YouSaid · the spoken record

Logan Mohtashami

lines on the record: 88
first: 2022-08-09
most recent: 2022-08-09
sittings or episodes: 1
sources: podcast

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“Here, I said, okay, I'm on vertical curve watch. It should happen in 2022. That's gone. That's number three. Number four is you kind of find the where in the economic cycle did we have booming demand where we had overinvestment to where when demand falls back to normal, you're going to have too much supply. Durable good spending and retail sales, right? We all see it massive spending during COVID. I call the Peloton effect, right? You saw Peloton have booming demand all of a sudden they're, oh my God, it's just a bike with an iPad on it. You don't really need that money out there. So they've had to lay off 20% of their workforce because they have too much inventory. So that de durable goods sector is kind of where I focused on that. That's the fourth flag. So the last two are usually the most important, but traditionally speaking.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“What I've done in the previous expansion, because I thought tracking economic cycles should be very boring. It's not supposed to be as exciting as people make it, but I need kind of six things to happen before I go on recession watch and just a quick version, you know, number one is the unemployment rate gets to a certain level. For me, it was 4%. The Federal Reserve starts its Fed rate hike process that already happened. The inverted yield curve. I was on inverted yield curb watch since Thanksgiving of 2021, which was really early, but people who know my work, I was on inverted yield curve watch at the end of 2017 for 2018. In fact, I crossed off inverted yield curve in 2018.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“What is the recessionary data? You said we are technically in a housing recession. We are also technically in a general recession, given that we have two consecutive quarters of negative real GDP growth. And also you said you have six of your recession red flags have been checked.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“As they want, but to me, what the tenure yield and mortgage rates is doing is traditionally very normal post-1982. I mean, the 75 and 1981 cases are different, but we've kind of been through the cycle already. It's kind of, I know there are people that think the 10-year can get a 5%, 6% or mortgage rates could get to 8% to 10%. Really tough when you have recessionary data, right? So traditionally, just doing what it normally does.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Right now, as we speak, the 10 year yield's at 260. So if you look at that downtrend in the bond market from 1982 and you look at where the bond markets have been since 2010, if you take the kind of the COVID out of the equation, Russian invasion out of the equation, the 10-year yield has really been just in that normal channel. And mortgage rates, for the most part, has been in that channel except for pricing got really bad after the Russian invasion. So that was probably 1% higher than normal. And now we have this big, big percentage decrease in a very short amount of time. But the 10-year yield looks like how it normally looks like. We found a peak and if the economy is going to a recession and falls, I'm sure the Fed is not happy about that because they don't want loosening. They want tighter credit conditions. And the bond market doesn't care, right? They sniff out the data so they can come out and talk as tough.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's. So much of the last few months is trying to convince people that if you are, if you're looking for mortgage rates in the bond market to correlate to inflation data, I'm very sympathetic. I am, I get it. You think mortgage rates should be a 10% or you think the bond market should be much higher, but it's late in the expansion for that to occur. Now, in 1975, that happened. Rates went up during a recession. Mortgage rates went up. We saw that in 1981. We have gone through an entire recession recovery and now having recessionary data with the 10-year yield being above 3% not that long. We had the hottest economic growth. We had the hottest rate of growth of inflation. We had a commodities war that was being played out. And today...”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“In a sense, because everyone's a loan processor for the government. That's what really the world is. We either sell to Freddie or Fanny or the FHA VA insurers. So everybody's basically they'll give you the rate, but if your borrower refinances within six months, we lost money, so you have to pay. So having rates drop down that fast wasn't good for the entire industry. So market pricing was probably never as low as it should have been during the COVID crisis. Eventually, pricing did get better. But there was a lot, I mean, there's just so much drama everywhere because of what COVID has done. And now we're dealing with the aftermath of the Russian invasion and what's going to happen in China and Taiwan. So there's just nothing is normal after 2020. So we have to deal with these violent moves, either in the bond market or pricing or the credit stress much different than it was in the previous expansion, which was really boring compared to this.