- 7 months ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about housing demand, home prices and whether Trump’s rate-cut plan includes pushing ARM loans.
Related to this episode:
Lower mortgage rates driving housing demand | HousingWire
https://www.housingwire.com/articles/lower-mortgage-rates-driving-housing-demand/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
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.
Related to this episode:
Lower mortgage rates driving housing demand | HousingWire
https://www.housingwire.com/articles/lower-mortgage-rates-driving-housing-demand/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
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.
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NewsTranscript
00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about housing
00:10demand, home prices, and whether Trump has a plan to push arm loans. First, I want to
00:16thank our sponsor, Optimal Blue, for making this episode possible. Logan, welcome back
00:20to the podcast.
00:21It is wonderful to be here, Sarah.
00:23It's wonderful to have you. We've got lots of things to cover. Okay, first off, let's
00:27talk about the pending home sales that came out this morning.
00:30So it was a very interesting morning because Redfin's pending home sales data showed 2%
00:36growth. But when they do their updates, their median sales price index is picking up. And
00:44of course, everybody saw the greatest seller-buyer-buyer-seller gap in history, and every Doom
00:50Porn account took that. And they misread it as being something like what we saw in 2022
00:55where home prices were noticeably, not only the seasonal decline, but were authentically
01:01declining in the second half. That's actually very rare in the history of US economics, but
01:05it did happen in 2022. So that happened starting in June. And what's occurred right now is the
01:12median sales price of Redfin is actually picking up. And it's creating a little bit of higher
01:17gap versus 2024 data. This didn't happen in 2024, 2023, or 2022. So it's confusing people out there.
01:27And what we always say is that our weekly tracker data, the slope of the curve economics, we started
01:34to see our pending sales data show some year-over-year growth. Nothing spectacular, very low bar,
01:40but a little bit of growth year-over-year. Now the NARs, the existing home sales report two months ago
01:46was flat. The other one showed year-over-year growth. The pending home sales data showed year-over-year
01:51growth now. So our pending contract data has actually now gotten ahead of the NARs reports.
01:58Again, a little bit of growth. And just remember the bar is low. This is why one of the reasons for
02:02the last four months I've said, guys, the reports in June to October that will be reported in July
02:07to November or have extremely low comps. So take the year-over-year growth with a grain of salt.
02:13But that has correlated to what we talked about in mid-June. The housing market dynamics have
02:20somewhat shifted as mortgage rates have gone down. The thing is that the purchase application data
02:27now, now that mortgage rates have gone below 6.64, it's like my thing is that housing data I've seen
02:34and since late 2022 typically gets better when mortgage rates are under 6.64, head to 6%. We've
02:40never really broken under 6% for the existing home sales market. So the last four weeks, we've had
02:47positive week-to-week data, positive year-over-year data, double-digit year-over-year growth every
02:52single week, 25% year-over-year growth this last week, but the weekly data is now positive. And how we
02:59show the purchase application data, you could see that ascending rise in the demand curve. And this
03:04is just with mortgage rates slightly below 6.64%, not towards 6% yet. So we're seeing a little bit of
03:11a better positive forward curve now with rates not near 6%. And I've asked you this before because it
03:19seems weird to me that August is seeing a pickup there, right? I mean, we tend to think of people
03:24following the school year when it comes to interest in buying homes, but I mean, it feels like that's
03:30less important these days. When you're working from a very low level and rates fall, it doesn't take
03:36much to move the needle because in a sense, you still have near 5 million total home sales, right?
03:43So just that little bit can keep... I know it's weird to think this, but this has happened last year as
03:48well when mortgage rates started to fall towards 6%. The thing about last year is that nobody saw
03:55any year-over-year growth in purchase apps and they just completely discounted the week-to-week data.
04:00So they said home sales are growing. It ended up being a couple hundred thousand more home sales. Now,
04:05our weekly pending contract picked that up before it hit the NAR's existing home sales, and it was
04:11really deviating. So what happened in late 2022, early 2023, mid 2024, and now so far four weeks,
04:18we need about 12 to 14 weeks of positive forward data with purchase apps to have something material.
