On The Market

189: The Fed’s Plan “Backfired,” Now They’re Scrambling w/Logan Mohtashami

Feb 12, 2024

Financial expert and commentator Logan Mohtashami warns that the Fed's high interest rates are causing a housing market stalemate, making homebuying unaffordable despite rising wages. He discusses the Fed's outdated mindset and the need for adjustments. Mohtashami emphasizes the importance of analyzing individual cities and personal variables when investing in real estate. The impact of Fed rates on construction loans, rental rates, and the resilience of single-family rents are also explored.

40:54

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Logan Mohtashami

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Quick takeaways

The Fed's reluctance to drop mortgage rates despite rising wages and strong job numbers is creating a housing market stalemate.

Logan Motoshami criticizes the Federal Reserve for using outdated models and urges them to be more proactive in cutting rates to a more neutral level.

Deep dives

Overview of the podcast episode

In this podcast episode, host Dave Meyer and Kathy Fekke interview Logan Motoshami, lead analyst for Housing Wire. They discuss the current state of the labor market and its impact on the housing market. Logan explains that job growth is returning to normal after a surge in job openings and recoveries from the COVID-19 pandemic. He also emphasizes the importance of tracking jobless claims as a key indicator of the labor market's health. The conversation then shifts to the Federal Reserve's role in managing inflation and interest rates. Logan critiques the Fed's confusion in using outdated models and urges them to take a more proactive stance. Finally, the discussion touches on the relationship between the bond market, mortgage rates, and the housing market. Logan advises investors to pay attention to active inventory, new listings data, and price cut percentages when evaluating different housing markets for investment opportunities.

Introduction

4min

Labor Market Analysis

12min

The Fed's Outdated Mindset

7min

Implications of the Current Housing Market

11min

The Importance of Data and Personal Variables in Real Estate Investment

4min

The Impact of Fed Rates on Construction Loans and Rental Rates

5min

The Fed is putting us all in danger. With high rates, low inflation, a strong job market, and millions of Americans wishing they could buy a home (but can't), we're in a strange position. Buying a home is still unaffordable even with rising wages, but the Fed won't drop rates BECAUSE of rising wages and such strong job numbers. We're in a housing market stalemate, and all of this could have been avoided if the Fed stopped counting on old data to save them.

You might think that these are wild claims, but thankfully, we've got the housing market expert of housing market experts on the show, Logan Mohtashami, to make his case. Logan's team at HousingWire tracks housing market data like no one else can. They have the most up-to-date metrics and the best forecasts in the industry and were right about this housing market, and the last one, the one before that, and…you get the point. It goes without saying Logan is the singular voice to trust when it comes to housing and the economy.

Logan says the Fed is "playing with fire" by keeping mortgage rates as high as they are. They want to break the labor market, but with every number pointing to a return to normal, why should they? Logan gives his thoughts on why the Fed isn't dropping rates, the huge housing market mistake they're making, the metrics that could point to a disastrous labor market, and the harsh reality for first-time homebuyers.

In This Episode We Cover:

A normalizing job market and what could cause it to finally break

The Fed's massive mistake that is putting the housing market in danger

Why the Fed won't lower mortgage rates yet and what they're waiting for

The devastating state of housing demand and why it shouldn't be like this in 2024

How lower-income households are getting hit the hardest, EVEN in an expanding economy

Bond market effects and why yields are staying so high

And So Much More!

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