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“That the entire loans, we call it an EPO early payoff, everyone was going to refinance and everyone's going to lose a lot of money because you have to pay so much to obtain a mortgage. And then if somebody, if they refinance, that means you all lost money paying up for that. And then the margin of the trading around the bond market, I said, oh God, things are going to get hectic. That week, even though the 10-year yield collapsed, mortgage rates went up 1% because they couldn't allow the market to break that fast. So there are times where rates move down or the 10-year yield moves down so fast that they could completely destroy the business model of giving mortgages. And that was that mortgage market meltdown. Eventually things started to work out in time by September. We started to get a little bit better normal pricing and the risk of the business because even though consumers do not have to pay a prepayment penalty,”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Well, it's just basically the function of the rate. What is the cost, right? So traditionally when tenure yield goes up, usually the Fed funds rates go up. The cost goes up. So the mortgage rate has to be higher. Vice versa, the other way around, 10-year yield falls, the cost of mortgage rates. So you want to have a, there has to be a competitive product out there. You don't want to have like all the other banks having lower rates than you and you just don't have any business. So they move in that direction. The mortgage-backed security, in a sense, provides liquidity, provides a functioning marketplace. The Fed was a massive buyer. Oddly enough, I remember the March 9th of 2020. When I saw that 10-year yield at 0.33% said, oh boy, we're going to have a mortgage market meltdown. It wasn't because the banks were going to go out of business. It's just that mortgage rates were going to fall so fast.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“The Fed is not stepping in. We see some dislocation in the pricing, but still, wherever the 10-year-old's going, mortgage rates will follow. Traditionally, there's a big gap right now. But in a sense, mortgage rates can go a lot lower on its own if the traditional pricing gets back in there. So I just don't think there's a lot of appetite at this point, but still we just had a 1% plus decrease in rates in a very fast amount of time. That should wake some people up on how important the 10-year yield is to the 30-year mortgage.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“They're not really buying or doing anything too much there, but mortgage rates fell with the tenure yield. So I try to just focus on that because I think there's a lot of discussion on the mortgage backs, how that's really driving. And it's just, to me, it doesn't really make sense when you look at the historical data. So bond yields fall, mortgage rates fall. The pricing variance can change definitely, but they have historically trended well together since 1975. And I kind of joke. I said, guys, do you guys remember the Fed sold off all its mortgage-backed securities from 75 to 81? And then in 1982, they started buying back mortgage-backed securities from 82 to 2010. And then everybody pauses and goes, oh no, that didn't happen. So definitely we do see some.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Yields are still rising, but historically speaking, 10-year yield rises, mortgage rates rise, 10-year yield falls, mortgage rates fall. So we've seen a reversal in bond yields as more and more of the economic data gets recessionary. And if you look at post-1982, I'm not going to take 1975 in the early 1980s, mortgage rates tend to fall going into a recession. My six recession red flags are up. So when people say, oh, do you think mortgage rates could go higher? I say, I can't. My recessionary flags are up. That means bond yields typically go down and mortgage rates go down. It didn't happen in 75. It didn't happen in 1981. But we're pretty late in expansion to be thinking about the 10-year-old getting to five or six percent or mortgage rates getting to 7% to 9%. So what we're seeing right now is rates made a 1% plus move lower. There's no more QE. Mortgage-backed security market.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“I don't actually target mortgages. I hardly ever talk about mortgage banks. Bonyields Rose, Mortgage Rates Rose, except this time mortgage rate pricing was a lot worse. So a good example is in twenty eighteen, the tenure yield got to three and a quarter percent. Mortgage rates got to 5%. In 2013-14, the 10-year yield went from 160 to 3%. Mortgage rates got to 4.5%. Here, the 10-year-old went up all the way to 350. Mortgage rates got to six and a quarter percent. And even today, as we speak, the 10-year yield is at 260. Mortgage rates could be a little bit under 5% now or roughly at there. So the mortgage-backed security has impacted the pricing in that sense. However, no matter what anyone says, the 10-year-old and mortgage rates trend together, right? There are dislocations at times where we can see the mortgage rates start to go lower, maybe bond.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Why don't I think they'll be like very popular like they were back then the payment structure and the qualifications are much different this time.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Yeah. And even the adjustable loans now are not even the adjustable loans in the past. So we've seen a little bit of increase in adjustable loans. The adjustable loans adjustments or increases look like how they were in the last 10 years when rates rise, you see a little bit of growth. The difference is that you actually have to qualify with the higher payment. And this is one of the reasons why adjustable loans aren't that popular. During the housing bubble years, I think it got to 34 to 35 percent of the loans being done. I think here even the increase we saw this year is roughly like 10% increase. So it's not only the volume isn't there, but the product itself is much different. You actually have to be able to afford the loan off the readjustment price, whether it's five or seven or ten years. And some people just get it now and they go, okay, well, you know what? When rates come back down, I'll refinance to a 30-year fricks. But even if that didn't occur, there's just no kind of recast arm risk like we saw from the loans that were given before the peak of 2005. Completely different ARM products as well.