And welcome back as you guys can see I Have a very special guest and that is Logan Mami did I get that right Logan awesome yeah Logan is the lead Analyst for housingwire.com and he was So grateful to uh you know accept my Invitation to be on the channel to share His insights regarding uh the housing Market and of course a lot of other Topics we want to cover in today's video So welcome Logan it's great to be here Awesome so one thing I want to say Straight off the bat is that if there Was A award for the best um H for the best Hair in real estate you might friend Would win a hats off yes my hair's Taking a life on its own and I'm very Fortunate because my my father and my Brother were both balding in their 30s And uh my uh grandfather on my mother's Side he had a full head of hair the day He died so I obviously took uh the jeans From him yeah so you're seven feet with Air and then like you're like 510 it's awesome uh well yeah it's so um It's such a pleasure to meet you this is Actually the first time we actually had Talked but we have a mutual connection Which is Jim Black my dear friend of Like 35 years which we kind of talk About offline um so yeah thank you for Joining us I know a lot of people get a Lot of value because let me just let's
Just kind of back up you know for those Who do not know who you are can you kind Of explain who you are and what you do At housing wire well I'm the lead Analyst for housing wire I started Working there in 2019 um our family in General has been in banking since the Late 1950s uh myself I was a loan Officer uh uh from about 2003 to 2020 Retired early 2020 I started writing About housing economics in 2010 kind of one thing led to another This was all a tragic accident um I Started to take the work in a more Economic sense not just housing around 2015 and I've just became a giant data Chart nerd out there and uh my role is Just to basically talk about economics In the normal format and I think that's The different thing I'm not here to kind Of do I mean economic Stone right should Be very boring but in my case uh my job Is to basically relay the academic and Economic work in a way that could be Somewhat entertaining but also factual Which in this day and age it's a pilgrim In an Unholy land in that Sense well I have um the way describe Myself as a self self-proclaimed real Estate data nerd and you're the chart Guy so the combination of the of us both Is kind of like the perfect combination Of you know kind of sharing what's Happening in the housing market yes it
Is yes it is and it's it's been very Confusing for a lot of People yeah it's definitely confusing I Mean the volatility over the past Several years we went from you know Record highs to uh decreases in prices The first time in 13 years I mean uh Quite the volatility over the past s Years so um having said that um how Would you kind of describe the housing Market um as we're seeing um right now Actually I'm looking out the out the Window right here I see coyote believe It or not but yeah how would you Describe the state of the US housing Market right now well the existing home Sales Market has been in a recession Since June uh 16th 2022 and when we Think of the existing home sales Market It's a sales falling so much it's Transfer of Commissions um it doesn't mean home Prices are falling nationally it just Means activity is low the new home sales Market is growing since the lows of 2022 So that's that's that's in a normal Healthy spot but I deem the housing Market savagely Unhealthy uh in 2022 was unhealthy in 2021 because active inventory got to a Level that none of us have ever seen in History yeah uh so my concern toward the End of 2020 that home prices could Actually escalate out of control in this
Environment and it did and then mortgage Rates jumped up in a super fast fashion And it created the fastest crash in Sales ever and this was going to take a While to kind of resolve itself but 2024 it's a lot healthier now because Active inventory is growing the days on Market are growing uh we're starting to Get something like a normal housing Market back again so I I'm very happy About this year uh more than for example Last year last year active inventory Didn't really start to grow until the Second half of 2023 and we're trying to Find an equilibrium between supply and Demand and of course uh demand's picked Up just a little bit recently but uh to Me the the housing market really does Need sub six% mortgage rates to grow Sales just like the new home sales Market has showed Everyone yeah that's a same thing that I've been sharing in my channel as well Is that I really don't think that we're Going to see a rush of home sales unless Rates get Below levels we're seeing today yeah Maybe perhaps below 5% because prices Still remain um really high as well Which kind of leads me to my uh next Question the most common comment I get On my channel is like home prices are Too high which I totally understand People saying that um but also um some
People believe that the housing Market's Going to crash worse than 2008 how would You respond to that that's kind of been My specialty um a lot of people know me As like the American bear you know Killer out there running around the Internet and challenging people in the Recession calls but housing 2008 and and The problem we have in housing economics Is that the academic side doesn't do a Really good job of explaining housing Economics to the public and the public Tends to go to kind of Doom porn to get Their information and the housing price Crash people Are what I deem to be professional Grifters not actual data people so their Forecasting and models aren't very Coherent if you look at the history of Home prices going back to 1942 if I took 2007 and 11 out of the Equation home prices only fell one year It was 1990 and it was only 1% and it Was really tilted because Southern California was in in a deeper recession So the economics of housing does not Give you kind of a worse than 2008 uh Backdrop But it really does sell clicks if you Say it does so uh I've been trying to Keep people at Bay as much as I can over The last few years about to stay away From 2008 economics because none of that None of those variables are here um but
