Trust This. Real Estate Faces Risks and Lock-Ins

Trust This.

By Joseph E. Seagle, Esq. ● Feb 07, 2025

Smart Brevity^® count: 8 mins…2071 words

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1 big thing: Climate Change, Boomers, and CRE Shifts Impact Real Estate Pros

Wildfires and mudslides in L.A., floods and landslides in Western North Carolina, aging boomers, and a weak commercial real estate market threaten to sink home values during the coming decades.

Why it matters: Real estate professionals—realtors, mortgage brokers, and title insurance agents—are facing a shifting market shaped by climate risk, aging homeowners, and the rise of flexible workspaces. These factors are reshaping home values, transaction volume, and investment strategies.

Driving the news:

• Climate risk threatens home values: A Carnegie Endowment study projects a $1.2T–$1.9T correction in home values due to climate risks, such as wildfires, hurricanes, and rising sea levels. Florida, a pandemic-era housing hotspot, is particularly vulnerable.

• Boomers aren’t selling: Baby boomers now own 54% of homes, up from 44.3% in 2008, per Construction Coverage. Nearly half say they will never sell, limiting inventory and homeownership opportunities for younger buyers.

• CBRE bets on coworking: The CRE giant is acquiring Industrious in an $800M deal, signaling confidence in hybrid work demand. Flexible office space is expected to remain a strong segment amid office market turbulence.

Between the lines:

• For Realtors: Lower housing turnover due to aging homeowners and climate risk concerns may reduce transaction volume, requiring agents to focus on relocation-driven deals and newer, climate-resilient housing and communities.

• For mortgage brokers: The inventory squeeze and climate risk pricing could challenge mortgage origination, requiring innovative loan products for high-risk areas and generational wealth transfers.

• For title agents: Rising transactions in secondary markets and climate-impacted regions will require deeper due diligence on properties with environmental risks.

• For insurance agents: Aging homes in high-risk communities will require creative underwriting and education for customers to guide them to the best retrofit and upgrade options for existing homes to get the best rates.

The bottom line: The real estate market is undergoing structural shifts that demand adaptability. Understanding how climate risk, demographic trends, and changing commercial real estate dynamics interact will be key to staying ahead in 2025 and beyond.

Go deeper: The Business Journals

2. Housing Market Faces Persistent ‘Lock-In’ Effect Amid Elevated Mortgage Rates

The Big Picture: According to Realtor.com, the U.S. housing market continues to grapple with the “mortgage rate lock-in” effect.

• This phenomenon causes homeowners with low-rate mortgages to be reluctant to sell and face higher rates on new loans.

• It reduces housing inventory, contributing to a slowdown in home sales.

By the Numbers:

• Declining Home Sales: In 2024, existing home sales dropped to their lowest level since 1995 due to persistently high mortgage rates and rising homeownership costs.

• Elevated Mortgage Rates: The average 30-year fixed mortgage rate has remained between 6% and 8%, discouraging potential buyers. As of yesterday, rates have risen to an average of 6.89% for a 30-year fixed mortgage.

• Inventory Challenges: The number of Florida homes actively for sale increased by 22.7% year over year in December 2024, marking the fourteenth consecutive month of annual inventory growth. However, this is a sharp deceleration from November, when it was up 26.2% year over year.

What They’re Saying:

• Fannie Mae’s Outlook: Economists predict that the housing market in 2025 will face a difficult balancing act. A notable decline in mortgage rates is likely needed to help unwind the lock-in effect and increase the supply of existing homes for sale.

• Realtor.com Forecast: The economic research team projects that mortgage rates will average 6.3% through 2025 and end the year at around 6.2%. This suggests that the lock-in effect will persist, though it may ease slightly.

Why It Matters: Understanding the lock-in effect is crucial for real estate professionals navigating the current market dynamics.

• Elevated mortgage rates deter potential buyers and discourage existing homeowners from selling, reducing transaction volumes.

• This environment necessitates strategic approaches to client advisement and inventory management.

The Bottom Line: As the lock-in effect continues to influence the housing market, real estate entrepreneurs and professionals must stay informed and adapt to these evolving conditions to effectively serve their clients and sustain their businesses.

It’s a wrap on Season 2 of the Trust This podcast.

• This week’s episode is a recap of the most liked, watched, and listened to portions of the most popular clips from this past season.

• If you missed an episode, be sure to watch or listen to this one so you’re all caught up before Season 3 starts in Q2.

• In the meantime, we’ll be posting tips and tactics and general question-answering videos about topics to help you aspire to a better life as a real estate entrepreneur.

Listen in or watch on your favorite streaming platform.

