Fox News Cancelled Me

What's up you guys? It's Grahe here.

So, I got cancelled by Fox News and because of that, I'm making this video as my way of sharing the information that they didn't allow me to talk about. What could it be, you ask?

Well, a few weeks ago, I received several emails from a Booker at Fox asking if I'd like to join their host, Jesse Waters, during his prime time show to discuss the real estate market. I quickly said yes. After all, this is a topic that I feel like I know quite a lot about because, for those unaware, I've worked full-time as a real estate agent from 2008 through 2020. I've sold over $130 million worth of inventory. I bought and sold several rental properties of my own. I still hold on to a small portfolio of multifamily homes, and this is a topic that I spend hours a day researching.

So, after agreeing to the interview, I got almost an immediate response back to clarify the logistics and then cover the topic at hand: Wall Street. There's been reports that institutional investors have bought up a great deal of single-family homes and are driving up the price. Millennials are now being forced to compete for homes. We would love to have your real estate experience break this down with Jesse and get to the bottom of what's going on.

Now, admittedly, I'll be honest, it's been a very long time since I actually sat in front of the TV to watch the news—like probably not since I was a kid. So, I assumed, maybe too naively, that they'd want to promote actual discussion led by relevant facts, not mainstream media hit pieces to get clicks, right? In a way, I guess this was one of the reasons I was so excited to be able to talk to Jesse on Fox prime time because I was under the assumption that we would be able to get to the bottom of what's actually going on and clear up a lot of the misconceptions.

So, in response to that email, I clarified my position ahead of time very clearly so that that way they'd know where I'd be going with the entire story. The response I got back from them was, "No problem. We don't have to lean with that. Instead, we could go into Millennials in the housing market and why they're not buying homes."

Well, on the day of filming, they sent someone over to the house to set up a remote interview between me and Jesse that was scheduled to air later in the day. Basically, they had me call in. I could hear the scheduled segment in order as it was being recorded. Then, when it was my turn to do the interview, I looked at the camera and talked to Jesse. Simple, right?

Sure enough, despite me sharing my position on Wall Street buying homes shortly before going live, I got a message that they would, in fact, be leading with the narrative that Wall Street is buying homes. In my earpiece, I could very clearly hear the segment that was leading up to my interview. Just before I went on, I heard a variety of millennial interviews sharing their frustrations with high home prices, anecdotal stories of why they're still living with their parents, and how unfair it is that Wall Street is allowed to buy these homes and drive up the price.

About a minute later, Jesse’s voice began talking in my earpiece and his first question was along the lines of, "Shouldn't it be illegal for Wall Street to buy homes and drive up the price? What's going on?" Thankfully, I have my entire portion of the call completely recorded from beginning to end, and my response was to simply reiterate the facts: mortgage rates are the highest they've been since 2000; housing inventory is at the lowest level since 1999; 60% of homeowners have a rate locked in below 4%; home prices have risen 250% in the last 20 years, whereas average incomes have only risen by 80% at best. So, the fact is, unless someone is planning to live in their home for the next 7 to 10 years, buying right now tends to be a losing proposition when you account for closing costs, maintenance, property taxes, insurance, and everything else that goes along with homeownership.

If anything, this is one of the few times out there where it's a lot better short-term to be a renter than a buyer. So, I was fully prepared to go in with factually verified information as to the true problems that people are facing right now in the housing industry, especially as a millennial. But after saying this, he again circled back to the narrative that implies that Wall Street is to blame—that they're the ones driving up housing prices by buying up all the inventory.

So again, I reiterated my position: the reality is private equity only owns 1.6% of all single-family rental homes and the other 98.4% are bought and owned by normal everyday people. So, Wall Street has a very insignificant effect throughout the broad market. That's why the real issue we should address is the fact that low interest rates have completely turned our economy upside down, and now we're facing the repercussions of artificially stimulating the economy.

But after saying all of that, he then proceeded to ask if the home I live in belongs to my parents. I said, "No." And then he asked for my advice to all the other millennials who are having difficulty buying a property. Perhaps this is the point where I lost them, but my thought is that when I look at the numbers financially, buying does not make a lot of sense in most markets right now unless you plan to hold for at least 10 years.

Like right now, throughout most of the country, the cost of buying is significantly higher than the cost of rent. So with that in mind, isn't renting the better option financially? Just take myself for an example: If I were to go and buy a million-dollar home, I'd have to put $200,000 down, take on a $5,600-a-month mortgage, pay $650 in property tax, $200 a month in insurance, $150 in maintenance, and I'd be spending $6,600 a month for a home that I could rent for $3,900 a month at today's interest rates.

The math for buying does not make a lot of sense unless you plan to live there for a very long time. So my thought is this: for most millennials as of today, the cost of renting is cheaper than buying. Rental prices are falling; take advantage of this and perhaps you could arbitrage the opportunity for some savings in the future.

In response to my argument, Jesse then asked, "What about all the people who can't afford to live in San Francisco?" To which I jokingly responded, "Well, they could move to Las Vegas because that's what I did." And then he responded back by saying, "Well then, you're living in Las Vegas." Okay, he’ll win that one.

Anyway, we finished filming the segment in about 3 minutes, and afterwards I was told it would go live at 5:40 p.m. that same day. So because I don't have cable TV, I went to a neighbor's house to go and watch it. And sure enough, a little bit later, as I began watching, everything on TV played in the exact order as I heard it on my earpiece except when it came time for my segment to air. They played this instead: "Sarah Ashton-Cillo, Ukraine's American transgender spokesman, was suspended after threatening to hunt down those who questioned Ukraine's corruption. Next week, the teeth of the Russian devils..."