If we look back to the early 1980s housing was less affordable back Then we had more inventory we had less Workers we had a recession And home prices didn't fall it's wild so You you you have a situation to where You can compare this to history and that Is the closest I can refer this to but However what happened back then is Mortgage rates went two and a half% Lower and home sales back then went from Two million to 4 million four million Down to two million it crashed and then Home sales started to pick up again and Home sales started to pick up with Inventory picking up and prices inre Increased and sales increase and Eventually household formation wages Grow and you get the housing Cycles We've had for 80 years uh 2007 and 11 Was such a unique backdrop because Foreclosures were actually increasing in 2005 six seven and eight all before the Job loss recession happened uh the Exotic loan debt structures of the the Loans back then Facilitated uh most sellers or buyers Anyway back then was just straight so Many distressed sales we don't have that Backdrop anymore so hopefully that is a Very quick way to explain why Prices Rose in 2033 and Prices rose naturally Still in 2024 the cas shoulder just came Out and it's another all-time high so I
Think for me it's just trying to explain The supply and demand equilibrium of how It works in relationship to the economy The bond market mortgage rates and it's Not the most exciting topic I get it but I try to make it as entertaining as Possible and to get people to follow People that do forecasting and models And kind of the nerdy people um and uh Uh the record speaks for itself you know For the last 13 years we've always had People that said home prices are going To crash and we just don't have that Kind of we don't have the economic History behind it but we don't have the Same backdrops as we did in 2007 to 11 Yeah I think the important takeaway There is like education right so I think The people that think that the Market's Going to crash just like 2008 were Probably not homeowners or buy ERS back Then I'm guessing U because I mean back Then I I purchased a home in 2005 and um the options really was not a Third-year fix really the option because Everyone was doing it was an arm and I Chose a lengthy seven-year arm instead Of a three-year arm fiveyear arm that People were doing um interest only um so We had those uh those loans back then That someone could like just pick a Payment do you want your payment to be The full amount of your principal Interest taxes Insurance Etc or do you
Want this one which is a lot less than That one and by the way don't worry Because making a payment is actually Less than what you actually would owe But we'll just add that to the balance Of your loans so every time every time You making a payment your loan balance Increases because of course back then Home prices increased forever right so It's basically like kind of like and on Top that do the qualification Underwriting standards were like hey can You breathe into a mirror and if so hey You're Qualified it's the 2010 qualified Mortgage law um you know I kind of tour The country now and and I show all these Credit charts and after 2010 everything changed for housing so I Kind of have a simple model with Inventory 70 to 80% of Home sellers or Buyers 20 to 30% uh inventory gets left Over there is one group of home buyers That do not provide you a house it's First-time home buyers Millennials Started to buy in 2013 13 mortgage Demand started to grow in 2014 all the Way up in years 2020 to 2024 at the Biggest housing demographic patch in History so inventory slowly started to Move lower and lower and lower for many Years nobody paid attention to it but Years 2020 to 2024 that's our best Housing demographic patch ever well
Housing broke out actually before covid Even came out but inventory hit all-time Lows so if you believe in supply and Demand equilibrium economics you just Have an x amount of higher levels of Sales but you have the lowest inventory Ever we have over 336 million people in America now we have our Workforce is so Much bigger that is not a very healthy Environment for home prices it's uh it's It prices escalate you know in in the Late 1970s actually home prices grew More from 1977 to 1979 than 2020 to 2022 But yeah and and early 1940s as well the Early 1940s was the hottest home price Grow period uh post World War II but in This context homeowners are doing great Right and what I try to do is I try to Show people the data that is so Different now like for example 42% of Homes in America don't have a Mortgage but when we're talking about uh Um currently the loan to values in America with the people that have Mortgages are under 50% back in 2008 it Was 80 to 85% we had four years of Rising foreclosures and bankruptcies Didn't happen now we are the lowest Levels ever we're just not even pre-co Levels so now it's just a much different Backdrop and that's not the most Exciting topic to talk about because it Doesn't show this massive stress now There's parts of the country that
