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EndGame Macro
Housing’s Turn: Cooling at the Edges, Setting Up for a Jobs Driven Reset
Look past the heat map and you see a clear shift that the wild housing boom is losing altitude.
Eleven of the 20 Case Shiller cities are down year over year. The soft spots are the pandemic winners and investor markets including Phoenix, Tampa, Vegas, Seattle, San Diego, San Francisco, Denver. Many peaked 30–40 months ago and now sit 5–8% below their highs.
The steady metros are still holding up. Chicago, New York, Boston, Cleveland, Detroit never went vertical in 2020–21, and they’re still posting mid single digit gains, sitting at or near new highs.
The national 20 city index is less than 1% off peak. So on the surface this is a cooling, not a crash. But housing always moves this way: transactions freeze first, then the mix of sales changes, and only then do reported prices roll over.
How this rhymes with past cycles
Housing prices are lagging indicators. The leading pieces like purchase apps, builder sentiment, rent growth, affordability turned months ago.
This episode looks like a blend of the early 80s and the mid 2000s. Like the 80s, a huge rate shock wrecked affordability. Unlike 2006, we don’t have the same wall of teaser rate mortgages or speculative leverage, and most owners are locked into cheap long term loans, which slows forced selling.
But valuations stretched much further than in the 80s. Prices out ran incomes and rents in a big way. That gap has to close through some mix of lower prices, higher wages, and time.
Meanwhile, the stress building outside housing is hard to ignore where auto loan and card delinquencies are at or near multi decade highs, student loan delinquencies jumped when payments resumed, aggregate delinquency is rising, and recent grads are dealing with high unemployment and sliding credit scores, the future first time buyer pool is weakening, not strengthening.
Baseline with unemployment drifting higher
If you assume unemployment stays flat, you can argue for a long, mild real correction. But the more realistic lens now is that joblessness creeps higher from here. Credit is tightening, rejection rates for new credit are at record levels, and regulators are already loosening capital rules to give banks room for stress which is itself a tell about the macro path.
Under that backdrop, my base case isn’t just a soft, real terms adjustment. It’s a jobs driven reset that eventually bleeds into the safe markets too.
Nationally, I still think this plays out over years, not quarters: boomtowns and investor cities see the deepest nominal declines; the Midwest and Northeast slide later and less, but they don’t escape. As unemployment grinds up, more households in every region move from locked in and fine to can’t quite carry this anymore, especially younger owners already stretched by car, card, and student loan payments. First time buyers, with weaker credit and more delinquencies, won’t be able to clear the market at current prices.
In that environment, the gentle drift off the peak becomes a more visible move: national prices down something like 10–15% over several years, with the late cycle gains in places like New York or Boston partially given back instead of frozen in place. It still doesn’t have to look like 2008, the plumbing and leverage mix are different but it does look like a broad, grinding reset rather than a quick breather.
So yes, the most unaffordable housing market on record is cooling. Viewed through an unemployment curve that’s likely edging higher, that cooling looks less like a pause and more like the early stages of a jobs driven repricing that eventually reaches every zip code, just on a lag.
🚨 Housing shift: 11 of the 20 Case-Shiller cities saw prices fall over the past year.
The most unaffordable housing market in history is finally starting to cool. https://t.co/luJabdD8b2 - Charlie Bilello tweet
Housing’s Turn: Cooling at the Edges, Setting Up for a Jobs Driven Reset
Look past the heat map and you see a clear shift that the wild housing boom is losing altitude.
Eleven of the 20 Case Shiller cities are down year over year. The soft spots are the pandemic winners and investor markets including Phoenix, Tampa, Vegas, Seattle, San Diego, San Francisco, Denver. Many peaked 30–40 months ago and now sit 5–8% below their highs.
The steady metros are still holding up. Chicago, New York, Boston, Cleveland, Detroit never went vertical in 2020–21, and they’re still posting mid single digit gains, sitting at or near new highs.
The national 20 city index is less than 1% off peak. So on the surface this is a cooling, not a crash. But housing always moves this way: transactions freeze first, then the mix of sales changes, and only then do reported prices roll over.
