Logan Mohtashami on inflation, mortgage rates and losing construction workers
Nov 14, 2024
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Logan Mohtashami, Lead Analyst at HousingWire, dives into the pressing issues of inflation and mortgage rates affecting the housing market. He highlights the potential fallout from a mass deportation of construction workers, addressing labor shortages amid rising demand. The conversation unveils the latest trends in housing demand post-COVID and critiques the inefficiencies within the mortgage industry. With a mix of insight and humor, Mohtashami explores how these economic indicators shape the future of residential construction.
The interplay between mortgage rates and housing demand is crucial, with lower rates expected to potentially drive increased buyer interest in early 2025.
Labor market health, particularly the potential loss of construction workers, poses significant challenges to the housing sector's ability to meet rising demand.
Deep dives
Understanding Housing Demand Trends
The recent shifts in mortgage rates and consumer behavior are significantly impacting housing demand. Historically, there has been a pattern of increased demand for home sales in the latter months of the year, as seen in 2020 following the pandemic, which led to a surge in delayed purchases. In the current post-COVID landscape, coupled with fluctuating interest rates, the forward-looking data indicates potential for another seasonal run in housing demand starting in early 2025. However, whether this trend materializes will depend heavily on mortgage rates reaching or falling below critical levels, notably around 6%, suggesting that lower rates could once again stimulate buyer interest.
The Impact of Labor Market Dynamics
The state of the labor market plays a crucial role in shaping the housing industry and its prospects. Job growth and wage trends are essential indicators that influence mortgage rates and, subsequently, housing demand. The potential deportation of a significant number of construction workers could exacerbate labor shortages in the housing sector, making it difficult to meet rising demand should interest rates decrease. However, the implications of such labor dynamics depend on various factors, including the timing and scale of deportations and the overall economic context as housing permits are currently at recession levels.
Navigating Economic Uncertainties
Economic forecasts are increasingly influenced by labor data and inflation reports, which dictate the trajectory of mortgage rates and housing stability. The essential correlation between labor market health and mortgage performance highlights the need for cautious optimism as the economy navigates potential recession signals. While there are fears of economic pain being necessary for broader recovery, historical trends suggest that accurate data monitoring is key to making informed predictions. Mortgage rates have shown reluctance to dip below established thresholds, often putting pressure on the housing market despite a seemingly growing demand, complicating future assessments of the sector's vitality.
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about inflation, mortgage rates and what happens to housing if we see a mass deportation of construction workers.
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