Inventory is rising there's parts of the Country that has insurance issues but in General context most homeowners are Doing really good yeah I think that's an Important distinction there I mean like The the um looseness of Back in 2005 through 2009 right before The Dodge Frank Act of 2010 was very Very loose you look at a chart um what Is it I think it's Freddy Mack or the MBA or something it shows the the uh Credit availability it's shooting up Right before the Great Recession I think The index was at 900 now it's at like 90 So Basically yeah it's a chart that I use In my conferences the index was running At 400 and it shot up to 9 00 by 2005 And six so during that period of time The the credit channels were just Exploding we had massive massive uh Credit boom and then it went from 900 Down to 100 and it's basically been There for 14 years you know so uh it's Just it was such a once- in a-lifetime Event but it left such a memory to Everyone that they think everything is Going to be the same like that and my Job again is to try to teach history of Economics and try to get people online And hopefully it could Explain 2023 and 2024 as a lot of people Thought the big home price crash was Going to happen in 2023 and they had to
Happen in 2024 and now you know demand's Slightly picking up it's just a much Different backdrop um a good way to look At this is the n has their inventory Data uh traditionally going back five Decades it's between two to two and a Half million active listings well in 2007 it peaked at 4 million we're at 1.35 million today Completely different Marketplace as back Then but I think when people visually See the charts that we show uh at Housing wire all of a sudden people like Whoa and it's a lot of data that not a Lot of people has ever seen you know the Loan to value the the FICO score data The Foreclosure data then it all starts To make sense and I think that's my job My job is to make everybody kind of make Sense of this and take it from there uh And then again it explains our models That we use for housing economics yeah I Think that's great I think the part of The challenge for everyday consumers is That that information is typically not Readily available um so for example like Data from n they only look at the past 12 months if you go to Fred uh charts it Only goes back 12 months so to get to Historical data going back to the 1980s Or whatever it is um if you want to have That access to that data you have to be A realtor if you want for free but as a Consumer you have to pay guess how much
It is A lot and this is why we always say call It500 for an Excel file it's like what So it's mind-blowing so I can look at That and share the data which is great Because I show how like the month supply Back during the Great Recession was like At 12 months I believe just if my memory Me correct I Believe four months today yeah the Average run rate for 2007 to 11 was O Over 10 months if you accumulate them All together so it it's it's one of These things where like I said my Nickname is the chart daddy so I've got I've got 50,000 charts stored in my Computer it's not just housing but it's General economics because I follow the Economics cycle first housing second Yeah and when we overlay the data lines It's if I go back 500 years there's Never been a sector that is more Different than the 2002 to 2011 housing Data versus the 2012 to 2024 housing Data it's it's so vice versa yeah so This is why we have to show H the Historical data not just the current Recent data and then people get a better Picture because I I I know I I I talk to Realtor associations and mortgage Associations across the country and Every time when we're done speaking Everybody just goes oh my God I just Never knew and they take their
Information and they give it to their Clients and their clients go I will Never knew that either so that's the Clarity that us nerds want to provide But unfortunately we live in an era Where you have to like be a little bit Entertaining as well to get the Viewership so uh we have a top 10 Business podcasts in America and it's More it's done in a fun way but it's Also done in a way to where we try to Keep it as simple as possible so Everyone can relate to it and then talk About to their clients with it what What's the name of the podcast housing Wire daily uh Sarah Wheeler and myself We come on every uh Thursday and Monday Out there and it's just it's a fun way To look at economics weekly but we also Give historical perspective that's Awesome because yeah it's it's very Challenging I I'm I first admit my my uh Videos are definitely not entertaining Whatsoever so it's hard to make it Entertaining when you're just talking About like data and like percentages and You know the housing market whatnot so Hats off to you if you can make it Entertaining so you're doing something Right yeah I mean it's it's also done in A in a way that we try to we try to Incorporate what's happening during the Week so people keep up form now the way We track housing data we're like months
Ahead of the N we have a weekly tracker Uh we bring it out every weekend we Track the active inventory new listings Data price cut percentages we Incorporate it to the bond market and Mortgage rates and purchase application Data and by the time you are normal uh Consumers read it in the N or Cas Scher's report we're already four months Ahead and this is why we try to teach People that looking at current and Ford Data actually is more prolific than Waiting for uh the n's existing home Sales or the K Schiller report andic oh Yeah that's the worst I I yeah so so we Do ju numbers like thank you very much For that monage there so it's it's it's Done in a way to keep people Informed so we look ahead we always want To look like 30 to 90 days ahead and the Current data we don't want to look Backwards so then this gives us it Almost gives us an unfair Advantage I Always joke about that that it's not Fair like the data that we know like on Friday night I'm one of the few people On planet Earth that see the weekly data And then we present it on the weekend so Again our job is to teach and when we Teach this then more people get educated About this and then kind of the Doom Porn people kind of are less relevant in That fashion and the my academic nerdy Economists friends don't deal with those
