- 2 days ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the DOJ investigating the Fed. The two also discuss falling inventory growth.
Related to this episode:
DOJ opens criminal investigation into Federal Reserve and Powell
https://www.housingwire.com/articles/doj-subpoenas-fed-powell/
The impact of lower mortgage rates on housing inventory
https://www.housingwire.com/articles/housing-inventory-growth-2026/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Trust & Will visit trustandwill.com
Related to this episode:
DOJ opens criminal investigation into Federal Reserve and Powell
https://www.housingwire.com/articles/doj-subpoenas-fed-powell/
The impact of lower mortgage rates on housing inventory
https://www.housingwire.com/articles/housing-inventory-growth-2026/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Trust & Will visit trustandwill.com
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NewsTranscript
00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about some of the wild
00:11Fed news we've had over the last couple of days and inventory levels. First, I want to say thank
00:16you to our sponsor, Trust in Will, for making this episode possible. Logan, welcome back to
00:21the podcast. What a crazy, crazy, crazy, crazy time we live in, man. It feels like it's the
00:27show 24. Every day we get some kind of headline news and we're going to talk about, you know,
00:33the inventory data on the tracker first, but then the Powell news broke and here we are.
00:37You know, I just want to say we just got off an hour, a 45 minute long webinar that we did just
00:43for our subscribers. If you guys listen to this podcast and you're not a subscriber, you are
00:47missing out. It is, you get so much with it. You get Logan's trackers every week, plus his takes
00:53on other things. I write a newsletter just for them and they get those kind of special things
00:59where they could ask Logan questions in real time and he answers. So that's a plug for that. But yes,
01:04indeed. Okay. First of all, your hair, your hair has risen to new heights. I don't, I don't know
01:09what happened. It's just like Johnny Bravo hair today. You know, I just made a video talking about
01:13the Powell situation. So just for everyone, it's not a coincidence that the mortgage backed security
01:20market purchases were announced. Then the subpoenas went to the fed. Okay. I'm trying to get people to
01:28connect the dots here because we are talking about mortgage rates got better today, even with the
01:3210 year yield up just one or two basis points. So I think this was a coordinated thing. I was trying
01:38to figure out like, why did they do the mortgage? Was it just, we're getting ready for spring and
01:42everything, but I could connect the dots because right now people are just saying, oh, mortgage rates
01:46are going lower, you know, so the mortgage backed security market is being very heavy right now
01:49on this. And we're talking about three year lows, you know, close to there on mortgage rates,
01:56but there's all this news about Powell. I don't think it's the market cares because the market
02:02doesn't believe that it's going to happen. Cause a few Republicans have already said, I'm not going
02:06to elect a new fed chairman as long as this goes on. So, you know, Trump and them like to do test
02:11balloons. Like I don't think the 50 year mortgage is going to come out now. Cause it doesn't look
02:15like that went well. So it's the world we live in. It's the X variable. Sarah, we said in the
02:20forecast this year, we're just going to have to deal with it. One crazy headline at a time.
02:26One crazy headline at a time. And just to, you know, to make sure everybody knows what's up on,
02:30on Sunday evening, Jerome Powell went on, did a video, a live video and posted it to
02:35the, the federal reserve page where he talked about the fact that subpoenas had been served to the
02:43federal reserve and to him on Friday over his congressional testimony on the rebuilding, you
02:49know, the renovation they're doing, um, on the federal reserve building in DC. And boy, boy, boy,
02:55did that just, uh, that was pretty surprising. Like three minutes after the Niners beat the Eagles
03:01because Hendricks linebacker out of UCLA made that big play. And then I look at the thing. I'm like,
03:06what really? I can't even enjoy this without getting back online. Oh, great.
03:10I think we all felt that way. I, I mean, I, I definitely felt that way. Um, so it's a little
03:15tricky because here's the thing. So, um, like you said, this could actually delay getting a new Fed
03:22chair in, in this weird way. So, you know, uh, Jerome Powell's, his, his term is up. He should
03:27be out in May. But if the, uh, if the Republicans in the Senate are like, listen, we're not, because we
03:34don't like the fact that you did this, this interference, and we're not going to vote for a new one.
03:37He could actually be there longer. So this could actually go against what Trump wants.