04:24But this is now the third year in a row that the forward-looking data, at least early on,
04:29has now correlated to rates being under 6.64. So far, we haven't gotten near 6% yet, but mortgage rates
04:36just hit a year-to-date low yesterday. We'll see what the pricing is today, but very fascinating.
04:43It is interesting because the structural dynamics are so... With having live weekly data, you could
04:51see if something changed. And we picked this up mid-June that we said housing market was stabilizing.
04:56The growth rate of inventory just can't keep itself up. Unfortunately, I loved inventory being up
05:0133%, but our number now is down to 22%. If this continues, then we'll be in the teens eventually out
05:08there. But again, this is the benefits of having a live tracking data. You don't have to wait
05:12for, oh, we're showing year-over-year growth in sales. Bar is low, but our weekly pending sales
05:19data picked this up a little bit in the past. So here we are at the end of August. I cannot wait
05:24for our Mortgage Banking Summit on October 7th. Great timing on that because we will have had
05:30the Fed September meeting where it looks like a rate cut is likely, but what the market does with
05:38that... I mean, like last year, we had a Fed rate cut and the mortgage rates went up.
05:43So I still believe everyone is really overplaying that story because mortgage rates... It's so funny.
05:49Nobody talks about this. Mortgage rates fell 2% with no rate cuts and not anybody mentions this.
05:56No one talks about this. Everyone wants to talk about...
05:58Yeah, but I mean, the rates were at 8% in 2023 and it got down to 6% in 2024 and there was no rate
06:06cuts. Nobody wants to talk about that. Everybody would say, well, they cut rates. Well, because
06:11the 10-year yield was well ahead. We had this conversation last year. I said, Sarah, the bond
06:17market is so ahead of Fed policy that you need a recession or else the yields are just going to go
06:22right back up. Why? This is why we created Gandalf. You shall not pass. This is why we created...
06:28Hold on. Hold the line. The bond market at times gets well ahead of the Federal Reserve because it
06:35thinks we're going into a recession. So money flows in and you got traders, her trading out there.
06:40And this happens from time to time. Now, it's really not the case. I mean, the 10-year yield's at
06:46424. We haven't had that big down. The only down draft we had was Godzilla tariffs. Even back then,
06:53I was saying, really, we should be at 435 on the 10-year yield. We don't really belong here.
06:59So I think it's a much different backdrop. But I would say this, maybe Trump's game plan
07:06is not so much about the 30-year mortgage. Maybe the Trump game plan is really trying to push
07:14ARM loans in the future. Because if short-term rates keep on getting cut, but long-term rates don't,
07:22you know, for the first time in a while, because the guidelines are different to even qualify for
07:28an ARM loan, there could be a push that ARM loans are a better short-term choice. I mean,
07:36I'm a 30-year fixed guy. Remember when I wrote, I was trying to write to abolish all ARM loans in
07:41America that went well. But in any case, President Trump made a statement this week,
07:48we're going to have enough votes. So really, this is a tactical power grab against the Federal
07:54Reserve. We're going to have enough votes to go after Powell. Our job is to destroy Jerome Powell
07:59and have more people at the Federal Reserve that are ours, that wants more aggressive rate cuts.
08:05But if he wants aggressive rate cuts and the long-term yields don't follow it,
08:09because inflation expectations and growth is still up there. You know, it's one of these
08:14things to where if it does happen and they start promoting ARM loans, because ARM loans are going
08:20to be better than a 30-year fixed, that's something just, it's a hypothetical. But when I saw that we're
08:26going to have more votes soon, it's a power grab at the Federal Reserve. And President Trump wants
08:33emergency rate cuts. I mean, see, this is why I want Christopher Waller as the head Fed chairman.