How this rhymes with past cycles
Housing prices are lagging indicators. The leading pieces like purchase apps, builder sentiment, rent growth, affordability turned months ago.
This episode looks like a blend of the early 80s and the mid 2000s. Like the 80s, a huge rate shock wrecked affordability. Unlike 2006, we don’t have the same wall of teaser rate mortgages or speculative leverage, and most owners are locked into cheap long term loans, which slows forced selling.
But valuations stretched much further than in the 80s. Prices out ran incomes and rents in a big way. That gap has to close through some mix of lower prices, higher wages, and time.
Meanwhile, the stress building outside housing is hard to ignore where auto loan and card delinquencies are at or near multi decade highs, student loan delinquencies jumped when payments resumed, aggregate delinquency is rising, and recent grads are dealing with high unemployment and sliding credit scores, the future first time buyer pool is weakening, not strengthening.
Baseline with unemployment drifting higher
If you assume unemployment stays flat, you can argue for a long, mild real correction. But the more realistic lens now is that joblessness creeps higher from here. Credit is tightening, rejection rates for new credit are at record levels, and regulators are already loosening capital rules to give banks room for stress which is itself a tell about the macro path.
Under that backdrop, my base case isn’t just a soft, real terms adjustment. It’s a jobs driven reset that eventually bleeds into the safe markets too.
Nationally, I still think this plays out over years, not quarters: boomtowns and investor cities see the deepest nominal declines; the Midwest and Northeast slide later and less, but they don’t escape. As unemployment grinds up, more households in every region move from locked in and fine to can’t quite carry this anymore, especially younger owners already stretched by car, card, and student loan payments. First time buyers, with weaker credit and more delinquencies, won’t be able to clear the market at current prices.
In that environment, the gentle drift off the peak becomes a more visible move: national prices down something like 10–15% over several years, with the late cycle gains in places like New York or Boston partially given back instead of frozen in place. It still doesn’t have to look like 2008, the plumbing and leverage mix are different but it does look like a broad, grinding reset rather than a quick breather.
So yes, the most unaffordable housing market on record is cooling. Viewed through an unemployment curve that’s likely edging higher, that cooling looks less like a pause and more like the early stages of a jobs driven repricing that eventually reaches every zip code, just on a lag.
🚨 Housing shift: 11 of the 20 Case-Shiller cities saw prices fall over the past year.
The most unaffordable housing market in history is finally starting to cool. https://t.co/luJabdD8b2 - Charlie Bilello tweet
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WealthyReadings
$TMDX keeps printing new yearly highs and is getting close to analysts’ upper targets.
Ratings follow price, not fundamentals. Analysts can't let momentum run without them, they’d look stupid otherwise.
Just a matter of time before re-ratings, justified by accelerating flight data and strong expectations for Q4.
We're going higher.
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$TMDX keeps printing new yearly highs and is getting close to analysts’ upper targets.
Ratings follow price, not fundamentals. Analysts can't let momentum run without them, they’d look stupid otherwise.
Just a matter of time before re-ratings, justified by accelerating flight data and strong expectations for Q4.
We're going higher.
tweet
Quiver Quantitative
Representative Jacobs is the 18th wealthiest member of Congress, per our estimates.
https://t.co/HWjy13y9Hx
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Representative Jacobs is the 18th wealthiest member of Congress, per our estimates.
https://t.co/HWjy13y9Hx
As one of the richest Members of Congress, if I can co-sponsor the bipartisan Restore Trust in Congress Act to ban Members of Congress (and their families) from owning and trading individual stocks, then every Member should too. Let’s pass this bill! tweet
X (formerly Twitter)
Congresswoman Sara Jacobs (@RepSaraJacobs) on X
As one of the richest Members of Congress, if I can co-sponsor the bipartisan Restore Trust in Congress Act to ban Members of Congress (and their families) from owning and trading individual stocks, then every Member should too. Let’s pass this bill!