03:41Sarah, they could end this with a snap of their fingers. They being the, the, the White House,
03:46the White House could end this if they want to. So if it's going to delay the new Fed chairman,
03:51this, this isn't going to be a thing. That's, I think the markets have already figured that one
03:54out. You've already had enough Republicans make some noise that, uh, uh, this will move on and this,
04:01uh, in the future, it won't be a thing.
04:02So we have a couple of dates coming up that are important. Um, number one, he said that, um,
04:08Bessent went on TV and said that, uh, he thinks that it's going to be right around the Davos,
04:13uh, conference that Trump's going to go to. And that's the 19th, I think through the 23rd,
04:17but it's, it, that overlaps with when the Supreme court is going to hear, uh, Trump has appealed to
04:23the, his, his, uh, case to the Supreme court that he should be able to fire Fed governor, Lisa Cook.
04:28Um, lower court said, no, that he hadn't shown, uh, enough cause. And so right around there,
04:34boy, that that's going to be, uh, that's coming up pretty quick. And those are some pretty interesting
04:38dates. We're going to find out who the next Fed chair might be.
04:41I feel like, I feel like Jack Bauer. This is just basically the whole, the whole,
04:45the whole theme of 2026 is going to be a Jack where the whole year is going to be a Jack Bauer 24,
04:50uh, uh, episode, you know?
04:52No, no, because it is always end up with like someone getting, you know, killed by a lamp cord or like,
04:57you know, the, uh, nuclear weapon. Let's not, let's listen, let's listen, the chart daddy doctor
05:02and Jack Bauer 24, everything. Let's, let's just go with that. It makes it a little bit more exciting,
05:06but yeah, there, again, this is the X variables. We have to take them one, one day at a time and
05:11then just work off of that. Um, but I kind of, I, as soon as this announcement, I said, boy,
05:16they timed that mortgage-backed security purchase right before the news. So, uh, uh, I, I literally
05:22had just made a video about that, uh, stating, I think that's the case, but okay. The four,
05:26the four, we are left with four candidates and one, he hasn't even been interviewed yet. I think
05:30it's Rick Ryder, right? And he's from BlackRock, which isn't that just going to like having that
05:35BlackRock, Blackstone, uh, thing in the mix that could just be so confusing to really,
05:41do you really think Trump cares? Also, I think if he, if he hasn't interviewed the guy by now,
05:47seems unlikely that it does, it does appear like this is going to be Kevin Hassett. Um,
05:52so we'll, we'll cross that bridge when we get there, we'll cross the bridge of Lisa Cook and
05:57everything, because again, the, the federal reserve chairman can, can talk very dovish out
06:01of fed meetings and everything, but he needs votes, right? He needs some way to get rid of the Beth
06:07hammocks of the world and all that. If I'm Beth hammock, I'm thinking, oh boy, this might not be a fun
06:14year. So in any case, we'll see what happens with the Lisa Cook. They will see what happens there.
06:19But for this, I know, I understand it might be confusing, but I really think a lot of people
06:23just say, okay, there's enough Republicans to say, we're not going to elect a new fed chair until
06:27this is resolved. So kind of just, I don't know why they did this now because advantage,
06:33disadvantage, there's no real advantage here. He's going. So, uh, we'll take it, uh, uh, we'll,
06:38we'll, we'll, we'll cross the next legal bridge when we get there.
06:40We will get there. Okay. Let's talk about inventory, which is what you wrote the tracker on
06:44so we had the tracker come back online because we had a data that you trust again, since we're
06:49past the holidays. And what you noticed here was something really different with the inventory.
06:54So let's talk about that. So Sarah, when did the housing market shift?
06:57Mid-June, mid-June, 2025. What's happened since then? Well, nine month high in sales,
07:04NAR is, you know, uh, pending home sale three month high in that calendar month. Uh, our total
07:11pending data is at a multi-year high, just a little bit on a year over year basis, but the growth rate
07:17of inventory, which was at 33%, which I loved. I remember I, people are like looking at me. I was
07:22like, this is the best news of the, uh, of the year, but there's limits to what can happen with
07:26inventory in a market like this. And it looked like it was peaking and then new listings data peaked
07:32late May and new listings data slightly negative still year over year. And then the growth rate of
07:37inventory started to slow. Uh, and then all of a sudden mortgage rates get below 6.64 demand gets
07:43a little bit better, but inventory growth has gone from 33% now to 9.99% on a year over year basis.
