Logan Mohtashami: Is stress in Florida signaling a larger housing problem?

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about Fed policy, mortgage rates, new listings and why stress in parts of Florida doesn’t signal a larger housing problem.   Related to this episode:   ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Why mortgage purchase apps are on a 22-week growth streak⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.housingwire.com/articles/why-mortgage-purchase-apps-are-on-a-22-week-growth-streak/   ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠HousingWire | YouTube  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q     More info about HousingWire⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://lnk.bio/housingwire   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.

Transcript

00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about Fed policy,

00:11mortgage rates, new listings, and why stress in parts of Florida don't signal a larger housing

00:17problem. Logan, welcome back to the podcast. Welcome, Sarah. Where are you at right now?

00:24I am in Cambridge in the UK. I'm at this beautiful hotel, so I'll be here for the next 10 days.

00:29Super excited. Good, good. You deserve some time off. Of course, I never take any time off because

00:35I wouldn't know what to do with myself and I'd be absolutely losing it. I went and saw Jurassic Park

00:41and I was just like, oh, I might be missing something. I might be missing. So I just don't

00:48know how to relax. I think you went on a Sunday. You should be able to be off on a Sunday and go

00:54see a movie. No, I can't. It's just not me. Well, I'm doing this as a working vacation because I'm

01:01the same way. I don't want to be gone too many days. So anyway, great to be here. Lots to talk

01:07about. Since we last talked, of course, we had the July 4th holiday and we had some new trade war news

01:13where Trump has pushed the deadline out a little bit to August 1st, but also seems like there's

01:21more punitive things happening. So what's your take on the trade war?

01:26So of course, the irony of everything is that the government jobs data might have given Powell

01:33a little bit more leeway to not cut at the end of July. Now, personally for myself,

01:41even if the jobs report was weak, let's say there was no government jobs created and there was only

01:4574,000 payroll and private payrolls are slowing down. Private payroll has been slowing down for

01:51some time. They wouldn't have cut anyway. They raised their inflation expectations. Obviously,

01:56inflation has not hit what they thought there would be. And now they're saying it'll eventually

02:01come in the second half of 2025. So it's going to take a lot for them to move. But now the trade war,

02:11tap dance, Godzilla tariffs, however we want to define it, we've moved the deadline from July 9th to

02:17August 1st. I think Monday morning, Trump even announced 25% tariffs on Japan if they don't do

02:23a deal. So bully ball tactics still. We obviously didn't get 90 deals in 90 days and we're trying to

02:32work some stuff out. But clearly, I cannot see them cutting rates in July, especially with

02:42questionable deals not being made yet. It would have to take a bunch of deals being done,

02:51written in stone, and the CPI inflation report being tamed, the PCE inflation report being tamed,

02:59and jobless claims rising noticeably to make the Fed move in July. They are very adamant on

03:06waiting until they see the data break, until they make their moves. And the evidence we saw was in

03:132024 when they admitted that they probably waited too long to cut that. And again, what the Fed believes

03:20is they believe they're still in restrictive policy. Because they believe they're in modestly

03:25restrictive policy, they can still cut rates and be in neutral. Where President Trump wants

03:31accommodative policies, he wants a much lower rate than anybody's talking about. And just for myself,

03:38because private payrolls have been slowing for some time, getting to neutral policy in a quicker

03:45fashion actually gives you a better backdrop in case labor does break. But everyone's playing a game.

03:50It's like the old Western movies where you have three, the good, the bad, and the ugly,

03:57and they're all looking at each other. And what's going to happen? Powell's on one side, Trump's on

04:02the other side. The economic data is in the middle, and everybody's looking to see who breaks or who

04:08flinches first. And it's going to be an interesting July, but I'd imagine if the government payrolls

04:16didn't explode higher, it would have been much worse. You know, it's disappointing for everybody

04:22in the mortgage business, right? Like, we're fingers crossed that we would see a rate cut in

04:28July after some people floated it. But there's just not the underlying data to back it up, no matter what

04:34Trump tries to do to Powell, seemingly. But we still are seeing pretty good mortgage demand. Are you

04:40surprised about that? Yeah, you know, mortgage demand, of course, you know, our weekly data is

04:47fresh. And as you can imagine, any kind of holiday can kind of mess up weekly data. But July the 4th

04:54holiday, if it's on a Friday, can really like mess things up for two weeks. So one of the things I did

04:58is purchase application data, something that is like very forward looking, 30 to 90 days. So the weekend

05:06tracker actually just kind of highlighted into that because it's one of these crazy things in 2025. Like,

05:11when you think of all the headlines of housing, and here we are with 22 weeks of positive purchase

05:18application data, nine straight weeks of double digit growth back to 2014 levels where happy was the main