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App Economy Insights
👀 Sneak peek at our latest report!
📊 100+ market leaders visualized. https://t.co/X84Ddnldgy
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👀 Sneak peek at our latest report!
📊 100+ market leaders visualized. https://t.co/X84Ddnldgy
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WealthyReadings
Everyone is talking about a rotation happening and we can clearly see it on the charts.
But that doesn’t mean what worked in 2025 will stop working in 2026. Tech & several other winning sectors still offer great value and potential returns.
What it means is that our focus for the next narratives has to shift. We need to start fishing where we weren’t fishing this year.
The AI trade isn’t over, far from it, but the best returns might not come from there next year - not from the obvious names at least.
New narratives are opening up, let's be ready to catch them
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Everyone is talking about a rotation happening and we can clearly see it on the charts.
But that doesn’t mean what worked in 2025 will stop working in 2026. Tech & several other winning sectors still offer great value and potential returns.
What it means is that our focus for the next narratives has to shift. We need to start fishing where we weren’t fishing this year.
The AI trade isn’t over, far from it, but the best returns might not come from there next year - not from the obvious names at least.
New narratives are opening up, let's be ready to catch them
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Wasteland Capital
Philippe charges 2/20 on $80bn of AUM, yet was unable (or unwilling) to hire even one single bright-enough person who could tell him that $GOOG was going to be the AI winner.
He didn’t even bother to put Google in his top 40.
It wasn’t even worth a logo. https://t.co/pXpeN8h1zl
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Philippe charges 2/20 on $80bn of AUM, yet was unable (or unwilling) to hire even one single bright-enough person who could tell him that $GOOG was going to be the AI winner.
He didn’t even bother to put Google in his top 40.
It wasn’t even worth a logo. https://t.co/pXpeN8h1zl
I bet these dots cross again! tweet
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Wasteland Capital
Altman expected to burn through $500bn in cash until 2030…. Yikes.
Good luck bro.
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Altman expected to burn through $500bn in cash until 2030…. Yikes.
Good luck bro.
HSBC forecasts that OpenAI is going to have nearly a half trillion in operating losses until 2030
https://t.co/j2aYV6umvM tweet
Offshore
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EndGame Macro
A Market Held Hostage And Why Pending Sales Are Stuck at 25 Year Lows
This chart makes something obvious that headlines still dance around: the housing market isn’t cooling…it’s stuck. Pending home sales are sitting near the lowest levels in almost 25 years and running close to 30% below what used to be normal. And it’s not a quick dip or a temporary shock. The line has been pinned down here for nearly two years. That’s the signature of a market where the problem isn’t demand or supply in isolation but more so a breakdown in the ability of buyers and sellers to meet at the same price. For most of the 2000s and 2010s, pending sales stayed in a tight band. Even after the financial crisis, once rates fell and the economy healed, buyers came back and contract volume snapped toward normal. This time is different. The market spiked during the 2–3% mortgage era and then flipped straight into a deep freeze as financing costs doubled. That freeze has barely budged.
The Airbnb Overhang and Seller Psychology
Part of the distortion comes from the short term rental boom that exploded during COVID. A lot of people bought second homes on 2–3% mortgages based on assumptions that only made sense in 2021. Demand was off the charts, nightly rates were inflated, and occupancy felt endless. Now the economics look very different. STR supply has surged, travel patterns have normalized, fees are higher, and local regulations tightened. A meaningful share of those owners would love to exit but can’t accept that their numbers no longer pencil at today’s 6–7% borrowing costs. They anchor to the price they paid or the peak listing they saw down the street. Meanwhile, any new buyer has to size the same property at a monthly payment that is dramatically higher, which means the price would have to fall to make the math work. Sellers won’t move, buyers can’t reach, and the result is almost no contract activity, exactly what this chart captures.
