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Graham’s Newsletter

Fox News canceled me

Published 7 months ago • 8 min read

"It is difficult to get a man to understand something when his salary depends upon his not understanding it."
– Upton Sinclair

So last week, I got canceled by Fox News.

A few weeks ago, a booker from Fox sent me a number of emails asking if I'd be available to join Jesse Watters during his Primetime Show to discuss the real estate market. I quickly said yes because it's a topic I'm passionate about. I worked full-time for 13 years as a real estate agent, and I sold over $130 million worth of inventory.

I agreed to the interview and got an immediate response – the topic would be: "Wall Street. There have 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 expertise break this down with Jesse and get to the bottom of this."

I didn't agree with how it was framed.

But I went into the experience thinking it would be a great way to add nuance to the conversation around the real estate market. In return, I learned a thing or two about how the media works. Here's what you need to know about the stories that come to you through the lens of the media, whether Wall Street is actually buying up your homes, and how you can get to the truth with a little research.

This will help you financially – but also save you a lot of stress and unnecessary anxiety, which I think is more valuable.


Naive assumptions

It's been a long time since I've sat in front of the TV and watched the news (I don't even have cable at home). So I assumed, maybe a little naively, that Fox would want to promote actual discussion led by real data and not just mainstream media hit pieces to get more eyeballs.

For all my videos and articles, I sift through dozens of outlets and sources, dig through independent studies, and piece together the most balanced and truthful narrative, even if it might not make for an attention-grabbing story.

For example, this headline might shock you: "25 percent of New York City tenants are not paying rent." But only when I dug beneath how the research was done did I learn that the study only counts tenants who don't pay their rent in full by the 5th of the month. Historically, 20-23% of tenants don't pay on time even in a good market, so the headline was barely above the average, and it wasn't a big deal. But adding that context doesn't create outrage, right?

In defense of Fox News, it isn't just them. Practically every news outlet ran a similar story because it made for the most compelling narrative. A headline that said that only 3% more tenants than usual were behind on rent wouldn't have caught anyone's attention.

That's why I was so excited to go on Fox Primetime and talk to Jesse, because I thought that it was an opportunity for us to have an open discussion, share data, and clear misconceptions. So I let them know my stand way ahead of time:

“Just a heads up, I'm very familiar with the narrative that Wall Street is buying up houses - but, there's very little data to support that. They make up such a small percentage of sales, they typically buy large developments that millennials aren't buying, and - if anything - mom-and-pop investors make a much bigger impact, with 20% of sales volume. Frankly, I think high rates, low inventory, and limited development are the REAL culprits of prices (combined with millennials not earning/saving enough).”

I got a response saying that wasn't a problem and that we could talk about millennials being unable to afford a home instead. I was totally okay with that, but that's not how it went.


The interview

On the day of the recording, Fox News sent over a cameraman to my place, and I was given an earpiece to follow along with the rest of the program that was leading up to my segment. Despite my reservations, they were leading with the angle that Wall Street is buying homes and driving up the price – and a minute later, Jesse Watters began talking into my microphone.

His first question was along the lines of: "Should it be Illegal for Wall Street To Buy Houses And Drive Up The Housing Market? What’s going on?" I responded with the simple facts:

In the last 20 years, incomes have only risen 80% – but home prices have risen 250%. As a millennial, I was fully prepared to talk about the real problems. But after all this, he circled back to the narrative that implies Wall Street is to blame – that they're ruining homeownership for Americans by buying up all the inventory.

But the reality is that only 1.6% of all single-family rental homes in America are owned by Private Equity. The remaining 98.4% are owned by everyday people like you and me. The focus should be on the fact that low interest rates completely turned the economy upside down. We're facing the consequences of artificially stimulating the economy.

Next, he asked for my advice to millennials who are unable to purchase a home in these conditions. This is where I lost him. Looking at the numbers right now, financially, it makes no sense to buy a house in most markets unless you plan on living in your home for at least 10 years. Throughout most of the country, the cost to buy is much higher than the cost to rent – so, isn't renting the better choice?

I spoke from my own example – If I were to buy a $1 Million home, I'd have to put $200,000 down and take on a mortgage of $5,600 in addition to another $1,000 in property taxes, insurance, and maintenance – totaling $6,600. Or I could just rent an identical house for $3,900. For most millennials, as of today, renting is cheaper, prices are falling, and arbitraging the savings could be a better choice.

