- 5 months ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the positive spring housing data that is now at risk with the escalation of the war in Iran.
Related to this episode:
Housing market is poised for growth in 2026 if Iran conflict doesn’t raise yields
https://www.housingwire.com/articles/housing-market-is-poised-for-growth-in-2026-if-iran-conflict-doesnt-raise-yields/
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
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.
Related to this episode:
Housing market is poised for growth in 2026 if Iran conflict doesn’t raise yields
https://www.housingwire.com/articles/housing-market-is-poised-for-growth-in-2026-if-iran-conflict-doesnt-raise-yields/
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
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.
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NewsTranscript
00:10Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about the positive housing
00:15data we have for spring that is now at risk with the escalation of the war in Iran. Before we
00:21dive
00:21in, I want to thank our sponsor, Trust & Will, for making this episode possible. Logan, welcome back
00:27to the podcast. It is wonderful to be here. And just before we went on, you told me to do
00:33my hair
00:34sideways because it looks very Johnny Bravo-ish or whatever that guy is. Johnny Bravo is the perfect
00:41character. Yeah, the hair grows when the volatility grows. And we officially had something that finally
00:50drove the 10-year yield over 450. We talked about earlier this week that it can't stay here forever.
00:56It's got to pick a side. And it's interesting, Sarah, we can't do these podcasts once a day.
01:02We got to do them twice a day because when we're done, something happens. Something happens every
01:07day. And we push up. And I was laughing because one of our fans says, you know, you're always on
01:12Instagram doing videos and Sarah's not there to boss you, so you shouldn't pick on her. You know,
01:16you have your own outlet without her. And I was like, you're right. But I'm still going to pick
01:21on her because, you know, being on here is much different than an Instagram live story. Yeah.
01:28Yesterday, the mines, they brought mines into the equation. I did an AI video of me.
01:35So Iran started mining the Strait of Hormuz, right? That's the news you're talking about.
01:39Yes. And that headline came in and the 10-year yield went up, oil went up. And then, you know,
01:48the discussion of releasing 400 million reserve barrels, you know, it's really how much you could
01:54release a day, that kind of how long this could be. But it's not really changing oil prices much
01:59right now. But what happened overnight while we were all sleeping, three ships were attacked,
02:04right? So you always want to see what creates kind of maybe the escalation yields. I know
02:09there's some bond auctions, treasury supplies, or debt issues that are also happening here. But
02:15that did finally take the 10-year yield toward 415, closed a little above that. And then when the
02:23attacks happened, 10-year yield rose early trading and then is still elevated about 421.
02:31So it kind of made me think, okay, so we have a lot of housing data now,
02:37now that we're in March. And they're all, the front loads are all positive. But kind of what
02:42tilts this maybe to a negative story outside of a positive story?
02:47Well, let's talk about some of those positive housing data stories, right? So you've got
02:53existing home sales, you've got purchase apps, you've got pending sales, all of that's positive.
02:58And that's why if we didn't have this Iran conflict, now we might have higher rates if we
03:03didn't have this Iran conflict, hard to tell. But otherwise, we were having a really good
03:10kickoff into a spring housing market that was the healthiest that we've seen since COVID.
03:14You know, the interesting aspect is, let's say hypothetically, Iran never happened.
03:20And oil is still at $55. And the CPI inflation report came out today as 2.4%.
03:28But we had a negative jobs report. You know, you can make a case that the 10-year yield
03:33would be lower, might not be tremendously low, but lower where rates, you know, could be sub 6%
03:40because, you know, the whole labor over inflation thing. But, you know, we've been in this bull
03:45pattern on the 10-year yield since September. And we've really not had mortgage rates get above
03:52six and a quarter. And that's, you know, before the year started, you know, I only had 237,000
03:58more existing home sales this year than last year based on if rates just stay six and a quarter and
04:04under. So for me, it's, you know, can this actually break this? And what does it look like? And what
04:10if
04:10it just broke it for a little bit and then the war's over and yields go down? So there's a
04:15lot of
04:15things that we already have a lot of data on. Purchase application data positive again today,
04:217.8% week to week, 11% year over year. I think that's five to six weeks of double
04:28digit year over
04:29growth. We've been positive every single week this year on a year over year basis. Always remember
04:34that there is some weekly seasonal flows with purchase application data. I try to show that in
04:39our tracker and the charts that we use. So the year over year growth is good. We'd like to see
04:45more
04:46week to week growth to go with that. You know, the snow impact, all that stuff is gone, but you
04:50have
04:50a positive curve in purchase labs and you have a positive curve in our weekly pending sales data
04:55and our total pending sales data. So all of that has always equaled more home sales. The existing home
05:01sales, you know, again, I'm questioning how the NER tracks some of this stuff, but, you know,
05:06that's kind of backward looking. So we just want to kind of keep it forward. But again, that's still
05:11six and a quarter and under. And, you know, can yields get up high enough to where you can get
05:19above there and then all of a sudden stay elevated for a longer period of time if the jobs data
05:25is
05:26negative or weak? Like, you know, if the jobs data beat estimates in the last report, I easily
05:34probably would have been over 415. But it's a really good conflicting fight on the economic war
05:40side of things that can what how is the Fed going to react and how's bond traders going to react?