What Pending Sales Tell Us About the Cycle
Pending home sales are the purest read on housing because they show real agreements, not listings or intentions. And right now they’re telling you the market is gridlocked. We get moments where mortgage applications tick higher when rates dip, especially among FHA and VA buyers looking for any opening, but the MBA data makes it clear those surges are coming off historically depressed baselines. Affordability is still stretched, credit standards are tightening, delinquencies are rising, and younger buyers, usually the engine of first time home demand are dealing with higher unemployment and falling credit scores. That combination is not how durable recoveries start.
If rates fall meaningfully or if unemployment rises enough to force more realistic pricing from owners, the freeze eventually breaks. But until then, we’re living in a market where the fundamental desire to own a home is still there, it’s just trapped inside a price to payment mismatch that neither side can solve on their own. This chart doesn’t just show a slowdown; it shows a housing market holding its breath, waiting for the next catalyst to decide which direction this cycle goes.
Chart credit: Nick Gerli (@nickgerli1)
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A Market Held Hostage And Why Pending Sales Are Stuck at 25 Year Lows
This chart makes something obvious that headlines still dance around: the housing market isn’t cooling…it’s stuck. Pending home sales are sitting near the lowest levels in almost 25 years and running close to 30% below what used to be normal. And it’s not a quick dip or a temporary shock. The line has been pinned down here for nearly two years. That’s the signature of a market where the problem isn’t demand or supply in isolation but more so a breakdown in the ability of buyers and sellers to meet at the same price. For most of the 2000s and 2010s, pending sales stayed in a tight band. Even after the financial crisis, once rates fell and the economy healed, buyers came back and contract volume snapped toward normal. This time is different. The market spiked during the 2–3% mortgage era and then flipped straight into a deep freeze as financing costs doubled. That freeze has barely budged.
The Airbnb Overhang and Seller Psychology
Part of the distortion comes from the short term rental boom that exploded during COVID. A lot of people bought second homes on 2–3% mortgages based on assumptions that only made sense in 2021. Demand was off the charts, nightly rates were inflated, and occupancy felt endless. Now the economics look very different. STR supply has surged, travel patterns have normalized, fees are higher, and local regulations tightened. A meaningful share of those owners would love to exit but can’t accept that their numbers no longer pencil at today’s 6–7% borrowing costs. They anchor to the price they paid or the peak listing they saw down the street. Meanwhile, any new buyer has to size the same property at a monthly payment that is dramatically higher, which means the price would have to fall to make the math work. Sellers won’t move, buyers can’t reach, and the result is almost no contract activity, exactly what this chart captures.
What Pending Sales Tell Us About the Cycle
Pending home sales are the purest read on housing because they show real agreements, not listings or intentions. And right now they’re telling you the market is gridlocked. We get moments where mortgage applications tick higher when rates dip, especially among FHA and VA buyers looking for any opening, but the MBA data makes it clear those surges are coming off historically depressed baselines. Affordability is still stretched, credit standards are tightening, delinquencies are rising, and younger buyers, usually the engine of first time home demand are dealing with higher unemployment and falling credit scores. That combination is not how durable recoveries start.
If rates fall meaningfully or if unemployment rises enough to force more realistic pricing from owners, the freeze eventually breaks. But until then, we’re living in a market where the fundamental desire to own a home is still there, it’s just trapped inside a price to payment mismatch that neither side can solve on their own. This chart doesn’t just show a slowdown; it shows a housing market holding its breath, waiting for the next catalyst to decide which direction this cycle goes.
Chart credit: Nick Gerli (@nickgerli1)
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Offshore
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EndGame Macro
Chicago Business Barometer: When a 36 Reading Says the Cycle Is Turning
The Chicago business survey isn’t subtle this month. The index fell to 36.3, which is deep contraction territory. You don’t see numbers in the 30s unless something is genuinely weakening under the surface. They’re also reminding us that Chicago has now spent two straight years below 50, meaning two full years of shrinking activity. That’s not a blip or a mood swing, that’s a trend.
What makes this more important is what’s happening inside the report. New orders dropped sharply, backlogs collapsed to levels we haven’t seen since the aftermath of the financial crisis, and employment softened again. When orders dry up and backlogs evaporate at the same time, businesses usually do the same thing: cut output and slow hiring. That’s exactly what you would expect to see late in a cycle when demand starts slipping.