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Just to add more fuel to the fire. So here, nothing. Foreclosures and bankruptcies have been falling for years. What's happened is American households, they bought a home. They have a fixed long-term debt product, and their wages rise every year. And then we've had three refinancing waves in 2012, 2016, and of course during COVID 2020, 2021. So the homeowner on paper looks wonderful because their cash flow is really great. Everyone's FICO scores are really high because their product is completely different. After 2010, all the exotic loan debt structures that were in the past were all gone. So credit, in a sense, can't get really tight or loosened anymore. It's just hovering at a very low level. Not much you could do there, so again, two very extreme different cycles on the credit profiles.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Prime activity, if at all biggest difference ever recorded in history. I mean, this has been a main talking point of mine because I always tell people I do not fundamentally believe the US can have a credit boom ever again in housing because we made lending standards great again by making it boring. It is simply just a fixed long-term debt product. That's it. So what's happened is, and a lot of times I like to show the credit profiles or the credit stress data. In 2005 and 2006, 2007 and 2008, credit started to get worse. What I mean by credit getting worse is that people were filing for foreclosures and bankruptcies before the job loss recession. We saw that in the data. So you can see that the product that was being facilitated back then was already creating foreclosures and bankruptcies. And there was some job loss recession yet. And then comes 2008, then the job loss recession comes on top of that.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“For new homes and existing home sales. Not the case now, right? We never had a credit boom in America. So we have very good homeowners, right? Homeowners' financial profiles look better than ever. So that was a credit boom here, very slow and steady demographic replacement demand completely two different cycles. I would argue that if you took those two cycles in US economics just based on housing, you've never seen two different cycles as we've seen. That one was boosted by demand here, the pricing mechanism, especially after 2020 is more based on a total inventory levels breaking to all time lows.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“The demand was facilitated by credit, exotic loan debt structures, how I call it, and then that's it, right? Credit actually really started to tighten after 2005 because the credit that was facilitating that demand was products that no longer started to exist. So you saw this massive decline in sales.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Demand, right? When you have a credit boom facilitated by exotic loan debt structures, you truly believe that your production levels are actually accurate because you can sell those homes at whatever price you want. That's why the 2002 to 2005 period, if you look at mortgage demand, it just blew up, right? And sales blew it up and production blew up and prices and permits and housing completions. Here, it's never the case. We never really had like a sales boom. So once that credit tightened, and then you saw this massive collapse from a very high level, new home sales fell 82%. And it wasn't just the 82% decrease in sales from the peak to bottom. It was having the weakest housing recovery also from 2008 to 2019. The main difference is that back then they had the demand.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Percent year over year, it's not a good trade off, and it's just an unfortunate reality that we're in. And this is why the builders will never build enough homes that people want, as frustrated as everybody is. Think of them as a business first and realize that they have to like manage rates, demand, pricing, all the cost, lumber, labor, everything. And they have to make money because they're not here to lose money. I think a lot of people forget this. They go, well, the builders have to build homes even if nobody wants them. No, that's not how a business works. So look at him in that light in a lot of their mindset or thinking or production levels will make sense.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“All these homes under contract, and they couldn't lock the rates, and their clients went in at three percent, three and a quarter, and now it's five and a quarter, six and a quarter. They can't even qualify for the loan now or for the home now. So they have to sell their products either at a discount or hope the rates come back down. So the business cycle for them is dead. I think I raised the recession red flag for the builders in June. And then the following month, the home builder survey collapsed in one of the biggest fashions in recent history. Looks perfectly normal to me. So they are just going to slow down because their product cannot compete with the existing home sales market, which are cheaper in a higher interest rate environment. And that's the thing. It's the housing dilemma. Do the builders need three to four percent mortgage rates to build, but then at the cost of the existing home sales market being up 15 to 20%.