08:40He's not going to be advocating for emergency rate cuts. But if one of President Trump's people are,
08:45they're going to be, we need emergency rate cuts. We need the Fed funds rate. So that's why the next
08:51Fed chairman needs to have a little bit more credibility or everything. But let's just say
08:55the 10-year yield doesn't cooperate. You can see a push for ARM lending just because if you get,
09:03you know, ARM loans sub 6%, we see how the data gets better for the builders. I mean,
09:09new home sales are still at 2019 levels. So it's something to think about because it made me think
09:14that when he talked about we're going to have more votes soon and not necessarily the 10-year yield
09:21might not cooperate as much as he wants. It is really interesting. Fannie Mae came out yesterday
09:27and said mortgage rates can get down toward 6% without the 10-year yield helping it because the
09:33spreads will get back down to 1.60%. So yeah. So more spread stories. Again, that's late 2026. I don't
09:43even think that far out. I just think of the next day, next week. But again, the story for 2025,
09:49the only reason we had year-to-date lows in mortgage rates is because the mortgage spreads
09:52are better. And what the mortgage spreads are doing right now is typically what's happened in
09:56every single cycle post-1970. You didn't need the Federal Reserve buying mortgage-backed securities to
10:03have the spreads get better. You just need volatility compressing. And a Fed rate cut cycle,
10:09you know, those things can get the spreads better and they have. And that's really the story
10:14for 2025. And I'm talking my own book, man, because this was something we've been trying to
10:20teach. We were trying to teach mortgage spreads for like, you know, 18 months now on the Nerd Tour,
10:25but now people get to see it and there's more people talking about it. And I see people talk
10:29about mortgage spread. It's just beautiful to watch. You know, the nerds, the revenge of the nerds,
10:36mortgage spreads, something nobody knew about is getting some play.
10:39Love that. But I want to go back to the ARM conversation, right? The ARM loan conversation,
10:43because obviously we had, that was the topic for our podcast earlier this week, but we also wrote
10:50a follow-up article about it. Flavia Furlan-Nunez, our senior mortgage reporter, wrote an article
10:56yesterday on Wednesday about it, just to back up with a bunch of the, you know, the numbers. And of
11:03course she quoted you and all that, but the truth is that this, what you're not saying is that what
11:09Zero Hedge put out on Sunday night, that 41% of the loans that are held by banks now are ARM loans.
11:17Now that might be commercial loans. That's definitely not the share of ARM loans that are,
11:23that are like single family mortgages, correct?
11:26So remember that, uh, those posts earlier in the year where they go mortgage delinquencies are higher
11:33than 2008 levels today. And it was the multifamily. It's basically a subversion of that. I mean, if,
11:39if Zero Hedge was honest and Zero Brain Debt is never honest, a pro-Russian sympathetic website,
11:46but in any case, um, they could have said that, you know, multifamily and single family
11:52loans together, but predominantly multifamily or commercial, they purposely misled people.
11:59Right. And that's just what they do. Right. Like all doom porn sites, you know,
12:03the headline is grappling. So it was just basically, uh, it's not single family residential homes,
12:10multifamily and commercial loans out there. So that, so they purposely misguided that just to
12:15get attention. And they did, it always works. The, the gravitation to doom porn is really good.
12:21There's, there's some of us in the world that were just born to, to fight to get this. But again,
12:25the devil has its hands and so many men's souls whispers in their ears, you know, and, uh, we've
12:32been fighting this battle since 1790. And when I die, my other counterparts will take my place. And,
12:40uh, the holy war economic war against the American bears will still continue. And like I've always said,
12:45my tagline is very simple. All American bears have failed since 1790. When you die, you are going to the
12:50graveyard with your fellow brothers and sisters who are Russians, Chinese, Iranians. And there is a
12:55cold, dark abyss for you because not even the devil will take your soul in for this.
13:00Wow. Okay. Well, you feel very, very strong.
13:04Sarah Wheeler, if there's a day where I'm allowed to just be myself on all these people
13:08for 14 years, this fanatical group, I am, I am gracefully holding back on this stuff.