05:46Because
05:46it's still bond yields are not, you know, not elevated in any big way. And how long can we keep
05:53rates
05:53low enough for the rest of the year while this conflict still goes on?
05:58That is the big question. You know, it's one of the things about being in the mortgage industry is,
06:02you know, or the housing industry, everybody listening to this podcast, like bad news generally
06:08makes rates go down. Right. When the economy is doing great, when we when we have a lot of jobs
06:14being created, I mean, that's when rates go up. Right. So it is an interesting thing. Like nobody
06:18wants a recession. Nobody wants people lose their jobs. At the same time, if you're in this industry,
06:24sometimes bad news drives lower rates.
06:26It does. You know, it's also still Fed policy had been very restrictive, you know, after the start of
06:342022. Now it's not so restrictive anymore. The argument is how to get to neutral policy. So we have
06:41a lot of rate cuts. And again, we have a lot of mortgage spreads, you know, but in the past,
06:45a lot
06:45of people go, well, it's war, stock selling off, money goes into bond. That really hasn't been working
06:49the last few years. But we're also working from a low level. It really depends on how low you think
06:54the 10 year old. Of course, me, it's 380. With neutral policy, I just don't think you get under
06:59380 unless you really think the labor market's breaking. But this because it becomes a very
07:04complicated thing because it's not just gas prices, it's fertilizer costs, it's diesel costs,
07:12it's food, everything, every time this goes on. And, you know, you're starting to hear rumbles. What if
07:19the Iranians just go, we don't care if you're done, we're not done. Like we're going to make
07:24this so painful that you never do this again. And now that the ships were attacked, now that we had
07:31people getting off the boats because they're on fire, it changes the game plan. I don't know if
07:37the story is true or not, but you know, a lot of ships were asking our Navy for protection and
07:41our
07:41Navy said no. So even Newt Gingrich came on TV and said, if you can't protect the Strait of Hormuz,
07:49then this war is, you know, you know, so it's still very early into this, but I've always said
07:54March 21st, like I'm kind of like, if it gets past March 21st, then, you know, something went wrong,
08:02or there's not a clear end to this story out here. So we'll see how this goes. But we finally
08:11found
08:11something that brought the 10-year yield above 415, close it above there and yields rising. Mines,
08:18boats being attacked, Jack Bauer 24, those things, they were pushing yields up. And again, we're still
08:26kind of in the low end of this bull from September of 2025. It hasn't broken out there. I actually
08:32thought that going into the year, that if the tariffs were gone because of the court and business
08:38had this, all this backwind and tax cuts and everything that the economy could kind of get
08:44back on track, like it did after the first trade war tap dance, that obviously doesn't happen. And
08:48we're not even talking about the 15% tariffs that are supposed to come in anytime soon. So it's a
08:54lot.
08:55It's, this is just way too much drama out here, you know? So housing has been the one sector that's
09:01like, okay, as long as the 10-year yield and spreads are here, we can operate. And hopefully this,
09:07like, takes away that talking point of uncertainty. And okay, you need to, you need to say what you
09:14mean by that, because you and I were talking about that earlier. What do you mean by the talking point
09:18of uncertainty? That consumers are uncertain and so they don't buy houses? So you have people coming
09:23on TV and on social media says that the housing market is being held back because of uncertainty,
09:30that people are not applying to buy. That is not in any of the data, right?
09:36Purchase apps are up. So that's, that's not what you mean.