05:24song back then in the billboards. But a lot of that has to do with new listings data growing year over year, and how

05:31how the data line was constructed, because we had such a low bar from 2020. Like 2024 was a very negative

05:37year when rates actually moved up towards seven and a half percent. And it really created a low bar. And

05:43then when rates went down to six percent, and remember, mortgage rates went from the peak in eight

05:48percent in 2023, all the way down to near six percent in 2024, with zero rate cuts, no rate cuts had the labor

05:56data was getting weak, weaker in the bond market, which typically does sometimes they overbuy their

06:00oversell, took the 10 year yield, broke the hoarder line for a very small amount of time and, you know,

06:07pricing in much weakness, much more weakness than the labor data was showing. And then the reversal

06:13happened. So, you know, we're here, the 10 year yield is at 4.38% today, mortgage rates are about like

06:206.75, 6.80 around there. It looks about right considering where the data is. If you believe that the

06:29labor data is the most important data for mortgage rates, not the growth rate of inflation, because

06:34the growth rate of inflation has already fallen a lot. And we almost got to the two percent handle

06:39and it just, there's no, we're not even close to getting sub six percent mortgage rates because

06:43the labor data matters more because 65 to 75% of where the 10 year yield of mortgage rates can range

06:49is Fed policy. Which is why we need, we need some things to happen here, but I'm glad to see that

06:57we're seeing business even. So let's talk about new listings. Another surprising, maybe something going

07:03on there. Let's talk about it. Well, you know what? New listings data might've peaked already.

07:07We're at the seasonal peak period anyway. And last year, one of the calls I got wrong is I thought we

07:13could get minimum, minimum 80,000 last year. I was so, I was 100% sure that that would happen last

07:20year and it busted. I got like 75,000 was the highest. So in that regard, I still went back to

07:26that same call saying we should get at least minimum 80,000. Why do we use that 80,000 level?

07:31Is that from 2013 to 2019, 80 to a hundred thousand would be the norm. We did have some prints at 110,000

07:40in the last decade after. And that's that per week, right? Yeah. Per week after the housing

07:45crash data line filtered itself out in the system. So I was hoping, hoping that we'd have a few weeks,

07:55not a lot, but a few weeks between 80 to a hundred thousand this year during the seasonal peak period.

08:02That didn't happen. So new listings data took a big dive, took such a dive that this last week that

08:08it's actually below 2024 levels, but that is common with July the 4th. And again, how,

08:14when July the 4th is on a year of year basis, when it is during the week can really mess up weekly

08:18data. So I was anticipating that, but we don't really have many weeks left. I mean, we possibly

08:24might have one or two weeks that can maybe get it above 80,000, see if that can happen, but we're in

08:29the seasonal decline. And I always like to remind everyone that, you know, kind of the 2008 to 2012

08:35period, this data line was running at 250 to 400,000 per week. Crazy. Credit stress sellers into

08:42a underwater marketplace, right? We, we actually did this presentation today on, on X monthly supply

08:50on average. I'm going to take the aggregate average now from 2007 to 2011, the total aggregate

08:57monthly supply for, for the existing home sales market was running at 9.16 months. The last report

09:04was at 4.6 months. So it's such a structurally different marketplace now, but now that we're in

09:09July, 2025, it's like we went through the whole gambit. Like we went through the biggest home sale

09:14crash ever recorded history in 2020. We've had three years of mortgage rates ranging between six to 8%

09:20with home sales at record low levels, but the credit markets are so different that it takes time to get

09:25inventory to grow, which I love 2025 out of all the years post COVID. This is my most favorite year

09:30because we're creating balance, right? And that's what you need for long-term health of housing.

09:36What happened post 2020 was such an abnormal period of time in history that it was savagely

09:42unhealthy. So the new listing data decline, a lot of that had to do with July the 4th holiday. We have

09:47another week of tainted data. And then after that, we can get back to normal, but we're kind of in the

09:52seasonal decline period of our total pending home sales, new listings data. And we'll take it every

09:58single week because last year at this time, rates started to fall, head towards 6%. And all of a

10:02sudden the weekly data started to really get positive. And just remember our weekly pending

10:06sales data, these things go into contract. It could take months before they hit to the existing home

10:11sales. And we're already existing home sales already months behind where we are today. So it takes

10:15some time to filter itself into the data, but a very interesting year, very positive, healthy year in

10:22that regards of getting active inventory, at least back to the low levels of 2019 balance, right?

10:28Price growth, slowing down good inventory, less competition in terms of the supply out there.

10:35It becomes a more buyer market. And why are the home builders at 2019 sales levels? It's because

10:42if it was a buyer market for them, they were doing concessions and sellers and giving buyers a choice.

10:48So this is why I love this year more than any of the years back in the last five years.

