On The Market

What Happens When Rates REALLY Drop? Probably Not What You Think w/Logan Mohtashami

Sep 16, 2024

Logan Mohtashami, a top housing market analyst, shares his insights on the current state of the housing market. He discusses the surprising possibility of a reversal in increasing housing inventory as mortgage rates drop. Logan also challenges the conventional wisdom that lower rates automatically mean higher home prices. He emphasizes the importance of monitoring labor market trends in predicting mortgage rate movements and highlights the ongoing affordability struggles for homebuyers, despite recent improvements in the market.

38:55

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Episode guests

Logan Mohtashami

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Quick takeaways

The current housing market exhibits mixed signals, with rising new home sales contrasting a stagnant existing home sales market amidst high mortgage rates.

Despite some improvements in housing inventory, the potential reversal in this trend could exacerbate affordability challenges for homebuyers in the future.

Deep dives

Current Housing Market Dynamics

The current housing market is described as being in a 'baby pivot' stage, marked by confusion and mixed signals regarding home sales and prices. While new home sales are increasing, the existing home sales market remains stagnant, particularly in a high mortgage rate environment. Historical trends show that nominal home prices rarely fall, which contrasts with previous cycles where a crash was observed from 2007 to 2011. This unique situation comes from the fact that after hitting low levels, sales ceased crashing, resulting in a bifurcated market where new and existing home sales are performing differently.

Home Prices Don't Always Follow Sales Trends

00:43

Inventory Growth Signals a Housing Cycle Revival

00:29

Intro

2min

Housing Market Insights

6min

Exploring New Construction and Housing Inventory Trends

2min

Decoding Housing Market Dynamics

15min

Navigating Real Estate Risks and Opportunities

3min

Understanding Housing Affordability and Mortgage Rates

4min

Navigating the Complexities of Housing Affordability and Mortgage Rates

6min

Are we finally at the end stages of this harsh housing market? With housing inventory increasing, mortgage rates steadily falling, and inflation cooling, we might be returning to a much healthier time to buy a house. But one of these improvements we’ve seen over the past year could begin reversing, and that’s creating some interesting future scenarios. One that even we’re surprised to hear as we bring on top housing market analyst Logan Mohtashami.

Logan has referred to 2022-2023’s housing market as “savagely unhealthy,” but he’s a bit more optimistic now that we’re seeing relief. While we’re still not at 2019 inventory levels (which were already low), we’re slowly getting there. However, we could see the positive inventory trend start to reverse, leading to even more affordability problems for homebuyers. So what has to happen for affordability to see meaningful improvement?

Today, Logan is giving us his take on housing inventory, where mortgage rates could be heading, and why we may NOT see a spike in home prices even if rates fall significantly (something most analysts are bullish on).

In This Episode We Cover

Logan’s housing market, mortgage rate, and inventory forecast

Why our increasing housing inventory could reverse once rates start to fall

The one thing holding affordability back and whether Logan has hopes of it improving

Why watching the labor market and jobs numbers will help you predict mortgage rates

Were we wrong about the “lower rates = higher home prices” premise?

And So Much More!

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