Anyway, the segment was just 3 minutes long. They said it would air at 5.40 pm, so I went over to a neighbor's house to watch the interview live. Everything I saw on TV played exactly how I remembered it, but when the time for my segment came, they played another story about Ukraine War Journalist Sarah Ashton Cirillo getting a book deal.

I thought maybe they moved the segment to a little earlier or later, but after watching the entire segment and not finding it, I reached out to find out what happened. Their response was that presidential candidate Vivek Ramaswamy's car had been rear-ended and that was a much bigger story – but everything except the book deal that replaced my part seemed to be left as it was in the TV interview.


Wall Street is NOT buying homes

The story seems to have started from this Twitter Thread that claimed that "Blackrock is buying every single-family house they can find, paying 20-50% above asking price and outbidding normal home buyers."

But it turns out that the neighborhood in the article was a purpose-built rental community created by D.R.Horton. The project was already fully rented out by the time it was for sale, and was being sold as an entire package of 124 homes – it was never meant to be available to individual home buyers.

The developers had chosen a high-demand area, developed a community, and built it with the intention of flipping a fully occupied rental community. The 50% "outbidding" was just their profit margin. So, while this article makes it sound like Wall Street is buying up inventory and taking it away from homeowners, these homes were never meant to be sold individually. And it was eventually bought by Fundrise, which allows people to invest with as little as $10.

This tweet went viral – but it was completely unfounded, it's false, and nothing supports these claims.


Debunking more claims

In 2022, there was the headline that "Investors buy nearly 1 in 5 homes, most in all-cash deals." First, this number seems absurdly large – but it was actually lower than in 2004, 2005, and 2011, when investors purchased nearly 1 in 3 homes for sale.

The term investor is also a broad one. If you're a homeowner who buys their first rental property, you're categorized the exact same way as an institutional conglomerate that closed on a 1,000-home subdivision. Here's what the numbers actually looked like:

  • 26% of homes are currently sold to "investors".
  • Half of these are mom-and-pop landlords who own less than 9 properties.
  • Only 11% of the other half are mega-corporations.

When you buy a home, 75% of the people you compete with are other owner-users. 12% are mom-and-pop investors. Only 2.8% own more than 1,000 units.

Corelogic found something else in 2021 – Less than 3% of all homes were sold to "large investors". And almost all of these large investors were funded by everyday people who invested their spare cash into pensions, retirement plans, and real estate investment trusts. The returns flowed back to the investors.

And even those investors aren't "jacking up" the rental prices – less than 50% of landlords across the US raised rent by more than 3%. Most headline rent increases are reported from tenant turnover, not increases on existing tenants, because landlords want to be closer to the current market value.


The way I see it, based on all the numbers from verified sources, the real reason housing prices are unaffordable is due to the aftershock of decades of artificially low interest rates, restrictive zoning that makes it difficult to add inventory, and a surplus of demand from home buyers who think that owning a home is still the American Dream despite prohibitive prices.

That's it. It's not sexy, it's not dramatic, and it doesn't give us a faceless corporation to blame for its greed causing our problems. But that's the truth. If you want someone to blame, it's probably your local city council, zoning commission, Congress, and the Federal Reserve who have been responsible for systemic issues.

Investors typically don't want to compete with first-time buyers, and I'm not saying it's because they have your best interests at heart – it's just bad business. To make a profit, you need to buy properties that need a substantial amount of work to rehabilitate, and the competition for the normal inventory isn't worth it. Investors do have better terms and close with cash to lower the price, but they compete for different properties.

As to why Fox News didn't want to run the story, I'll leave that for you to decide. I personally think that the truth doesn't make for a good story. It doesn't get people upset or angry, and the story doesn't get shared on Facebook because it's nuanced.

That's why I value this newsletter as a direct medium for me to share my thoughts with you and give you a direct insight into what's going on in the market without all the clickbait and outrage. Thank you for reading.


That's it for this week. I hope you enjoyed this article. Let me know your thoughts by responding to this email - I read every single reply :)

If you found this valuable, do share it with one other person who needs to see this.

Stay safe, stay invested and I will see you next week – Graham Stephan.

113 Cherry St #92768, Seattle, WA 98104-2205
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Graham’s Newsletter

by Graham Stephan

A 33 year old real estate agent and investor with over $120M in residential real estate sales. This is my way of sharing actionable ideas that will make you a smarter and wealthier investor.

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