The Messy Middle

I said something on a call this week that I haven't been able to shake.

"I get less confident when I shorten the timeframe. I get very confident when I lengthen the timeframe."

That's the honest version of where I'm at right now as an investor. And I don't think I'm the only one.

Seven years from now? I feel great. Five years from now? Pretty good. Three years? Maybe. Two years from now?

I have no idea what the hell is going on.

And that gap between long-term conviction and short-term confusion? That's the messy middle. That's where we all are. That's where the next real estate fortunes are going to be built. And that's where most investors will quit.

So let's talk about it.

The Data That Changed How I'm Thinking

Last week Ken McElroy and I did a 7-hour live broadcast on YouTube covering every asset class we could get to. Gold, commercial debt, oil, AI, tax strategy, multifamily, and single family. I presented on the single family side, using data from Brian Burke's presentation at our REI Summit plus what I'm seeing from my own deals and our lending desk.

A few numbers that stuck with me.

4.09 million. That's the annualized existing home sales number for February. Lowest since 2009. People are not buying homes right now. Whether that's demand or supply depends on where you are, but nationally, the activity is as low as it's been in almost 20 years.

256 of 387 metro areas are below their previous peak. Austin, where I live and invest, is number two on the list at negative 17.8% from peak. Four of the five worst are in Florida. Different markets, different reasons, different stories. But the trend is clear in a lot of places.

72% of investors are on the sidelines. That's from John Burns, Q1 2026. Record high. Only 19% are increasing exposure.

Month over month, prices turned negative nationally in February 2026. Year over year, housing prices are still technically positive, but the growth rate hit its lowest level since 1995.

And builders? Sitting on the largest glut of unsold inventory in 15 years. Here in Austin, one of the largest local builders has fired half their executive team, half their project managers, and a huge chunk of staff across the board. They're still running 8 to 10% concessions. Builders don't make money unless they're building and selling. Right now a lot of them are doing neither.

Why This Still Isn't 2008

I know. The numbers above look rough. And there's a version of this where you read all that and go, "So it IS 2008."

It's not.

The delinquency data tells a completely different story. 30-day lates are sitting right around 3%, which is basically where they've been for the last 20 years outside of the crisis. Normal. The 90-day lates are there but not spiking. And foreclosures are barely a blip compared to 2008.

Why? One word. Equity.

Most homeowners who bought before 2022 have significant equity in their homes. Even if their property is worth less than it was at the peak, they put enough down (or their mortgage has paid down enough at a 3% rate) that they're not underwater. They don't have to sell. They won't get foreclosed on. They'll just wait.

The foreclosures that are happening? They're concentrated in FHA and VA loans. People who put 3.5% down in 2022, saw their values drop, and walked away from $7,000 or $8,000 in equity. That's not a systemic crisis. That's a predictable outcome from a specific group of buyers who bought at the peak with almost nothing down.

Negative equity nationally is almost nonexistent. Forced selling is not happening. The homeowner side of the market is locked up tight.

The investor side? Different story.

Where the Pain Actually Is

What I'm seeing from our lending desk, from the FA group, and from operator friends across the country is pretty consistent.

A lot of us bought last year's market. And now we're solving last year's problems.

Appraisals coming in lower than expected. Houses sitting on the MLS. Flippers becoming accidental landlords because they can't sell at numbers that make sense. Hard money lender defaults going up significantly. I sat down with a big local hard money lender here in Austin a few weeks ago and asked him about his default rate. His reaction was instant. "Oh my god, it's going up."

I bought my first foreclosure from a hard money lender in years. That's a leading indicator. The distress isn't coming from homeowners. It's coming from overleveraged investors who got caught in a market that didn't cooperate.

And here's the tension that I think a lot of us are feeling right now.

On one hand: "These houses are losing money. I'm going to lose my shit."

On the other hand: "Man, it'd be a really good time to buy."

Both of those thoughts live in the same brain at the same time. Welcome to the messy middle.