07:50So the curve has already shifted since mid-June. So as long as this continues, we just keep going
07:56with that because a similar thing happened late 2022, right? The whole November 9th, everything
08:03changed November 9th, 2022. That's when the 10 year yield made another move lower existing home
08:10sales. Wasn't at 4 million, but we thought if we got to 4 million, you know, the supply and demand
08:14equilibrium changes. Well, we had 12 weeks of positive data. We had one of the biggest month
08:19to month sales reports in the history of America, February of 2023. But what it did is shifted the
08:25supply to find a bottom in, um, April of that year, home prices were up 6% that year, even with
08:33mortgage rates going up toward 8% toward the end of the year. So the supply and demand equilibrium
08:37got hit by that. Now it's a little bit different because the inventory is up on a year over year
08:43basis. We're, we're at least for me, we're back to normal. Uh, um, but rates went lower again and the
08:50demand curve changed and pricing firmed up a little bit. So we, we try to teach the supply demand
08:55equilibrium out here so you can go with a trend. And so far the trend going into the 2026 is the same
09:03that we saw starting November or mid June. And also remember, we're going to have some
09:08difficult year over year comps for inventory growth going out. So if we don't see like the
09:1535 to 33% inventory growth, uh, uh, this spring, that's because the comps are a little bit hard.
09:22And this is what part of economics is, you know, making sure everyone understands when's the comps
09:27low and when are they high. Uh, and in this case, going out for spring, they're going to be a little
09:32bit difficult comps to get really, uh, the same type of growth in, but if it did, if inventory
09:37growth did, you, you get a kick, but so far that hasn't been the same. And that's why the tracker
09:42was created. So everybody can visually see, even if you couldn't read, right. Even if you don't
09:47believe in the reading is a good thing that Logan talks about. Um, the, you could visually see that
09:52there was a shift mid June and that's continued out there. I think the thing with inventory is it's
09:58so, um, it has the effect it's affected by, and then it has an effect on so many of the other
10:04things that we're tracking, right? Like, so if you, if you have, uh, inventory and, and mortgage
10:10rates drop, do you have more people coming in the market? Uh, home prices can go up. If you have
10:14inventory, a lot of it, that's great because people have more choices. Like it's a very complicated
10:19situation. So what the conversation we can't have, because I think it's a stupid one rates can't go
10:27lower because home prices will rise. Literally pack your bags up and go to some third world country.
10:34Like it, could you imagine from 1942 to 2026 outside of, you know, outside of the housing
10:40crash years, there was only two years where home prices declined. Could you imagine saying
10:44we have to have rates stay so high for a very long time because home prices might go up 1%.
10:50This is not the country for you to live in. Just pack your bags of leave. Trust me,
10:54there are millions of people that would rather come here. So the supply and demand equilibrium
10:58is healthy because inventory is much higher than it was in 2022, right? 2020, 2021 and early part of
11:052022 was very unhealthy, savagely unhealthy. I hated that housing market. Their sellers had way too much
11:11control. Now we're okay, right? We're back to normal. There's four months of supply. It's,
11:16it's the chart daddy doctrine. It's the tug of war. But if rates come back down to London,
11:20your, your only thing is home prices might increase 1% or two, just go, just leave. This
11:27is not a country for you, man. But that demand destruction is, is something that could happen
11:33in a very short time. You can't run an economic model off of it, right? This is why deflation
11:37is never considered a good thing, right? Deflation means demand is so bad. It's so weak. Profit margins
11:43will fall for companies, all that stuff. That's why you get a steady level of inflation. Demand grows,
11:49population grows, all that stuff. That's very normal. What we needed to do is get inventory
11:54up. So with a supply and demand equilibrium is buyers versus sellers, right? This is what
11:58we've always wanted. Here we are, go at it marketplace, right? So whatever happens, even
12:04if, even if home prices were positive this year, it can't be, oh my God, we have to jack rates up.