10:54Okay. So on the plane over here, nine hour flight, right? I watched the big short, which it had been

11:00a few years since I saw it. And I was not covering the industry then, but boy, just the anxiety and just

11:06the like, oh, that dread of watching that movie and remembering what that time was like, just as a

11:10consumer, you were a loan officer during 2008. I can only imagine. And also seeing all the data that

11:16we're talking about, right? You know, it's interesting. One of the charts that we always

11:21show on the nerd tour and everything, the, the housing credit market was actually breaking years

11:26before the 2008 recession. Like I, like I always say, this is my tombstone chart. When I die,

11:34Sarah Wheeler, you got to make sure to put that chart on my tombstone and just lay it there. And then

11:38we draw these black lines and the credit markets were breaking in 2005, six, seven, and eight.

11:43Then the job loss recession happened. So it was such a unique period because the unemployment rate

11:48was actually falling, but the credit markets were breaking because there was a massive credit boom,

11:52a credit bust. Inflation never really took off from like 2002 to 2005. There's your first clue.

11:58Like in the 1940s, that was the hottest home price growth year ever post-World War II, 1943 to 1947,

12:04inflation took off. 1974 to 1975 was hotter home price growth than what we had recently here.

12:11Inflation took off back then. COVID inflation, right? Global pandemics, very inflationary.

12:17Then the disinflation happens, but the housing bubble years, no. If you go, if anybody goes back

12:22and looks at the, if anybody goes back, yeah, a few people are going to do that. If anybody goes

12:26and sees a CPI and PC inflation, it never took off. So you had a massive credit boom. You didn't have

12:31wages, but you had sustained demand get up there. It's, that is not a good thing. That's nothing to,

12:39to, uh, to cheer about. And then of course the housing bubble crash happened and credit markets

12:43broke, uh, supply escalated, went vertical, but then you had millions at near 15 millions of

12:49distressed sellers into an underwater marketplace. So when you look at the aggregate data of 84 years

12:54of U S history, that was such an anomaly period. Uh, and then we're sitting here in July of 2025

13:00month of supplies, 4.6 months for the existing 1.54 million, uh, active inventory. Uh, uh, the

13:08foreclosure data is barely smidging up a little bit higher. We're not even back to pre COVID level,

13:13such a different marketplace because the entire U S economy changed with the 2005 bankruptcy reform law

13:20and the 2010 qualified mortgage. Those two things. If I ever had to teach any analyst, you go back and

13:26learn those two things and how we just had the longest economic and job expansion ever recorded in

13:32history. You know, COVID was a very brief recession and we still have those, the benefits of those two

13:37regulations in place right now today. You know, I was, um, there's been a lot of headlines about Cape

13:43Coral, Florida. So Cape Coral, Florida is seeing a kind of an explosion of inventory and things aren't

13:50selling and all this stuff. And we know that there are like pockets of Florida, especially if it's

13:54condo, um, the condo market that is, that is in trouble, but the, the headlines on it that I don't

14:01appreciate are like, this could be the bellwether. This is the canary in the coal mine. You know, last time

14:05Florida showed you what was happening, but it's like the underlying things are not the same. Like it's, it seems

14:12to me, but I want to ask you very specifically, when you look at Florida data, see what's happening

14:17there. Are you worried that there's something systemic happening?

14:21So do you, do you want to know like the really rookie ball people out there? We have men, grown ass men

14:26still talking about one or two cities in Florida for like three years. Their adult lives are sitting

14:32there and just going, Oh, this is it. This is the next. So just let, let me like, like, if we want to talk

14:39about Florida specific, Sarah Wheeler, do you know how many, what's the percentage of, of homes that were

14:46underwater in Florida? Like back then, it was like 69%. It was some crazy number. I think I, I, I, I'd have to go

14:55back and check on this, but I think Cape Cod or we're talking about five. Yeah. 5.7 to 7% are

15:04underwater. That place was like much similar to Austin. They, it went up like 76% home price

15:11growth in like a two and a half year period of time. And what Austin in Florida, parts of Western

15:15Florida, those places need migration. So what happens is why I said savagely unhealthy so much,

15:22you had so much price inflation that if you don't sustain a 3% mortgage market and get migration in

15:29there, the whole system is, is busted and broken. This is why the whole concept of team higher rates

15:34in February of 2021 is like, this has to stop. Y'all don't realize this is a very, very, very unhealthy

15:41thing that's happening. And now that we're in 2025, imagine us we've had rates range from six to 8%

15:47for three years now. Uh, and you know, we never saw the, the, what we call the mass scale canary in

15:56the coal mine, the entire national marketplace, because you could have pockets of the country

16:02where you have, uh, uh, systemically really terrible housing data, but as an aggregate whole,

16:08you could look at the national data. This is why people need to like separate, uh, certain things,

16:12but even, even in Florida, it doesn't have like the underwater mortgages and the distress sellers.

