to happen? Is it not going to happen? And who do you think you are to tell a young kid that he can't do that in a country where we, we use choice, I mean our.

Adam Van Wie 31:02

Home, there are regulations on everything involved in finance that is not regulation to tell people that they can't take like you can't take a 20 year car loan. I mean, why not? Because it doesn't make sense.

Steven H Van Wie 31:18

Ten years to me.

Joey 31:19

This is, this is similar to FEMA to me. Because like you were incentive. Like why do people feel like they can't buy homes because they don't want to buy homes where they can afford them. That there's so many nice places in the country you can live that people don't want to buy the homes that are totally affordable. 

Adam Van Wie 31:33

I agree with that.

Joey 31:35

And if there's the same thing and sort of incentivizing people with a backstop to live in some place where they're at high risk, the biggest public takes.

Steven H Van Wie 31:42

On the biggest problem with this whole thing aside from people thinking they can make rules for everybody in the world, biggest one is if you're not in current ownership of a house, you are missing the biggest wealth builder period. So do everything you can to get in. That's my view and I promised it. We'll be right back. This is the Van Wie Financial Hour. 

Steven H Van Wie 32:04

Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie. 

Adam Van Wie 32:06

I'm Adam Van Wie.

Joey 32:07

And I'm Joey Loss. 

Steven H Van Wie 32:08

And I. I don't want anybody to think I'm a big bad ogre on this thing, but I'm going to throw out one statistic and I want you all to think about it. And that's over and above. You're all acting like a bunch of what, communists use that term loosely because of New York and Seattle. Anyway, the average first time home buyer right now is 40 years old. It used to be 25. I bought a house when I was 24 actually, so I was pretty close to the old average. By shifting that 25 up to 40, you've got a whole generation of kids who are not getting 15 years of appreciation on the biggest wealth builder they're probably ever going to have. That opportunity cost will cost society big time and it'll cost a lot of individuals a chance at a brighter future. That's my beef and that's it. So you guys want to talk about something fun now? Your choice.

Joey 33:12

First of all, I thought it was a great conversation and I respect your position, I still hold mine. And it's mostly because I think the issue is in the supply of housing. But also I'm 33, so I feel like I can kind of dunk on my generation. Our expectation, like when we do this game where we say, oh, my parents bought a house for $27,000 or my grandparents or whatever, it's not an apples to apples comparison. First of all, the technology in a home today is worlds above. This is the same thing with cars. Right. It's, it's like cars almost have too much technology. We've talked about the price being out of control. And so I think if people were willing to live in the kinds of places our grandparents lived, you can certainly buy a house at a good price with a 30 year mortgage and all these things. I think the issue is twofold. We've got a supply of housing problem, that is true. And then the second issue is the expectations for what we want out of our first house are also a little bit unrealistic. And so maybe, maybe there's room for a 50 year mortgage and that can help in the short term. But I'm a big believer in what historical economics says and I just think that the price impact is going to be a big counter to what the short term benefit might seem like.

Steven H Van Wie 34:20

Yeah, I have, we had a lot of change during COVID as to consumer preference too. Yeah, bigger and better equipped was in.

Joey 34:26

Yeah, right.

Adam Van Wie 34:27

I have, I have a pretty interesting data point. I just went up, went back and looked up my first house. I originally, when I moved to West Palm Beach, I wanted to buy a house. I'd moved there for a job. I had a budget. I quickly learned that that budget wasn't going to work. So I upped my budget and got a roommate and bought a house I could barely afford in a worse neighborhood than what I wanted and a smaller house than what I wanted to buy. And I think I paid $230,000 for that house. Roughly. I just zillowed that house. Guess what the zestimate is on that house? 384,000. So almost the $400,000 house. So it's just a matter of making, in a lot of cases, making sacrifices that you may not want to make. And whether or not that includes a longer mortgage, I don't know. I'm kind of wishy washy on that one. But the fact is you, you, you can't always get what you want. Like it's not, it's not as simple as houses are unaffordable, you would expect.

Steven H Van Wie 35:33

Me to say, but you can try sometimes.

Adam Van Wie 35:35

Yeah, get what you want or get what you need. But yeah, it's just, I, I think there's just so much that goes into this conversation that when people are complaining about it, I was complaining about it back then too. This is, that was 20 something years ago. I mean, this is not a new problem. This has always been a problem for people in their 20s to afford a house. Maybe it's probably worse today, but also where are you choosing to live? What, what is the, what are you trying to buy? What, what, what do you think you need to be comfortable and you willing. A roommate like I did. So all of these things factor in and I just don't think it's a completely apples to apples comparison when you look at what your parents and grandparents did.

Steven H Van Wie 36:06

To get a second job or, or. A roommate. Exactly.

Steven H Van Wie 36:18

Yeah, if we were advising an individual in our office, we would go through all the options. What I don't like is all these people say no, you can't offer that option and thereby they're cutting out some of the people who might be able to leverage that in. And for a lot of young people, it's a really high priority and one of the things that they ought to think about is where equity comes from. It comes from the clock, not from the wallet.

Joey 36:44

I agree with that. The 30 year thing, it seems to me like at least part of the design of 30 year being the timeline is that part of, relates to the length of a career for a lot of people. And to your point that the seven year turnover, obviously that's the average, nobody stays in their home. Very few people stay in their home 30 years. But starting a clock with 50 years, when you're 20, let's say you're 22, you come out swinging, you get a house, 50 year mortgage, 72 years old, when you're done two years into Social Security payments, I mean, that's just, at some point every one of those buyers is going to have to accelerate payments.