09:38I mean, I mean, you know, and, and, and, and I, and I say this because the same thing was
09:43said during
09:43COVID, right? Because COVID was the ultimate. There's no, there's no, you know, the butterfly effect
09:50that we used to talk about back in the days, you know, there is no more crazier event. People went
09:54to,
09:55as soon as they stopped hoarding toilet paper, they went buying. So here through January, February,
10:01the first part of March, we had so many crazy stuff. We had no job growth pretty much out there.
10:08We have all these crazy headlines. We have the Iran conflict. We have oil spiking. We have
10:14supposedly AI taking all the jobs now and disinflation from AI and nobody knows where I can find work.
10:22And on top of that, you know, a private credit break, purchase application data positive every
10:28single week, year over year, pending weekly sales, positive. The snow data did impact it for a little
10:34bit, positive. So it's not in the data. And what is the variable that counters that logic is rates are
10:42under six and a quarter. And I say this because what we've seen in the past few years is that
10:47when
10:48rates just get here, when you're working from such a low level, you can grow sales.
10:51Uh, out here, but now, you know, uh, now that the 10 year yield is closed below above four 15
10:58and
10:58this thing is still going and we don't know where it goes after this. Uh, I, I get, I'm, I'm
11:06actually
11:06more concerned about diesel costs and fertilizer and production. Now all these things, because you
11:13have chaos, right in this chaos, something worse can even happen. It just makes it even a bigger event
11:19out here, but for now it's still somewhat in check, at least on the yield side of the story. Uh,
11:26of
11:26course, energy has, has, has spiked up so much. And though those, uh, oil reserves being released can,
11:33can put a bandaid on it for a little times, but you know, you can't, you can't do this for
11:38a long,
11:39prolonged period of time out there. And then you get the midterms.
11:42Right. Uh, coming up. So I think this is really interesting because from the beginning of this
11:47conflict, what you were looking at is like, um, what is the escalation and how is the market? How
11:55are, how is everything going to respond to that escalation? And so at first you're like, you know,
12:00if this is just sort of a one-off Venezuela in and out kind of deal, still not exactly sure
12:04what
12:04happened there, but like, if it's that kind of deal, really no, you know, very short-term, uh,
12:10effect, uh, if at all. And then as it went on, you're like, okay, at what point does the oil,
12:16the price of oil make a difference on the 10-year yield? And that's what you were looking at Sunday
12:20night, you know, and now you've seen an escalation of like, okay, now that, you know, we've, we've,
12:25uh, started mining the straight of Hormuz. And, and the reason that matters is that that's a longer
12:30term issue, right? Like things are not going to be able to get through there for, for a while.
12:35So I would love for you to talk about why you have that deadline. You mentioned March 21st. Why,
12:40what is that about? So to me, it's, it's not the initial start of the war. It's after the first
12:47week
12:48of any escalation of oil prices, gas prices start to pick up noticeably. So right now, this is the
12:55first week of gas prices being up. Now you can say, when does demand destruction hit?
13:00Is it $4 a gallon or is it $5 a gallon? In any case, you've got one week of everything
13:06up already.