16:18And you have, you have other differences, like my interview with Yahoo in 2024 early, like,

16:23do people want to live in Florida still? Like there are certain, not all home buyers feel this way,

16:29but certain home buyers, like why, I don't know the insurance situation. What's it going to look

16:33like five years from now? I can't get insurance. There are some people who just going to go,

16:37hey, listen, Ohio, you know, Minnesota, you know, uh, uh, um, Pennsylvania, there are other places

16:45that you don't have to worry about insurance and hurricanes and all that stuff. So that,

16:49that is a legitimate things. And that is a Florida situation, but this systemic rest talk that people

16:55have been talking about for 13 years, just, we don't have the credit markets and it's been tested.

16:59Like I said, it's July, 2025. We did it. We ran through it. It's three years. And the reason I use

17:06three years is because it was three years when the housing market bubble peak of sales happened

17:12in 2005. And then the housing crash happened in 2008. We're here, 2022, second half, biggest crash

17:19in home sales ever, 23, 24, 2025. We're in July. We ran through the three-year gambit. And you look at

17:25the aggregate data, does not look anything alike. So I understand we always say doom porn sells.

17:33So I'm the anti-doom porn person. Right. And I'm the guy who said housing was savagely unhealthy,

17:39you know, in 2022 and very unhealthy in 2021 and unhealthy at the end of 2020. But I could talk

17:46about it in the, in an aggregate way. Like, like a lot of people come to us for our Florida data

17:51and our Texas data, cause we can break things and we keep that very close in house, but real estate

17:55investors on wall street, cause we can just make it very, very prolific, but, uh, it much different

18:01marketplace. There's no canary in a coal mine. When we see this, when we see stress, it's in the

18:06new listings data. If we had to see anything that would get our minds, uh, eyes open, it's the new

18:12listings data. If new listings data went vertical and started going above 110,000, then I'm like,

18:17okay, here it is. That's, that's the marker. That's the line in the sand. It's like jobless claims for

18:23the recession. If you guys are going with a recession talk, you need jobless claims to get up

18:26to 323,000. Don't do it. Like since the end of 2020, you don't go there unless you get this number.

18:33And now here we are. So different marketplace, different credit structures, very anomaly event

18:38back then, but it was a credit boom, credit bus where here was massive amount of inflation,

18:44migration, unbelievably low inventory. The lowest active listings ever recorded in history with our

18:49data was 240,000 in March of 2022, much different marketplace than we are right now. And the data shows it

18:56in aggregate three years, right? Take June of 2022 to July of 2025. Look at it all. Take the national

19:03data. There you go. It speaks for itself. Numbers are the closest thing to the handwriting of God,

19:08Sarah Wheeler. And you always want to be the detective, not the troll, because we've been doing this stuff

19:13since the Peloponnesian war. Three things in one sentence, in one little section, three of your,

19:20your sayings. So it's possible, like, like what we're talking about is that it's not affecting the

19:25larger market. It might be, it might not be a great situation if you're in Cape Coral, Florida,

19:30right? It might be bad if you're a realtor there or a mortgage person there might, it might not be,

19:35but it's not, it's not saying there, there's a lot of attention for two or three cities

19:39in Florida for the last three years and not a lot of tension. Like, have you, do you realize nobody's

19:45talking about the purchase application data on a national basis? Like finally, some people begrudgingly

19:50had to do it. And they're like, they don't know. They're like, I don't know what this means.

19:54Right. I, I, I, I encourage everyone, everyone listening, go read our weekend tracker. When you

20:02read the weekend tracker, you get all the data right there. Nothing is going to, we are so far ahead of

20:07all the monthly reports that all of you have been reading for years that if anything cracks on the

20:13national side, we see it. Now our personal stuff, our, our personal data lines, we, we provide that

20:19for any zip code. You can get a free zip code, go to Altos research, get a zip code, get it there.

20:24We can do things, break it down per zip code, which is much more prolific. I'm just showing you the

20:29national aggregate data and I bring my economic cycle works. Remember I am an economic cycle person

20:34first housing, second. Right. And so we put that with Altos data in there and we incorporated that.

20:39And it's just, it is a beautiful looking model. I just, I love it. I love it so much. That's why I

20:44spend my Friday nights, you know, it's Saturday morning, writing that stuff everywhere. There's

20:49so much excitement for me. Well, Logan, thank you so much. I can't believe we're already at time.

20:54We're trying to keep these a little bit shorter since you are on officially this week.

20:58Four times a week. Chart, Daddy, four times a week. Can you ask for anything more?

21:04So thank you so much for bringing your insights to that. We will talk to you again soon. Thank you so much.

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