Grant Cardone: Mortgage and Housing Starts Decline in Tandem
Real estate investor Grant Cardone stated that mortgage and housing starts are declining simultaneously. After the last three occurrences of this combination, it has proven to be a good window for investing in real estate, but careful selection of location, asset quality, debt terms, and purchase price is still necessary. He also reminded that owner-occupied homes often underperform compared to the S&P 500; rents in many markets are below the total holding costs; and the U.S. is becoming a "tenant nation."
Data supports his first statement. Census data shows that housing starts in August were approximately 1.275 to 1.28 million units on an annualized basis, down 2.6% month-on-month, marking the lowest level since October of last year and declining for the second consecutive month. Starts for five or more unit apartments plummeted 22.5% to 344,000 units; single-family homes rose 7.6% to 918,000 units. Building permits fell 2.7% month-on-month to about 1.39 million units. The National Association of Home Builders confidence index dropped to 32, matching the low point at the end of 2022, marking the worst level in a year.
Demand is even colder. The Mortgage Bankers Association reported that purchase applications were down about 19% year-on-year, and refinancing applications were down about 65% year-on-year; new home mortgage applications fell to the lowest level since 2026 in August, declining year-on-year for the fifth consecutive month, with the Federal Housing Administration loans accounting for 35%. The average weekly rate for a 30-year fixed mortgage from Freddie Mac was 6.95%, with some market quotes exceeding 7.2%. Monthly payments for a $500,000 loan have surpassed $3,400. About 65% of existing loans are still locked in below 4%, providing homeowners with no incentive to sell and refinance.
Cardone's investment approach has never been about "bottom-fishing single-family homes for personal use." He advises renting out homes while using cash intended for down payments to buy cash-flow-generating apartments, warehouses, and commercial properties, stating that around 32 units is the entry-level scale. Cardone Capital also plans to tokenize a portfolio of about $5 billion and allocate Bitcoin for liquidity in projects. He denies that institutional landlords are the main cause of rising home prices, stating their share is only about 3-4%.
The "last three occurrences" refer to periods when starts and credit contracted simultaneously, followed by rising rents and replacement costs pushing up asset prices, rather than the high-leverage personal housing collapse of 2008. The current shortage remains: builders estimate a nationwide shortfall of about 1.2 million units; the months of new home inventory available for sale once lengthened, but starts have not compensated. Interest rates have frozen transactions, but do not automatically lower land and labor costs.
The market mechanism is the repricing of assets after transactions freeze, not a sudden oversupply. Buyers are cash-flow investors who can secure terms and choose the right cities and asset types; sellers are first-time buyers squeezed out by 7% monthly payments and homeowners trapped by locked-in loans. Beneficiaries are multi-family assets that can collect rent, leverage, and do not require personal occupancy; pressured parties are brokers and builders who rely on commissions and construction volume. Funds are shifting from new mortgage issuance to existing rental income and stricter debt terms.
Source: Public Information
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Cardone frames "affordability" as a business model. Owner-occupied homes do not generate cash flow, have weak tax shields, and must share holding costs with state governments; apartments turn the same liabilities into a stream of rental income. He stated in 2023 that America would become a tenant nation, and in February 2026, he criticized those waiting for price drops as fools—these two statements are not contradictory: do not buy for personal use, invest instead, and do not wait for national average prices to crash. The decline in starts, for him, tightens the supply valve, not an asset liquidation.
The capital path is to leverage one's portfolio using the monthly payment dilemmas of others. The 7% new loans push first-time buyers into rentals, protecting multi-family occupancy rates and rental growth capabilities; builders are cutting apartment starts, leading to less new supply in the next one to two years. Tokenization and Bitcoin allocation add a layer of exit fantasy to private real estate: framing a five-year lock-up period as tradable shares. Money is shifting from mortgage bank issuance to institutional balance sheets that can negotiate seller financing and withstand interest rates.
Analogies should reference 1990-1991, 2008-2012, and 2022-2023. Survivors after the first two periods were those with cash flow and debt capacity; from 2022, rates shot up from 3% to 7%, transactions froze, and home prices did not halve as textbook suggested because existing loans were locked in. This time resembles an extended version of 2022: rates rise again, starts drop again, owner-occupied demand is absent, and rental demand persists. The industry's position has shifted from "everyone gets on board" to "those with terms collect rent."
Structural judgments indicate a transfer of pricing power. Pricing power has shifted from the buyer's monthly payment formula to the landlord's capitalization rate and debt terms. The mechanism is that fixed rates lock supply in the hands of existing owners, while floating new loans lock incremental demand in the rental market; those who can buy rental properties with manageable debt in the right locations will capture the rental income of those pushed out by monthly payments.
ABAB News · Cognitive Laws
- Houses that are unaffordable will turn into someone else's rent.
- A decline in starts does not mean assets must be sold cheaply.
- Supply locked in low-interest old loans will not automatically release due to new rates.