People as much but I have no problem Challenging all of the live dat so like My thing is like I want to see your Forecasts and models and everything Going back five years and none of them Can really do it so I think that's the Way that I try to look and approach this Because if I do my job right everyone Understands it better and they can talk To their family members their clients or Everything and that's the whole purpose Uh uh of my work is to educate and to Teach people you know how to read Economics and and say it in a way that Their clients and and family and friends Could understand better and that's Awesome it's we're definitely aign in That um scenario because I basically Started talking about like the housing Market in the US back in like May 2020 I Was seeing all these videos about how That market was going to crash because Unemployment was at 14% we have all These um what we call it loan Forbearances that everyone was doing Which once they get off they're gonna Crash the market we're gonna see if Foreclosure gave those people a nickname The forbearance crash Bros there you go The crash Bros the housing market Crashed in 2020 20 so I made a video Back then about looking at the actual Data instead of like making a video About how I felt things were gonna
Happen and back then I was seeing that Inventory was just going down and I made A video how like the inventory was Already down before covid hit and then We had covid and then inventory sunk and So I made a video about how the market Was home prices are still going to be Increasing because of all the debt I was Seeing that video got pushed out greatly Because I'm sure a lot of people are Watching videos about how the market was Going to crash of course I made a video Exactly the opposite of that but kind of In line here talking about like what's Actually happening rather than like um I Don't know fear Mong fear mongering or Like speculating about how the Market's GNA crash to get clicks if that makes Sense it is it is it is interesting in The aspect that I've done this for so Long that I've kept every forecast for The last 13 years like what reason was For home prices to crash starting from 2012 and since I've collected everything There's one common theme the people that Think home prices are going to crash are Usually the people that hate the Federal Reserve and they usually have like five Simple sentence structures that they've Kept year in and year out and one thing They don't do is none of them ever Forecast or none of them actually have Any models to to show this so I always Tell people if you really wanted to
Trust a source uh look look at their Forecast look at their models to see if They could explain it and the Doom crash People just keep on saying crash every Single year but it's year 13 now so it's Like a broken clock the broken clock has More economic game so that's kind of how I've I've decided to to challenge this Because in this context we could Actually teach people uh what's going on So in the future they don't have to Listen to people and those people get so Much attention trust me they get Millions and millions millions of views But they're not actually economic or Data people actually you could see it by The way they talk you could see the Chart manipulation they do and really Very little forecasting uh uh no actual Live models to work with yes so I guess Like um you know obviously we've seen Like a lack of like years in which home Prices are going down and you know Overall buyers are in uh you know people Buying houses or refinancing are in Good Financial shape because we're seeing Like high FICO scores for example which Is much different compared to uh the Prior to the Great Recession but I don't Want to paint like a Rosy picture ever Or E either because you know there's a Lot of challenges right now we have you Know near record high credit card Balances uh Del lines on credit cards
Going up as well so um you know not to See like that everything is like perfect Um what do you think is kind of like the Biggest challenges um in the housing Market right now overall credit card Delinquencies are mostly from younger Households that are renters uh house Homeowners on paper have actually never Looked better one of one of the more Popular charts I have is the actually Homeowner FICO score chart and we go Back 14 years it has never looked this Good ever and the average FICO scores of Purchases recently is like 780 like the Top of the top of the food chain renters Though different story renters that you Know just have a high school education Different story renters that didn't Finish High School much different story Unemployment rate is at 7.1% uh for that so there's a buy for Ated Market in that context again the Existing home sales to me is still in a Recession just because demand is very Low uh you need demand and credit to Grow for housing to get that out of a Recession because it's again a transfer Of commission so right now what I what I'm looking for in the housing market And the economic cycle is actually Residential construction workers uh Every recession we've had in recent History residential construction workers Lose their jobs first before every