13:08Then on top of that, okay, so we have no TSA airline flights are probably going to start to
13:15get expensive soon. And there's not enough, you know, people working on this, you know,
13:19so there's big long lines and everything. All of a sudden, now you got airline flights getting more
13:26expensive. Then you got gas prices going up even more, diesel prices going up, food costs,
13:33the second and third week of those start to embed into people's mindset. Like I look at this stuff
13:3924 seven, it takes consumers a little bit longer to kind of like, you know, when they ever fill up
13:45their gas or if they go to their grocery shop to, you know, stuff like that. So usually like you
13:52need
13:52about three weeks of, you know, inflated input costs or rising costs for that to really like
13:57hit the sediment data. Like, you know, okay. That's why I kind of said March 21st, like,
14:03okay, that's, if, if things don't settle, then that means you've had more than four weeks
14:08of this process. So what's, what's the end goal? What are you trying to do? Obviously the Navy's not
14:14going in there protecting ships, you know, you, you, you're through, you know, a lot of missiles out
14:19there. So what's, and then it becomes one of these things, like what's the next stage. And there
14:24becomes like the oil prices keep on going higher. I mean, how much production can all the, all the
14:31countries hold up, you know, without letting that oil go through, it becomes more problematic. And
14:37after the 21st, there's enough time that's gone by that all those things are kind of in play because
14:41these countries have to stop producing oil because they can't ship it. Right. So, so they,
14:47they, the storage is there. So it, it, that's why I have that 21st date and, and obviously we're,
14:53we're not that far away, but over time people start to see that occur. So you can minimize the
14:59damage as much, as much as you can with reserves and all this stuff. But after that period, it gets
15:05a little bit more hectic. And again, I just want to see how the 10 year yield reacts to the
15:10news. So
15:10for the longest time, it wasn't, wasn't reacting too much. Of course they, they shot up from,
15:15they were under 4% and they, they went up higher, but technically speaking, there's, this is there,
15:20we're still kind of in this bowl and nothing's changed, but it really did. It was the mines and
15:26the boats being attacked, the boats on fire and the crew having to get off. Those are escalation
15:32things that the bond market was like, okay, now, all right, we, we, we get this because if you look
15:38at on the federal reserve side, we have a lot of fed hawks and they're probably, they weren't even
15:42talking about cutting rates, you know, beforehand of this. Right. And now they're just going to say,
15:48well, we don't know how long this is going to be. This could be sticky inflation and we don't think
15:51we need to cut rates. The labor market. Okay. So it's not solid, but we're not losing jobs in any
15:58big fashion. Then you start to, you start to get variables that aren't normal, aren't normal part
16:04of the cycle. You're putting, you're putting chaos cars into the mix. And you, you just don't have
16:09a clear setting going out in the future if this tracks on longer and longer and longer.
16:14So, you know, and you're talking about consumer sentiment, taking a little bit of time to get
16:19there. And if indeed consumer sentiment, you know, gets worse, we'll see it in the data around
16:27housing, right? We'll see it in the purchase application data, but also your point is that
16:32consumers, even with all that going on, if they're homeowners, if they're home buyers at this point,
16:37it's the mortgage rate that makes all the difference. It's not the consumer sentiment.
16:41One of the reasons why the first night, the mortgage spreads announcement or the mortgage
16:47backed security, my first mindset was like, this was a defensive move. Right. Okay. So this wasn't
16:54an offensive move. This was a defensive move, you know, and spreads have kept things calm this year.
17:03Imagine if that wasn't here. Uh, uh, and you know, if oil prices are at 87 and mortgage rates are
17:11above
17:117%, you know, and the fed is talking about hiking rates and the dollar starts to go back. I mean,
17:17the Trinity impact, that whole game plan goes away. Right. Cause they had everything. They had
17:23everything early on this year. They had lower mortgage rates. They had all this, and then this
17:27started. Right. So I'm talking what I've always thought they needed to do to keep things afloat
17:33because job creation is not here. It's been almost, it's almost a year from liberation day or Godzilla
17:39tariff. So, so they need the consumer to feel, okay, gas prices, a mortgage rates I pay, you know,
17:46but the conflict is wild card. Now, if it goes past March 21st, so, uh, uh, we'll see again,
17:54we, we still have a little bit of time, but, uh, last year Godzilla tariffs, even with stocks having
18:00an 18, 19% drawdown, it was really the 10 year yield getting to four 50 to four 60 because
18:06you
18:06can't have equities go down and bond yields go up and people just have a negative. We're going into
18:12recession because you wanted to have tariffs, you know, that doesn't work. This just doesn't work
18:18here. The 10 year yield is behaving much better, but let's say it got four 50, four 60, you know,
18:24uh, um, you know, oil prices are up consumers like really, you know, so that's the thing we have to
18:31think about going out in the future. We have a lot to think about going out in the future. And,
18:35uh,
18:35just one note, I saw that, um, Kevin Warsh is talking to Tom Tillis, uh, Senator Tom Tillis today,
18:41who's the one who said he's not voting on this nomination, unless the DOJ drops their
18:47investigation into the federal reserve. So we'll see if that changes after today. Maybe Kevin
18:51Warsh makes a, if I'm Kevin Warsh, I'm, if I'm Kevin Warsh, I'm staying the hell away from every
18:56camera in the world. Stay away. Do not make a comment because the old Kevin Warsh would be very
19:01hawkish right now today, but it's a new one. Yeah. We've talked about like, who wants this job?
19:06Who wants this job right now? Nobody. Logan, thank you so much. Appreciate you.
19:10And we will see you again soon. See you soon.
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