At that point, I figured, well, maybe they're just moving it a little later or maybe it was earlier. So I watched the entire episode and didn't see it. So I reached out to ask what happened. Their response was that they had some breaking news earlier in the day with V and his car got rear-ended, so they didn't have time to air my segment. But everything that I heard in my earpiece was the exact same as it aired on TV, with the exception of the book deal that could have been just a last-minute fill-in to take my place.

Now, I get it. I'm sure these things happen and maybe the book deal was just a bigger story than Millennials in the housing market. I'm just happy to have had the opportunity to even speak about a topic like this to begin with. Plus, in hindsight, maybe my narrative just didn't lead to compelling, exciting TV. For instance, after watching an hour of their content, I will say I learned that it really helps to lean into the narrative that there's a large faceless corporation to point the finger at because they're the ones to blame. They're the ones at fault; they are the bad guys; we are the ones being taken advantage of; it's not fair; we are the victims.

This just makes for much more compelling TV instead of saying low interest rates have boosted home prices to unaffordable levels. They can no longer build enough to satisfy demand at a low price because materials are also more expensive, and since 90% of homeowners are locked in with a mortgage under 6%, it no longer makes financial sense to move. Hence why there's very low inventory and anything currently on the market gets bid up to a very expensive level.

So, with that out of the way, if you want the information that I was not allowed to share on mainstream media, here are the facts as someone who has zero affiliation whatsoever to Wall Street: to start, the Wall Street buying homes narrative really seems to have taken off with this Twitter thread here which made the claim that BlackRock is buying every single-family house they could find, paying 20 to 50% above asking price and outbidding normal home buyers.

However, when you actually investigate all of these unsourced claims, as it turns out, the community in question is a purpose-built rental community created by DR Horton. By the time the project was for sale, it had already been built, completely rented out, and was being sold as an entire package of 124 homes that were never meant or built to be for sale for individual home buyers. In this case, DR Horton purposely sought out land in a desirable area, purpose-built homes on them to be able to rent out, and their business was fully intended to be a flip like this with a 50% profit margin.

So, even though this makes it seem like Wall Street is going and purchasing entire neighborhoods at 50% over asking and taking inventory away from home buyers, the reality is these homes were never intended to go for sale and were meant to be sold to an institutional investor who in this case turned out to be Fundrise, who allows anyone to participate with as little as $10. And them paying 50% over asking was simply DR Horton’s 50% profit margin after selling the project. Basically, this entire tweet is completely taken out of context; it's highly misleading; it's unsubstantiated, and from every piece of factual evidence that I could find, nothing supports their claims.

Instead, I'd summarize the entire tweet as basically misinterpreting the information and having a lack of understanding of how profit margins are calculated. But okay, fine, that's just one case. What about everything else? Like, in 2022, there was the headline that investors are buying nearly one in five homes, most in all cash deals. By the sound of it, this seems like an absolutely absurd number that's surely to blame for sky-high prices, except this is actually lower than what it was in 2004, 5, and 11 when investors were purchasing nearly one in three homes for sale.

Second, the term investor is extremely broad and it's very easily misunderstood. For example, if you go and buy your first rental property, you're categorized to the exact same as an institutional conglomerate who disclosed on a 10,000-home subdivision. So we got to break it down a little bit further. Of the 26% of homes that are currently being sold to investors, half are mom-and-pop landlords who own less than nine properties, and only 11% of that half are mega corporations. This means statistically, when you go and buy a home, 75% of the people that you compete with are other owner-users, 12% are mom-and-pop landlords, and only 2.8% are companies that own more than 1,000 units.

CoreLogic also found that in 2021, less than 3% of all homes were sold to large investors, and in almost all of those cases, those large investors were funded by everyday people who are investing in retirement plans, pensions, and real estate investment trusts. Americans for Financial Reform also estimated that by mid-2022, private equity firms only accounted for 3.6% of all apartments and 1.6% of all rental homes. That's it.

To top it off, rental home companies own even less than that at just half of 1% of all housing. The way I see it, based on the numbers from verified sources, the reason the housing market is so expensive is due to a combination of prior artificially low interest rates, restrictive zoning that makes it cost prohibitive or impossible to add more inventory to the market, and a surplus of demand from everyday home buyers who have been ingrained to believe that home ownership is the American dream.

If you want anyone to blame for the causes of all of this, you could probably look at your local city council, zoning commission, the Federal Reserve, and probably Congress. Now, sure, there can be times where investors compete with other home buyers, but as a former investor myself, I will say that competing with an owner-user is usually just bad business. Like, as an investor, you need to make a profit, and usually those opportunities only lie in the properties that need a lot of work, floor plan restructuring, new kitchens, bathrooms, complete renovations. That's where the money is to be made, and you can't do that if you're competing with multiple people.

Now, in defense of that, you can also make the argument that investors typically have better terms and close cash to be able to lower the price, which can be true. But usually in those cases, investors are competing with other investors, not buyers looking to do the work and move in themselves.

So as far as why Fox News decided not to run with that story, I'll leave it up to you. Personally, I tend to believe that anything other than blaming Wall Street just isn't exciting. It doesn't get people angry, it doesn't get them upset, and it certainly doesn't keep them watching to hear what happens next.

That's why this entire experience really makes me realize and appreciate just how great YouTube is—that you're able to hear a multitude of perspectives and hear the entire picture from a variety of sources, even if that means it's not the most exciting.

So, with that said, you guys, thank you so much for watching. As always, make sure to subscribe, hit the like button if you haven't done that already, feel free to add me on Snapchat and Instagram. That's it. I really appreciate it. Thank you so much for watching, and until next time.