Steven H Van Wie 37:17

I contend that most people who buy a house, not for the first time, I'm talking about repeat owners, most repeat owners who buy a house in their, let's say 40s later, 35, 45 years old, whatever, they're probably not at that point where this will be their forever house. Most people that are buying then have kind of maximum need or want or both, and they'll stay there for a while, but by when they get close to retirement, it's probably not going to be the biggest deal in the world to pay that off because they're probably going to downsize, so why worry?

Adam Van Wie 37:56

Mr. Mr. Beechler, our good friend just sent me this text. 1950, average house, 1200 square feet, 6 person, average family size 2025 average square foot, 25004 person, average family size. So again, have expectations changed a lot? It sure seems like it, yeah.

Steven H Van Wie 38:16

We're talking about the way we all grew up. You know, you were really something if you had a one and a half bathrooms in your house. Back two was unheard of. A lot of. A lot of them were simply. You had a bathroom, three bedrooms in.

Adam Van Wie 38:24

Yeah, definitely. Yep.

Adam Van Wie 38:33

A powder room downstairs and a one bathroom upstairs that's shared.

Steven H Van Wie 38:36

That was pretty typical. Yeah, I grew up with powder room downstairs and a full bath upstairs. So that's there. So that's pretty much America in the 50s and 60s.

Adam Van Wie 38:47

Yeah, that's how it was done.

Steven H Van Wie 38:49

My, my big beef is the people just shooting their mouth off and trying to deny things for other people because they're so smart that they know that it's going to cause them to not pay as much down or something. I say, come on people, this country is built on choice and it better stay built on choice. That's my complaint. All right, couple quick things. The Medicare premiums came out yesterday while nobody was watching. Really lovely news in here. He lied. The

Steven H Van Wie 39:28

the A which is most people get this is just deductibles for things like the inpatient hospital deductible, 3.58% for those not totally unreasonable. That one really didn't bother me much. Now Medicare B coverage went up a little. How about $202.90

Steven H Van Wie 39:55

starting January? An increase of $17.90 from the 185 we're paying today. That's a tiny little 9.68% increase.

Adam Van Wie 40:06

Right on the inflation number from three years ago.

Steven H Van Wie 40:09

Exactly.

Steven H Van Wie 40:12

All right. The deductible will be 283,

Steven H Van Wie 40:18

an increase of $26 from this year to 57.

Adam Van Wie 40:22

Also about 9%.

Steven H Van Wie 40:24

10.16.

Steven H Van Wie 40:28

All right, let's see. Irma, our favorite subject around this table, Irma increases, that's where you pay extra based on your income. So IRMAA is an income tax and nothing but. And you cannot get out of it if you're still earning that kind of money. So IRMAA, if you make more than 109,000,

Steven H Van Wie 40:50

they. Well, let's go 218 because that's joint up 9.73%.

Steven H Van Wie 41:01

Go up to the next one, it's up 9.68%.

Steven H Van Wie 41:06

The next bracket, 9.7%. One after that, 9.7%. The one after that 9.7%. So you get a little bump in the bracket and then a huge bump on the cost. That's after 9.7. Now I, I got my Blue Cross bill. I've got a Blue Cross supplement. Just got it this week. The numbers are out. 17% increase,

Steven H Van Wie 41:34

but no worries. I'm getting a 2.8% increase from my Social Security.

Adam Van Wie 41:39

Oh, lucky you.

Steven H Van Wie 41:42

Yeah, Part D drug coverage under Medicare, you get to pay IRMAA on that even if you don't subscribe. This is one of the most egregious things. I've been complaining about this since I learned about it probably about the time that we started this program, close to 11 years ago. So you get to pay in IRMAA this next year. The from 1370 goes to $1450. Those kind of small numbers. Right. But you didn't get anything. The next bracket goes up from 35 to 37, next one from 57 to 60. And then if you happen to be doing pretty well, you get to pay 83.30. And remember, that's not couples pricing, that's individual pricing. So if there's two of you, you get to double that. And that is nothing but an income tax. It is absolutely disgusting and I, I am about as irritated with the federal government as I've ever been.

Adam Van Wie 42:45

But on the good side, we got to go through the, the upped contribution limits for IRAs and 401.

Joey 42:51

Yes.

Steven H Van Wie 42:52

And I've got those right here. Yeah, it was good news. They actually did raise some things and I don't think we've got enough time to really cover it. But suffice it to see an extra thousand for your 401k. You get an extra 500 for your catch up contributions for IRAs. IRAs went up from 7 to 7,500 all in all. Yeah. And you should start right away doing your tax planning based on this. So if you're contributing to a 401k, you want to get that set up to take advantage of the bump starting in January. So get it evenly along the way. And if you're going to do a, an IRA contribution, always try to do it earlier in the year. You get an extra year of free growth in there. There's some changes on the Roth that I'm postponing till next week that there's some things about the Roth contribution that really upset me and I'll set you all straight next year. Well, thanks for listening. Sorry we've got to run, but we'll be here same time next week. And full of it again. This is the van.

Adam Van Wie 42:53

Yeah, because that was good news.