How It Fits With the Bigger Picture
Step back and connect it to everything else going on. Household credit is cracking at the edges with auto loans, credit cards, and student loans are seeing rising delinquencies. Credit rejection rates are high. Pending home sales are sitting near 25 year lows despite the population being much larger than it was two decades ago. Mortgage activity is bouncing around in that fragile, rate sensitive way you only get when affordability is stretched and buyers are trying to catch falling financing costs.
At the same time, the Fed has already cut rates twice, QT is hours from turning off, new Treasury purchases kick in next month, and regulators are loosening capital rules to give big banks room to absorb more Treasuries and keep liquidity flowing. These aren’t decisions you make when you think the economy is strong. They’re decisions you make when you see the slowdown building and want to make sure the plumbing doesn’t seize up.
Now add a major regional business survey screaming contraction. Chicago often leads turning points in national activity. When it’s printing mid 30s and doing it consistently, it usually means the broader economy is losing momentum.
My Read on What’s Really Happening
The economy isn’t falling off a cliff, but it’s not healthy either. What we’re seeing is stress accumulating in multiple places: households stretched by inflation and debt costs, housing frozen by affordability, banks tightening credit, and now business activity in one of the country’s economic hubs slipping into a deeper contraction.
My conviction is that this is the beginning of a steady weakening that eventually shows up in national employment numbers and corporate earnings. The Fed sees it, the credit markets feel it, and now the business surveys are reflecting it.
This report doesn’t tell you the end is near. It tells you the turn is already happening…quietly, steadily, and in a way that the surface level resilience stories can’t fully hide.
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Chicago Business Barometer: When a 36 Reading Says the Cycle Is Turning
The Chicago business survey isn’t subtle this month. The index fell to 36.3, which is deep contraction territory. You don’t see numbers in the 30s unless something is genuinely weakening under the surface. They’re also reminding us that Chicago has now spent two straight years below 50, meaning two full years of shrinking activity. That’s not a blip or a mood swing, that’s a trend.
What makes this more important is what’s happening inside the report. New orders dropped sharply, backlogs collapsed to levels we haven’t seen since the aftermath of the financial crisis, and employment softened again. When orders dry up and backlogs evaporate at the same time, businesses usually do the same thing: cut output and slow hiring. That’s exactly what you would expect to see late in a cycle when demand starts slipping.
How It Fits With the Bigger Picture
Step back and connect it to everything else going on. Household credit is cracking at the edges with auto loans, credit cards, and student loans are seeing rising delinquencies. Credit rejection rates are high. Pending home sales are sitting near 25 year lows despite the population being much larger than it was two decades ago. Mortgage activity is bouncing around in that fragile, rate sensitive way you only get when affordability is stretched and buyers are trying to catch falling financing costs.
At the same time, the Fed has already cut rates twice, QT is hours from turning off, new Treasury purchases kick in next month, and regulators are loosening capital rules to give big banks room to absorb more Treasuries and keep liquidity flowing. These aren’t decisions you make when you think the economy is strong. They’re decisions you make when you see the slowdown building and want to make sure the plumbing doesn’t seize up.
Now add a major regional business survey screaming contraction. Chicago often leads turning points in national activity. When it’s printing mid 30s and doing it consistently, it usually means the broader economy is losing momentum.
My Read on What’s Really Happening
The economy isn’t falling off a cliff, but it’s not healthy either. What we’re seeing is stress accumulating in multiple places: households stretched by inflation and debt costs, housing frozen by affordability, banks tightening credit, and now business activity in one of the country’s economic hubs slipping into a deeper contraction.
My conviction is that this is the beginning of a steady weakening that eventually shows up in national employment numbers and corporate earnings. The Fed sees it, the credit markets feel it, and now the business surveys are reflecting it.
This report doesn’t tell you the end is near. It tells you the turn is already happening…quietly, steadily, and in a way that the surface level resilience stories can’t fully hide.
tweet