Recession and this is has been one of The more confusing periods because Everybody was so sure we're going into Recession in 2022 but the builders have been paying Down mortgage rates uh they've been able To grow sales and they've been able to Keep people employed uh while they're Working through their backlog uh so I'm Keeping an eye on that more for the Economic cycle and the housing cycle Because before rates fell this year Housing starts were at near recession Lows uh permits were uh near recession Lows housing construction workers were Not growing at all for many many months But just recently because mortgage rates Have fallen now almost one and a half Percent the builders have been able to Pay down rates grow sales again and now Single family permits are rising for the First time in a few months that's where I'm keeping my focus on because actually If the US goes into recession housing Disproportionately gets hit in a benefit Side because rates go lower and stay There for a longer period of time while Here they're just elevated and can stay Elevated for a while yeah I I don't Really follow too much the construction Jobs maybe I should I know like the um Anyb the National Association of home Builders shares data on that but maybe I Should pay closer attention to that yeah
It's actually on Fred if you go on Fred And type in residential construction Workers it's actually it's a beautiful Chart every recession this thing Falls Uh how there was say during yeah it Falls right before the recession happens Okay yeah and not a lot of people know That construction workers typically lose Their jobs first before the recession so Uh I use that chart to kind of teach Economic cycle work and why we haven't Had a job loss recession yet Manufacturing jobs typically lose as Well because investment the cost of debt Is too much that people can't invest in Projects we see this in the apartment Boo um so in that context I think that Explains the economic cycle which is a Whole different conversation outside of Housing uh but the builders have been Able to pay down rates grow sales Permits are rising again so we're not Quite there yet on the residential jobs Being lost like we saw in 2006 and S What we saw before the tech recession And what we saw before the recession in The early 1990s yeah it's I I I know Like new home sales were just announced Yesterday which was on uh Wednesday and It showed that sales were more l in line With preo levels like around like 700,000 units you know seasonally Adjusted and I'll analyze as well but What really caught my attention though
Was the amount of uh new homes you know Single family houses that were for sale Again that could be a dirt lot home Owner construction or a completed unit And looking at that that data um the Number of new single family houses uh Were basically the highest level except For two months this year the highest Level since 2008 on top of that looking At completed houses over 100,000 that Was like a 40% increase compared to a Year ago in the highest level since 2009 You know is the high level of you know Inventory for brand new houses is that a Concern for you or not oh and this has Been the most confusing data line for Everyone in America there's no story There 102,000 or 102,000 is actually normal um What's happened is that the monthly Supply and this is where it gets very Confusing the monthly Supply is a lot of Those homes haven't even started yet uh And so many so many of the homes are Either under construction or haven't Started yet and it's record-breaking in That data line so when people see the Housing charts uh with that they think Oh my God it's 2008 all over again it's A it's actually not because even in 2008 The completed units for sale actually Never got to 200,000 uh the active inventory in America got up to four million so it's
Not that big but in this context um Everyone sees that and think it's 2008 It's a very normal Market the builders Are killing it their stocks are killing It their sales are growing their profit Margins are very good and that's the Difference you know in that context we Haven't had the profit margins really go Down to where they need to fire people Or not be able to pay down rates so I Always tell people 102,000 completed Units for sale is historically low uh That is out of 146 million total units It's a tiny sliver uh the builders are Still able to sell their homes and as Long as single family permits are rising And new home sales Rising that actually Looks perfectly normal and that Hopefully explains why the Builder Stocks have done really well and a lot Of that is actually not the top Builders These are smaller builders that where They see their inventory increasing so It's a very small portion of the pie Especially when you adjust it to the Population Act inventory really comes From the existing home sales Market not From the new home sales Market just Because those homes go into contract and By the time the house is built somebody Comes and occupies them uh smaller Builders do not have the profit margins As bigger Builders do the bigger Builders monthly Supply is so much lower