13:16Yeah, this is holding back. So, um, as those, the sources that we cited in the article show,
13:22it's actually less than 10%, um, of single family loans or arm loans. But even if that was larger
13:30than that, and even if like, you're saying that this is, this is something that maybe president
13:34Trump pushes, it's not a bad thing to have a bunch of arm loans these days, because they're not
13:38the arm loans of, you know, the, the housing crisis. These are like very safe loans. You have to
13:45qualify for the, for the higher rate. So even if that was true, which it's not,
13:50it's not a bad thing. Here, here's, here's one thing. I don't know if you people remember this
13:55that are listening, but remember we had a bunch of influencers like 18 months ago said the 2019
14:02arm loans are coming due and there's going to be a rush of sellers. The new listings is going to take
14:08off because none of these people can afford the arm loans. Remember that? Remember that, uh,
14:13the bait we're having. I say, I even told the guys at homey, you need to delete this.
14:17This is not, it's amazing to me how people with moderate and low incomes are worried about rich
14:23people. Cause they were talking about like these arm loans that were like over a million, you know?
14:28And I said, this is the top of the economic food chain in the history of the world. Why are you and
14:34your $70,000 income worried about a multimillionaire's arm loans, you know? And I was just like,
14:40and they, they pushed this story because they said all these arm loans are going to recast.
14:45I hope some of you guys remember this. Cause I was like every single one I went after. I said,
14:49so you think all of these people are poor and they can't take the recast payment, even though
14:54they qualify for it. Yeah, it's going to happen. So here we are 2025. It's the seasonal decline of
15:00new listings and it's the third lowest new listings year in history. We didn't even get to like the
15:06normal trends of 20, 2013 or 2019, where we have new listings ranging between 80 to a hundred
15:12thousand. So first it was the Airbnb crash that failed. Second of all, it was every middle-aged
15:17man podcast stock trader who said, everyone's going to rush to sell their house to take all
15:22their money and protect their. Now it was the arm loans in 2025. Every single one failed because
15:29remember these are not housing experts. They're really, really good doom porn people. Okay. But they
15:34are not housing experts. Why? They have no working models. Come to the chart daddy. Let the chart
15:42daddy do what he does bus. He cooks these people left and right. And then he forces them to forecast
15:47for 20 years until they're dead, until I'm dead. And none of these guys can do it. Right? Go to the
15:52YouTube section. Watch. YouTube is like YouTube comment section is a pit of hell. I literally challenge
15:57these guys to live debates and forecast models. Run away, run away. No, no, no, no. Cowards,
16:04frauds. I understand why the Russians and Chinese Iranians do it. Right? That's warfare. But if
16:10you're American, you should be able to forecast and show your models. Nothing. And here we are,
16:142025, the arm loans, the recast of 2019. I think it's funny because so many of these things where
16:21they're like, oh no, all this inventory is going to come. At the time, especially we were like,
16:25man, it would be great for the housing market if we had more inventory come online. Like it's not
16:30always a bad thing. And in fact, that's why you were team higher rates for a long time because
16:34you're like, we have to get some lower prices. We have to have more inventory. And so I just think
16:39it's funny because everyone's like, oh no, it's crashing. It's like, but more inventory does not
16:43mean crashing. We've said for a very long time, housing 2008 is a mental disease. And that mental
16:50disease has stayed here for a group of people until they're dead. And there's nothing, there's no cure for
16:55this. There's no therapy at all. They can go to therapy for 2008 disease, but they don't know.
17:01They don't. And this is just the way there are some people that are just born in America that cannot
17:05let it go because their fantasy is doom. And without doom to fill that void, that dark black hole in
17:14their stomach, there's nothing for them. So every day they wake up and doom, doom, doom. And I would say
17:21they're born this way. And there's just one group of people since 1913. It's just like,
17:28what a shame. Life was so much harder in the 1700s and 1800s. And now a lot of these people have
17:35single family homes and air conditioning and DoorDash and AI, and they're still, they literally
17:43would not last 10 minutes in the 1700s or 1800s.
17:46You know, I love that DoorDash made it onto the list really. And, and it's very particular.