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“They're just, I mean, they are simply here to make money. They could care less because think about this. Every decade that has gone by. They have been feeding this massive army, soldiers, right? The existing home sales is this massive market of cheaper homes, right? So for a brief time, they were able to really take advantage because total inventory for existing homes had fallen to all-time loans, so a little bit more people than normal came in and bought the new homes, which is much more expensive than an existing home. And they've already thrown in a towel, right? For me, once the 10-year yield broke above 1.94%, if people saw how much home prices the builders paid or forced on the consumer. And this is part of my thing is that the builders and home sellers had way too much pricing power. And because they had way too much pricing power, they pushed it to the limits, right? Because they're simply here to make as much money as possible. They don't really care about the sustainability of the housing market. The whole business model is at risk. The builders themselves couldn't finish homes on a timely manner.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“The builder's biggest competition is the existing home sales market. And I think where my work is different than maybe other housing economists, I never believe the home builders underbuilt in the last cycle. They only build off their own demand curves because they have to sell their homes for a profit. This is not the march of dimes, right? They have to build. There's a lot of labor costs, home costs, all these things. They have to make money. So what happened in the previous expansion part of my weakest housing recovery premise ever is that builders missed sales estimates in 2013, 2014, 2015. In 2018, they had a supply spike, right? Mortgage rates got the 5%. It didn't really impact the existing home sales too much, but for them, builder stocks were down 30%. One of the builder CEOs said it was the worst fourth quarter since the great financial crisis. They get drama really quickly. Yeah, they get very”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“But unfortunately it went up so fast that we're technically in a housing recession right now. The builders have basically thrown in the flag. They're not going to be constructing anymore. They're just going to slow the process and try to sell off all their backlog of homes that are under construction, right? I think there's less than one month of supply of actual finished product. We have roughly six months of supply that's being constructed to a little bit of up two months. They haven't even started yet. Don't look for them to bring a shovel near that dirt. So it's just, there's a lot going on here that's to me not good, but it's part of it is demographics equal demand. Here's the biggest housing demographics patch ever. Lowest mortgage rates ever inventory hit all-time lows. Nothing could happens in that situation.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“In the last two years, and not a positive. We inflated home price growth because we forced people to bid against each other. And it just sucks affordability in so fast. Nothing that we've seen in recent modern day history. So we're working our way back up there. We're not there yet. Most likely, we're not going to hit the high end of the 2019 inventory channel this year, but I'm hopefully next year. We can do that. But again, mortgage rates are falling. So kind of my thing this year, you know, talking to the media, I said, the biggest fear I have is actually mortgage rates have peaked, rates go back down again, and the growth that we've had in inventory either slows down, which we're seeing right now. We're seeing the growth rate of inventory slowdown of pauses or reverses. And that to me just means we're going to have another year of not getting back to 2019 levels, which I think would be the best thing for the housing market. And the only thing we had really was rates getting higher.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“All of a sudden, mortgage rates spiked, bond yields went up higher. So we're taking a massive hit. We see it in the data. Home sales are slowing down noticeably. But inventory channels are slowly working their way back up to 2019 level. So I've set targets in my work in the last 18s, 24 months. All we need is total inventory. This is the NAR data to get between 1.52 to 1.93. That's the four decade low before COVID. But it's enough to have a balanced housing market. You don't get the crazy bids. Just recently, the last existing home sales report, Meeting Days on the market is 14 days. That's an all-time low. That is the last existing home sales report. So you can see that the inventory channels are still not back to 2019 levels. There's parts of the United States of America that are creeping back to the low end of 2019, but we're not there yet. And that to me is a positive. What happened?”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“I can make a case that we had a 4% mortgage rate spread within a year. And I'm taking the low of 2.5% and we have maybe a day or two or six and a half percent. So we are probably most likely today under 5% again. So we've had a 1% plus decrease in recent weeks as the 10-year yield has fallen. But we took a humongous affordability hit. The biggest I've ever seen in my life time because it's not just mortgage rates rising. It's also the home price growth. You put them two together. That's meaningful. That is a really meaningful difference than what we saw in the previous expansion where rates would rise, but home prices never really took off and then rates would fall down and inventory channels would work itself out. Not the case here. Here we had unbelievable hot home price growth. So we were heading up higher than the Russian invasion came.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“You said for the savagely unhealthy housing market to start to get better, mortgage rates would have to go up. We've seen that definitely. I think mortgage rates have gone from somewhere in the 2.7% to I can.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Years after marriage, they have kids. Housing was always a year's 2020 to 2024 story. But the problem was the active listings weren't growing like they were in 2001 or 2005. A lot of people don't remember this, but inventory was actually growing during the housing bubble years. It's just that we had such a credit boom, such a big sales boom that it kept monthly supply below five months. Not the case here. We just kept on.