Than smaller Builders so that actually Looks perfectly normal in context to Where we are and hopefully that explains Why um you know the majority of all Inventory actually comes from the Existing home sales Market which is just A bigger pool a bigger stock of homes if You look at that uh the 2008 crisis only Less than 200,000 available units we had Four million active listings in 2007 Mostly mostly comes from uh distressed Inventory back then here it's just very Small so that's why I always like to Tell people about the active inventory The historical averages between two to Two and a half million this is nothing It's never going to be a big story Because the builders don't really Supply That many homes to the market going back Decades whenever they see demand get Slower they stop their permits right and They slow things down and this is why Recently uh permits were at recession Levels starts were at recession levels The Builder's business model is not to Over Supply a Marketplace they're kind Of like OPEC when they see demand start To get Wier they stop uh produce like OPEC stop produces oil they stop the Production and majority of the inventory Is still under construction or hasn't Started yet in fact we have more homes That are hasn't even started yet it's Only 10 like 2,000 but that's actually a
Historical high level so it's probably Been one of the more confusing things in The last few years but it's something I Constantly talk about so people could Have an idea that that data line doesn't Really mean that much in the general Housing market uh it does show that Smaller Builders have had a problem uh Not being able to pay down rates the Bigger home builders just have gr gross Profit margins are over 20% they just Pay down rates pay down rates sell the Products their monthly Supply is so much Lower so that's that's really more of a Smaller Builder story than anything in The general housing market so you're Saying that because the the inventory in Sales for brand new construction is kind Of like a small sliver of like the Market this is an effective Market as a Whole you're saying yeah yeah it doesn't Doesn't really impact anything in the General majority almost 90% of all Inventory going back decades comes from The existing home sales Market just to Give you a good example we have a new Listings data that comes out every week Two weeks of our new listings data from The existing home sales Market is more Homes than the builders can provide in One year that's how big the existing Home sales Market is compared to the Builders Builders just don't new Listings you're talking about yeah the
New listings for the existing home sales Market just two weeks of new listings is More than all the total homes available For sale from the builders going back 14 Years or even going back even uh uh uh Uh 16 17 years so it it it it's Confusing because they see the monthly Supply is very high but when you break It down majority of all monthly Suppliers are homes either under Construction or haven't even started yet And that's why you don't have a lot of Total completed units for sale from the Builders in the last few years and even Like a like 80 to 120,000 is normal in That environment and that's kind of how The builders operate because they people See the Builder stocks and they go oh my God this they're killing it but they Don't see these big home sales like they Did in during 2008 their profit margins Are are are are higher and better and They're just taking advantage of the Marketplace because the existing home Sales Market hasn't had a lot of Inventory and their home buyers don't Have sub six% mortgage rat so the Builders are kind of just using that Little you know Hey listen come everyone Come and buy our brand new house we have Sub six% mortgage rates come you don't Need to buy an older home so they've Milked that as much as they can Which is better for the economy in the
Sense that we keep construction jobs Going and build more homes but uh as We've seen housing starts and permits Have been at uh near recessions loads Recently but now that rates have fallen Builder confidence is picking up again And uh there starting single family Permits growing single family permits Growing is a very positive for the US Economy yeah I mean overall Builders are Pessimistic though I mean based on that Survey from the nhb I think it's it's Actually yeah it's it's it's Historically low as long as the forward Looking data grows in that it's positive In every single cycle post World War II And the for looking data it's a Subcomponent of it and this is tilted to The smaller Builders not the big Publicly traded Builders the big public I didn't know that like the survey that Like the census does is it I know it's Based on a survey but you're saying that That survey is basically sent to like Small bilders and not like public yeah Majority of it that's another thing that Not a lot of people yeah main builders The vast majority of the home sales and Inventory right so why would see it's Majority yeah majority smaller Builders Not the big publicly traded Builders and And that's another confusing thing they See the Builder confidence low and they Go how are how's Toll Brother stock
Doing great how I like I said oh no that Survey doesn't have those stock Companies in him they're more smaller Builders so when that survey starts to Pick up it's like Okay it's already on already because the Bigger Builders have uh uh more money to Work with so the last three months the Builder survey has actually picked up Looking out a few months so it's been a Very positive uh data line the last Three months and for the first time in Many months the single family permits Are rising again we haven't had that Happen all year yeah so you're seeing The Builder confidence based on the uh National Association home builders that One just to explain to viewers I think It's like 41 I'm just going by memory Right uh 41 is the last one they do a Monthly survey anything below 50 means That Builders are uh pessimistic Regarding the housing market anything Above 50 means that they're optimistic About building brand new single family Houses it's one of those it's one of Those surveys that if you take the total Number you can miss the rate of change Because during the last expansion when New home sales were slowly growing and Single family permits were slowly Growing it was always below 50 for a Long time uh so kind of I almost tell People kind of ignore the 50 number look