12:08There are a bunch of loser people who think that way, that we have to somehow destroy the economy
12:12just because their token line is, oh, young family can't buy a house. They say this in the 40s,
12:1750s, 60s, 70s, 80s, the 1980s. They said the same thing. Nobody's going to buy a house. So
12:22it's a much healthier year. Supply is up. Monthly supply is up. It's a buyer seller's market.
12:29If rates are at 6%, you know, it's not going to be like this. Home prices are about to escalate out
12:35of control. No. What happened after COVID was an abnormal historical anomaly, right? Our tracker data,
12:42our inventory got to 240,000. That's not good. That was bad.
12:46That was savagely unhealthy. This is why I said team higher rates in February of 2021 and savagely
12:53unhealthy in the start of 2020. But now we're good. Now there's supply, there's demand, there's,
12:57there's this equilibrium and rates are lower, spreads are better. This is exactly what we always
13:02wanted out here, but you can't say, oh, but we can't, we got to raise rates again. We got to,
13:08you know, listen, that's just not, not how the system has worked for decades and decades and
13:12decades. I'm actually excited about this spring home buying season for the first time. And,
13:17you know, last year was definitely better than 2024, obviously better than 2023, but like,
13:22this seems like they're, they're, you know, especially if we can get at that 6% mark or a
13:27little bit lower your, your forecast, the, the housing wire 2026 forecast for rates on the low end
13:32is 575. And we got 599 last Friday. Yes. And, and again, one of the reasons why I can never get to
13:405.75 and under is because mortgage spreads needed to get back to normal, right? 160 to 180. We,
13:45I think we got to like 183. So we're there. You see, you see what the difference of spreads is,
13:51but the spreads getting normal, positive. We have a lot of rate cuts into the system. That's positive
13:55for housing, right? The labor data getting softer, not breaking, right? That's positive for housing,
14:00right? Team labor over inflation. But we also have to be mindful of if we're labor over inflation,
14:06let's say the economy accelerates, unemployment rate goes down, job growth. That's how you get,
14:11you know, the 440 to 460 range in the forecast and rates elevated with higher inventory. That's
14:16how the supply and demand equilibrium works. This is why the tracker was created. So even if you couldn't
14:22read, you could visually see the data out here because if you're, if you're, if you can't read,
14:28but you're, you can see there it goes, let the data run you. Don't this, this ignore YouTube X,
14:35Instagram, so much trash out there, but this is how the supply and demand work. So the fact that
14:41we're seeing year over year growth, slow down, it's not like, oh my God, rates are low and
14:47inventory is going to go back to the lows of COVID and home prices are going to escalate. No,
14:50they're not right. There's just a supply and demand equilibrium mix. And it's a much healthier market
14:54now than it was in the past on multiple fronts. But if inventory did not get to this level,
15:01we wouldn't be having this discussion right now, but it did. It's a positive go at it. Chart daddy
15:07doctrine, tug of war, right? Buyers and sellers this year, let the marketplace work itself out.
15:13This is why I'm kind of like, just let the market endure, right? It's not very, it's midterms this year.
15:19Everybody's going to throw everything, but at least I think the 50-year mortgage is gone.
15:24I think so. We buried it.
15:26That test case, boy. If you could think about uniting the clans in America together,
15:32like the anti-Central Bank people and myself, we just despise each other completely. This is one
15:38thing that we actually agreed on that was not a good thing, but here it is. This is the world we live in,
15:45but we are balanced and this is good. And this is a positive, right? It shouldn't be looked as a
15:51negative. If rates go down and demand picks up a little bit, don't freak out like, oh my God,
15:56prices are going to escalate. Prices aren't going to escalate out of control. Supply is up,
16:00monthly supply is up. We're good. Affordability is still an issue. That's not going to allow prices
16:04to escalate out of control. We don't need to crush the economy to create some kind of deflationary
16:10collapse that some people are talking about. All right. Well, we are going to end on that positive
16:14note. It is, uh, got some good news despite the craziest headlines I can imagine. Crazy headlines,
16:21crazy hair, the Niners beat the Eagles, ball up Juwan Jennings with that touchdown pass. Oh my God.
16:28Just, I'm surprised I got my voice, you know, uh, still talking after that game. I mean,
16:34I think I heard you yelling from Texas. You're in Southern California. That was amazing. So,
16:39all right, Logan, we will talk again soon. Thanks.
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