3. Catch up fast

1. Trump fires Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB). Associated Press

2. Highlights of CFPB’s accomplishments under Chopra. Consumer Reports

3. Trump’s new Treasury Secretary, Scott Bessent — as the new head of CFPB — freezes all consumer protection activity, including investigations, rulemaking, litigation, and public communications, indefinitely. Reuters

4. Trump imposed then suspended 25% tariffs on Canada and Mexico and imposed — but didn’t lift — a 10% tariff on Chinese goods entering the U.S.; China has retaliated with tariffs of their own in a new trade war. National Law Review

5. Canadian snowbirds — under pressure of a devalued Canadian dollar (the loonie), higher insurance rates, higher taxes, hurricanes, and their perceptions of disrespectful U.S. leaders — are dumping their Florida and other Sunbelt vacation homes, increasing stale inventory figures. CBC, MSN, and Financial Post

6. Trump administration moves to end deportation temporary protective status (TPS) of 348,000 Venezuelans who fled dictator Maduro, opening them up to the loss of work permits and deportation in April. Another 300,000 TPS designations will also expire in September, opening them up to deportation to Venezuela, where they will face Maduro’s regime. Reuters

7. 80,000 TPS Venezuelans living in Central Florida, 100,000 in Miami-Dade, and tens of thousands more across Florida will be included in those who are deported in April and September, leaving behind empty apartments, houses, and jobs. Orlando Sentinel

8. Elon Musk and his companies’ employees gained access to and exfiltrated data from the U.S. Treasury and other federal departments. The data includes federal employees’, contractors’, and citizens’ names, addresses, Social Security Numbers, bank account information, payment amounts, tax return information, Social Security payments, Section 8 payments, Medicare payments, and Medicaid payments, among other information related to over $6 trillion that Congress has allocated to be paid throughout the fiscal year. CBS News

9. Cybersecurity experts explain the perils of Musk’s employees’ security breaches of government computer systems and how they endanger citizens’ privacy and anonymity. Cyberscoop and Wired

10. Multiple groups sued the Treasury, alleging it allowed Musk to access private data illegally. Newsweek

4. Closing Thought – Privacy violated

Archie wants to know why those strangers are eyeing his data … er … toys.

I’ve often explained that the financial data submitted to the federal government is maintained on secure servers that are not connected to the Internet.

• The most sensitive private data is kept in Sensitive Compartmented Information Facilities (SCIFs);

• Access to these rooms and the data is restricted to very few federal employees who have passed FBI background checks and — like all federal civil servants — sworn oaths to uphold, protect, and defend the Constitution of the United States.

Why it matters: Before this happened, we had a high level of confidence that our personal financial data, Social Security Numbers, bank account numbers, tax returns, and even land trust property ownership information was held at a level of secrecy just below that reserved for our nuclear launch codes.

Yes, but: As illustrated in the Cyberscoop and Wired articles listed above, now that unsecured computers have been plugged into those secured mainframes to exfiltrate all of that data — even if in a read-only format (now) — who knows where your government data could turn up?

• Former general Michael Flynn, who once pled guilty to lying to the FBI about conversations he had with the Russian ambassador, posted a screenshot of a spreadsheet of some of the exfiltrated data. So we know that Flynn at least has the data and has a penchant for talking to Russian officials.

• Musk himself has very close ties with China, an important market for his businesses, so there is musing that our data could end up in the hands of the CCP.

• Now that the computers have been accessed by Musk’s unvetted corporate programmers and engineers, there is concern as to what code, including automated AI coding agents, could be injected into the once-secure systems that control 20% of the United States economy.

The big picture: As an asset protection tool, we focus on providing privacy, anonymity, and confidentiality for our clients every day. While we and our clients know that the government has our most private financial information, historically, it has been secure and used for limited purposes by a small group of authorized persons.

• Since that trust has now been broken, we will reiterate our tips for everyone to protect themselves—as much as they can—from this exfiltration of our clients’ most secure and private financial and personal data (but we’ve also always advocated for these privacy measures):

1. If you receive payments from the government or a government contractor (think Social Security, Section 8, Medicare reimbursements, or student loans) by ACH into your bank account, consider opening an additional account at the same bank. As soon as the funds arrive in your current account, sweep them to the new account so those who may now have that account information cannot withdraw or otherwise access those funds.

2. If you haven’t already obtained an IP PIN from the IRS to lock down your tax return filings, do so now. However, beware that Musk’s lead programmer has stated a directive to code artificial intelligence agents into the login.gov and other federal IT systems. Therefore, even an IRS IP PIN may not protect your information anymore.

3. Freeze your credit report so no one can obtain credit using your Social Security Number.

4. Don’t share your travel plans on social media until after you return home from the trip, and keep your social media posts among only family and friends by checking who can see them before posting. Limiting your social media contacts only to those you know and trust keeps strangers or hackers from tracking your travels, assets, wealth, and other relatives or friends.

5. Use an encrypted e-mail system with servers located outside the U.S. maintained by a company that has not expressed affinity for any particular government, party, or ideology (other than privacy).

6. When transmitting confidential or financially sensitive information, consider using encrypted messaging services with servers located outside the United States.

7. If you have significant ($1 million+) cash or investment holdings, consider creating an offshore asset protection trust with bank and investment accounts in other countries not subject to U.S. government access.

8. Use a service like DeleteMe to remove as much of your information as possible from online data brokers who sell your data that could be detrimental to your life, liberty, and property if combined with governmental data.

9. Use land trusts and LLCs formed in “anonymous” jurisdictions like Wyoming to hold title to your real estate.

10. Do not voluntarily file FinCEN Business Ownership Information (BOI) reports unless they eventually become mandatory.

The bottom line: Private parties have exfiltrated our government-held data. Other hackers often grab your data from private databases so often now that we ignore most major data breaches in the news. It’s more important than ever to take extraordinary steps to protect your privacy, anonymity, and assets.

We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

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