At the forward looking data if the Forward looking data in that survey Starts to go it's a positive for the Housing market positive for the builders So that'd be for permits and starts for Single family hous and for the economy For construction jobs as well jobs as Well okay makes sense all right very Good um couple more questions I know We're running out of time here uh what Advice for home buyers do you have right Now so I've had the same advice for home Buyers for 25 years housing is the cost Of shelter to your own capacity loan of Debt if you ever have to ask someone if You should buy a house you're not ready To buy a house because millions and Millions of people buy homes every Single year they bought millions of Homes in 2008 they bought millions of Homes during covid now that qualified Mortgages in here you literally can't Buy a house unless you qualify so you Have to get yourself into a mortgage Person as soon as possible to figure out How much you can qualify for but also Remember you know your finances better Than anyone you do not ask anybody on The internet you do not ask anybody who Doesn't know your own finances you as a Grown adult know your finances better Than anyone so get Pre-qualified and it's a comfort payment Level the benefit for housing in America
Is that it's a fixed debt cost and your Wages rise every single year um in in That light you know your finances better Than a bank does even if you qualify and You don't feel comfortable don't pull The trigger because you need to be able To sleep with that total housing payment Each night and wake up with it every Single morning and go with yourself Don't let anybody outside influence you Get yourself pre-qualified when that House is ready for you you'll be like The millions and millions of people Every single year that buy homes and That'll be okay and that's the best way To look at housing without any kind of Outside influence you could get from People that might not be looking in your Best interest yeah that's a very good Advice and the other thing I tell people Too is that just because a lender tells You you qualify for a million dollar Property doesn't mean you should buy a Million dollar house look at your Payment look at your finances your Income coming in and figure out what's Best for you and your family about Qualified mortgage is that you can't you Won't be nobody will be ever will buy a House ever again that they can't qualify I mean literally everything gets checked Up and and and this is one of the Reasons why I don't think housing could Ever have a sales boom like we did from
2002 to 2005 that's the positive aspect Of housing that I love so much the Credit markets back to normal it's very Old vanilla lending that's a positive But everyone should realize your own Finances right you you you are G to Sleep with that payment every single day Uh so go with yourself trust yourself More than anyone else and then you'll Fall in line like everybody else every Year for decades and decades and decades Millions of people buy I always have This thing people rent they date they Mate they get married three and a half Years after marriage they have kids they Buy homes typically single family homes That's how it's worked for decades and Now with the Millennials gen Z Gen X Boomer silent you know they've all gone Through these cycles and they all kind Of traditionally been the same except People get married a little bit later in Life people buy homes a little bit later In life now but we're all human beings We're we're we're very predictable in That nature and that's how the home Buying process has worked really post World War II when you break the data Versus every single Generation awesome um last question for You predictions into 2025 okay so as long as the 10year yield And mortgage rates stay below kind of Six and a half housing demand should be
Stable prices will increase slowly um if There is a job loss recession that Happens in 2025 housing actually disproportionately Benefits because mortgage rates will go Lower and stay there longer and you have To think about this a lot of people say That well nobody's going to buy a house Because everyone's unemployed it's a Stupid statement there's over 162 Million people unemployed during covid We had thir 20 to 30 million people Unemployed we had 5 million under Forbearance housing demand came right Back within six weeks why because 133 Million people were working with 3% Rates so in this Context um if the data gets worse for The economy housing benefits if the Economy starts to outperform again rates Stay higher for longer it's very hard For existing home sales to grow in Environment so the economy actually Matters more for housing in regards to Where mortgage rates will go uh so uh to Get more home sales you probably need uh The data to stay a little bit softer and The FED to Pivot more mortgage spreads Are coming down but run the entire Housing year where the 10-year yield is And mortgage rates are besides of that Credit markets look fine uh um we are at Record low levels of sales I I am not Joking when I say this this is the third
