Josh Romney and Logan Mohtashami on economic factors driving housing
Feb 14, 2025
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In this engaging discussion, Josh Romney, President and CEO of the Romney Group, and Logan Mohtashami, Lead Analyst, delve into the pressing economic factors shaping the housing market. They explore the impacts of current federal spending and interest rates on housing dynamics. The conversation also addresses the challenges in real estate lending, multifamily housing supply, and tighter credit conditions. With insightful analyses, they examine the implications for mortgage markets and the overall economic landscape, highlighting the critical need for stable investment strategies.
High inflation and sustained interest rates are creating uncertainty in the housing market, prompting caution among investors and potential buyers.
The lack of affordable housing is becoming critical, necessitating federal intervention to boost construction and address demographic needs.
Deep dives
Navigating Administrative Uncertainty
The current administration has brought forth a mix of hope and uncertainty in the business sector, particularly in real estate. Business leaders are grappling with unclear signals regarding future policies, especially concerning tariffs and interest rates. Concerns linger that constant policy changes and mixed messages create hesitation among potential clients and investors, leading to a stalled investment landscape. The situation has underscored the importance of obtaining clarity from the administration to foster a more stable economic environment.
Long-Term High-Interest Rates
Market expectations suggest that interest rates will remain high for an extended period, possibly aligning 2025 closely with 2024 in terms of rate stability. Economic indicators, such as low inflation and high unemployment rates, typically point towards a downturn, yet the economy continues to show strength, leaving many surprised by the resilience of market performance. The Federal Reserve's aggressive rate hikes aim to combat inflation, but they have not yet shown signs of leading to a recession. This necessitates businesses to adapt their strategies for continued operation in the face of sustained high rates.
The Complexities of Housing Supply and Demand
The interplay between economic growth and housing demand poses a dilemma, as high employment rates can inadvertently maintain elevated mortgage rates. While a healthy economy benefits real estate, sustaining rates over 6% can deter potential buyers and slow down market activity. The lack of affordable housing is emerging as a significant concern, particularly in states where construction is lagging, which could stifle economic growth and job attraction. Addressing this issue requires federal intervention to stimulate housing production and ensure availability for varying demographic needs.
Challenges for Multifamily and Construction Markets
Current conditions in the multifamily and construction sectors are characterized by hesitance from banks to finance new projects, leading to a lack of inventory and project initiation. Concerns about economic stability, instigated by high interest rates and supply chain challenges, mean potential construction is stalled while previously started projects are reaching completion. Building permits have declined sharply, indicating a future shortfall in both multifamily and general real estate supply. As this trend continues, upward pressure on rental rates is likely, further exacerbating the accessibility crisis for affordable housing.
On today’s episode, Editor in Chief Sarah Wheeler talks with two guests: Lead Analyst Logan Mohtashami and Josh Romney, president and CEO of the Romney Group as well as Chairman and CEO of Intercap Lending. The three discuss the economic factors driving the housing sector, including lending, building and development.
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.