You Don't Need to Time the Bottom

This is the part that clicked for me last week.

Brian Burke shared data from J.P. Morgan that looks at what happened after the two biggest real estate corrections in the last 50 years. The 1980s crash and the 2008 GFC.

If you bought at the exact bottom of the 1980s correction and held for 15 years, you had a 5X equity multiple. Great.

But if you waited 7 years after the bottom, missed it entirely, and then bought and held? You still had a 3.5X multiple.

The difference between perfect timing and being 7 years late was only 1.5X. And the person who bought at the bottom took ALL the risk, because nobody knew it was the bottom at the time. I can promise you that. I was investing in 2010 and 2011. None of us had a clue we were doing a good job. It wasn't until 2016 that I looked back and thought, "Oh. We should have bought more."

Here's the part that really got me thinking, though.

On both charts, there's a point where appreciation hockey sticks up. It doesn't happen gradually. It spikes. And when you look at when those spikes happened, it maps to the same thing every time: the public got excited about real estate again.

In the 90s, it was the Carlton Sheets era. In 2015 to 2017, it was Fortune Builders and every "flip houses and get rich" course you've ever seen. That's when your neighbor and your barista started talking about investing in real estate. Demand from the general public flooded in, and values shot up.

Right now? The public is scared of real estate. Investors are 72% on the sidelines. Nobody's excited.

That's the accumulation phase. That's where you're supposed to be buying.

But you have to survive owning it while nobody else wants it. That's the middle part.

How I'm Buying Right Now

I had to check myself a couple weeks ago. After the 7-hour broadcast with Ken, I was all fired up. "40 properties in Austin. Let's go!"

Then I sat with it for a few days and thought... how about we just buy good deals? And whether that's 40 or 15 or 8, let's not attach an arbitrary number to it and start forcing things because I'm excited about a goal.

So here's what I've landed on. Surgical acquisitions. No speculation.

The Real Takeaway

The last two major corrections in single family real estate were followed by 13 to 15 year expansions. Equity multiples of 4X to 5X.

If you're buying now, you're building the foundation for the next decade. But the next 2 to 3 years might be uncomfortable. That's the messy middle.

And here's what Brian Burke's data actually says when you boil it down.

It is far more important to avoid buying at the top than it is to buy at the exact bottom.

If you're flipping, that matters even more. You can flip in any market cycle. The only time it destroys you is if you bought at the peak and now you're selling into a decline. That's the one scenario you can't outwork.

So don't try to call the bottom. Don't wait for permission. Just ask yourself the question I keep asking: if I'm wrong about the next 2 years, can this deal survive? If yes, buy it. If no, keep looking.

The bottom doesn't matter. Surviving the middle does.

One More Thing (The Other Messy Middle)

Here's something I don't talk about enough.

The messy middle isn't just a market concept. It's a life concept. And for a lot of us who are building businesses, managing properties, dealing with contractors who lose our deposits, figuring out what market to be in next, and trying to scale... we forget that none of this matters if the person sitting next to us on the couch doesn't understand why we're doing it.

In October 2017, I hit a wall. Quarter-life crisis, hated what I'd built, had more problems than profits. My wife Grace and I sat down with butcher paper over 3 or 4 weekends and designed our entire life together. That exercise changed everything. She quit her C-level tech job that Monday. We've been building together every day since.

That wasn't a business strategy session. It was a marriage alignment moment. And honestly, it's the reason my business works today.

My wife and I are attending a retreat next month called the Thriving Families Retreat. It's led by Lonnie and Shelley Gienger. Two days. San Diego. Limited to 100 couples. It's specifically for couples who've been intentional about success but maybe haven't been equally intentional about their family vision.

It's not a conference. Not therapy. Not motivational fluff. It's a structured experience to get on the same page with your spouse about where you're going and why.

Retreats like this are exactly what brought Grace and me together in business and in life, on the same page going the same direction with our family and our dreams. If you and your spouse could use that, check it out. Use code family to save $500.

www.thrivingfamiliesretreat.com

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