17:52It's very, because as someone who does DoorDash every single day, so funny, I show my DoorDash
17:58savings, like, you know, your DoorDash door patch savings is $13,500. And I'll put it on Twitter.
18:05This thing has literally saved my life. This is awesome.
18:09We, yes, we have, we've all been appalled at your DoorDash savings. So that's a savings.
18:14But yeah, no, I think this is a good point. Okay. Well, one more thing before we get off,
18:18I wanted to talk about what the jobs numbers were today, since we got the weekly job numbers. What
18:22do you see? The jobless claims data, pretty much kind of around estimates, nothing, nothing
18:29spectacular. Three year, three year continuing claims are still very elevated. Headline claims
18:35is still very low. Four week moving average has picked up a little bit from the lows. So again,
18:40no, no, like initial deterioration where you're going to see mass layoffs. But the, the continuing
18:47claims being at a three year high and still stay in elevated, it just shows that it's a softer
18:52labor market. The GDP revisions came in today. Consumption data picked up a little bit, business
18:57investments fell down. So jobs week is next week. We're going to have, we're going to do a special
19:03podcast on that, but it's, it's, it's, it's just going back to the arm discussion. It just made me
19:09think that what if Trump's policies is just to get as many people as he can in his own fed chairman and
19:14just push rates down. And he doesn't care about the long-term tenure yield and just tries to push
19:20arm loans because they'll get better. What we'll, I will see it, but it, it, I I'm only saying that
19:25because he talked about, we're going to have enough votes soon. So when the president of the United
19:31States basically says, we're going to have enough fed people on my team to, you know, take down
19:37Powell, but Powell's going to be leaving soon. So the fed chairman, whoever the next fed chairman is
19:43really critical. And we want Chris Waller because he'll keep everything in line. He's not going to do
19:48emergency rate cuts or anything like that. Getting the fed funds rate down to 1% with inflation CPI is
19:55that three point that just doesn't happen historically. And I'm not sure. And you know, a lot of people say,
19:59well, Turkey, dude, Turkey is a third world country compared to the U S. So let's, let's be a little
20:04bit context about, you know, we don't have to borrow against the dollar or we're not like a poor country
20:09that when the dollar gets too strong, you know, we, we export inflation out when that happens.
20:14We're the United States of America. So be careful with the Turkey, uh, um, massive inflation, stuff
20:20like that. It's a little bit different here. And again, these are tariffs. This isn't like pandemic
20:25inflation or, you know, in the seventies, if we adjusted to inflation, oil prices would be at
20:30$450 right now. You know, so it's, it's, it's different. It's a, it's a different backdrop out
20:35there, but man, we weren't kidding. July 1st, 2025, we said the second half is going to be lit
20:42and every day is something new happens. And this is why we should have Logan here five days a week.
20:47Every day, something new does happen. So thank you for being on. And I just want to wish everybody
20:52it's Labor day weekend. Uh, hope they have a great weekend. And Logan, it's a big birthday
20:56for you this weekend. You're going to have a big birthday. Oh, who would have thought
21:01and look, he still has, Oh, the hair is just flowing. You know, what's crazy guys think they
21:10could do a, like, uh, so many guys think they can have a hair competition with me, you know?
21:14And I was, and now I always go guys, guys, all I have to do is this. You don't have the flow
21:18in your hair. You put all your gel, you can't do anything out there. So I can honestly say
21:23that until I met you, I didn't even know people guys had hair competitions. So, you know, you've
21:28just opened my eyes to so many things. So there's a, there's an actor, um, the Star Trek actor,
21:33uh, the, uh, Rebecca DeMornay, uh, uh, she actually said on Twitter, I should have a hair competition
21:39with, uh, uh, um, uh, him with the, uh, Star Trek actor, because he, he's known for the best
21:44hair at Hollywood. And I go, uh, still beat him. You know, he he's three years older than me. So
21:50I'll, I'll give him kudos for an older guy. Try to take me off. Well, I hope you have a great
21:56birthday weekend. I hope everyone has a great labor day weekend and we will see you next week,
22:00Logan. Pleasure.
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