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's cumulative. We've cashed that in two years, right? So then another flag, it's already up. Great. Okay, that didn't happen. So a lot of this is demand's better. Of course, I could make a case that averaging out two-year sales, it's really about $365,000 more homes bought than the 2019 period. So it's not like a massive credit boom or a sales boom or anything like that. A good example is at the peak of the housing bubble years, new home sales was 1.4 million. And we're at like 590,000 right now. So it isn't that. It's just we had a very, very low inventory channel that was going lower. And then all of a sudden, we have more buyers than traditional. That's why years 2020 to 2024, I've always said this will be a little bit different than the previous cycle. Household formation, people rent, they date, they mate, they get married three and a half.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Lows in it really bad spot. And that's what occurred. And really, it was by the fall of 2020 where I started saying, oh God, we're about to like, you know, hit it in a very unhealthy fashion. I think a lot of people were stuck in that forbearance crash storyline. It didn't make sense. Credit profiles are much better. So even though demand wasn't really booming, because inventory was so low, what we had is we had too many people chasing too few homes. So what occurs then is that, you know, people are starting bidding against each other. And that's the savagely unhealthy aspect. In fact, for this specific period, I even said a price growth model that I said, listen, if home prices only grew at 23% in five years, we'll be okay.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“You know, during the housing bubble years, we had a lot more inventory. We had a lot more sales, but we had less price growth. Here it's different. We had less sales. We had a lot less inventory, but we had hotter price growth. So just like a lot of things that we see just in the economy, we have vertical pricing. Never seen that. We go back to the 90s, or the housing bubble years or anything recently. But we've had it for a few years now. And that is also part of the savagely unhealthy part. But it makes sense in the sense that inventory had been slowly falling since 2014, 2014, 15, 16, 17, 18 and 19, even when mortgage rates got to 5%. The total inventory data didn't really budge. So here is this period of time where I thought, okay, there is a chance that we can break to all time.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“So housing needs roughly 4 million mortgage buyers to have a stable market. It's got 15 to 20% cash buyers, a little bit more than that now. Those people just paused like everyone else did for six weeks and they just went back to trend. But it isn't record-breaking demand or anything like that that we saw from 2002 to 2005. And I use this as an example. 2020 existing home sales was only 130,000 more than 2017 levels.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“I'm in this camp because a lot of my housing economic work, it was always parsed out into two periods. 2008 to 2019 and then 2020 to 2024. So I've been waiting for this period in time forever. And then COVID happened. So I think for me as, you know, I work with macroeconomic cycles first and then housing is kind of a secondary, but it's kind of the main thing I'm known for. So when April came, I wrote a recovery model. It's called America's Back Recovery Model. And I thought, you know what? We're going to be okay. We're going to recover this year. Give housing some give it a few weeks and you should see things kind of get back to normal. What happened during COVID is I think people forgot that even though we had 20 to 30 million people unemployed technically, 5 million in forbearance, 133 million people were working, right?”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Doing is creating balance, but the unfortunate aspect is home price growth as we see in a lot of the recent data is still running double digits and we had this massive increase in mortgage rates and now we've had a 1% decrease and we're trying to find this equilibrium on what a normal housing market looks like. We're not there yet, but yeah, if I had to coin a phrase, I'll stick to the one I've started in 2022 savagely unhealthy.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“We got stuck in a very unique place, historically speaking, on inventory, inventory levels have been falling for many years, but we broke to all-time lows kind of right at the worst time possible as our biggest housing demographic patch, the millennials ages 28 to 34 now, came into their prime home buying age, and inventory collapsed to all-time lows. So what it's done is this unique dynamic of what I call is forced bidding. And in 2022, it got so bad that I just kind of threw in the towel and said, listen, the only way we could get any kind of balance in housing is to have mortgage rates go up. And they have, and we're in the process of trying to create a balanced housing market. And for me, it's just getting total inventory back to 2019 levels, which was the four decade low before 2020. But we can see that what higher rates are.”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT
“Well, at the start of the year when inventory had broken to all time lows and the home price growth was getting out of hand, I coined the phrase savagely unhealthy. And that's honestly how I felt about this housing market really since post 2020 in the fall”
2022-08-09 · Forward Guidance · Real Estate Market Will Stay "Savagely Unhealthy" For A Long Time | Logan Mohtashami · IDENTIFIED FROM THE TRANSCRIPT