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Logan Modashami characterizes the current state of the US real estate market as 'savagely unhealthy.' He highlights the historically low inventory levels, the impact of the millennial demographic entering the housing market, and the forced bidding dynamic leading to unbalanced market conditions. Modashami stresses that the only way to achieve balance is through increased mortgage rates, which have seen recent adjustments.
Logan Modashami compares the present housing market dynamics to previous cycles. He points out that the housing market recovery following COVID-19 differs from pre-2008 experiences due to improved credit profiles, stable demand, and the absence of a credit boom. Modashami emphasizes the role of inventory levels, pricing mechanisms, and demographic shifts in shaping the current housing landscape, highlighting unique trends and challenges faced in the market.
Modashami delves into the correlation between mortgage rates and the housing market, noting the traditional relationship where mortgage rates track the 10-year yield. He highlights the critical influence of mortgage rates on affordability, home sales, and builder stocks. Emphasizing the historical trend of mortgage rates falling during recessions, he discusses the potential scenarios in mild and deeper recessions, focusing on job loss, forced selling, and late cycle lending risks.
The podcast delves into the housing market dynamics, focusing on mortgage rates and inventory levels. It highlights the challenges faced by both buyers and sellers, indicating that traditional stock market strategies do not apply to the real estate market. The discussion emphasizes the impact of mortgage rates on housing transactions and the prolonged process of buying and selling homes, particularly in a low inventory market.
The episode explores the potential outcomes of a housing recession, particularly for home builders and existing homeowners. It discusses how lower mortgage rates could benefit builders in selling their properties, while creating challenges for home buyers amidst rising housing costs. Additionally, the podcast considers the implications of high inventory levels and economic cycles on the housing market, stressing the need for a balanced marketplace to ensure stability and affordability for all involved parties.
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Logan Mohtashami, Lead Analyst at HousingWire joins Jack Farley to talk all things housing: how has the housing market changed since 2019 and what will happen to homes as we approach a recession?
Logan and Jack talk about inventory and rates in the housing market, as well as the challenges homebuyers may have entering this space. Does Logan think we will be able to get out this unhealthy real estate market soon? You need to watch to find out!
Filmed the afternoon of August 1, 2022.
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Follow Logan Motashimi on Twitter https://twitter.com/LoganMohtashami
Follow Jack on Twitter https://twitter.com/JackFarley96
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(00:00) Introduction
(00:58) The Current Health of the Real Estate Market
(12:37) Inventory
(16:30) Building Homes in the Early 2000's
(22:06) Rates
(31:51) Signs of a Recession
(48:44) Challenges in the Housing Market
(55:38) The State of Housing
(1:04:16) Effects of a Housing Recession
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
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