Calendar year of the lowest home sales Ever it doesn't take much to move the Needle like in the 1980s uh rates went 2 and a half% lower The builders have shown you the way they Can grow sales but it does need a sub Six% mortgage Market World we're not There just yet we're cracking at the Door but anything to BR lower rates Longer lower for longer that's a benefit For housing just because Disproportionately we have more buyers Into the pool mix the Foreclosure crisis That everybody's talking about just Remember minimum it takes 9 to 18 months To get a home that starts in a Foreclosure into the supply so since We're late in 2025 that cannot be or Late into 2024 it can't be a 2025 story It has to be something in 2026 and 2027 So that's not going to be an issue for Next year but the economy if it does Soften it actually disproportionately Helps housing because it could push Rates lower yeah it's wild because like Inflation is like kind of under control Right now and it was also trans Transitory like a couple years ago but Anyways like the the direction in rates Really have to do really what the FED Does of course but also the the labor Market the labor market starts softening More then rat will be coming down so It's kind of a weird scenario in which
In order to see softness in labor you Need to see rates to fall so if you want To see rates fall you need to see more People losing their jobs basically it's Kind of weird Dynamic it it's one of those things Where if the growth rate of Labor Actually slows more that'll be the best Case scenario you never want to root for A job loss recession but in this case The Federal Reserve is still very tight With their policy um over time the Mortgage spreads will get better uh and With mortgage spreads getting better and An economy slowing down you can get Rates below six% and stay there but We're not there just yet we're cracking At the door uh and this is why I always Was say we track we track the tenure Yield and economic Cycles religiously 247 I mean I I live in breathe this Stuff and uh we've kind of had the big Rate move already before the rate cut I Mean we had 2% move lower mortgage rates Before any rate cut happens that looks Perfectly normal mortgage rates yeah so Yeah that's what a lot of people think Of course rates have gone up since the FED has has has cut but going out in the Future you're gonna need to see softer Economic data you're gonna need uh to See the spreads get better to get Mortgage rates to go lower outside of That uh I if that doesn't happen the
Economy outperforms home sales will Probably stay low again and the builders Will outperform as they can uh push Rates below 6% yeah well said and and For everyone watching today's video the Spread he means is the difference Between the 10-year yield and the Third-year fixed mortgage rate correct Yes and historically that's between 1.6 To 1.8% it got to above 3% last year After the Silicon Valley banking crisis It's moved down to about 2.42% so Mortgage rates today if I took the worst Levels from last year would be 75 basis Points higher today so of course that's A huge difference that means mortgage Rates are near 70% the market would not Be behaving as it is today but in this Context I do think that history has Shown us that when the FED starts Cutting rates and gets more Dage the Spreads get better and maybe doesn't get Back to 1.6 to 1.8 but if it just Falls Half a percent you're five and a half Percent or 5.75 mortgage rates today if The 10year yield Falls you get to low Fives so that's how you get mortgage Rates lower for longer better spreads Doish fed or the labor data getting Softer those three things are the things That I'm focused on for 2025 yeah and The spreads have been so wide between The 10year and the 30-year fix because Of all volatility in the bond market
Correct and now it's like kind of giving A little bit more of a normaly so Without that if we had like a more Historical spread right now then rates Today would be right probably in the mid Fives right now is that right five five And a quarter to five and a half % today As of this morning if if it was there so We're not we're not quite anywhere back To normal but we've made a big Improvement from the worst levels of Last year yeah absolutely well awesome Any last words anything else you want to Um say um always remember economics done Right should be boring um housing wired Uh we try to make it as fun as possible We track this stuff religiously I know It's more fun listening to the Doom porn People but uh we're designed to teach People economics so all of you could Have the real-time information and of Course this last week K Sher index H an Alltime high that's not shocking to us But uh if you're going to make a Personal choice to buy a home listen to Yourself trust yourself be careful out There and uh get yourself to a bank as Soon as possible to get yourself Pre-qualified and then trust me the Numbers will make the decisions for you Because millions and millions of people Are going to buy homes again this year We're going to have near 5 million Total Home Sales last year we had near 5
Million Total Home Sales the peak levels For La the last decade was near Six Million so uh we're still having people Buy and sell homes but uh uh you as an Individual have to be able to have the Best information for yourself and your Finances rather than listen to people With nefarious agendas yeah well said Thank you very much for being a guest It's an honor to meet you in person love To have you back too Logan my pleasure Thank you very much all right thanks Logan and everyone who uh want want to Check out his uh podcast uh Logan if you Can send me a link to that then I'll Provide a link in the video description Below for that as Well go ahead and if you guys really Wanted to nerd out my name Logan motam On Instagram I literally provide almost 24hour uh video updates on all economic Data not just housing and we we call it The nerd family out there so if you Really want to bore yourself with nerdy Information that's another place to find Me well you know where to find it All right well yeah I follow you on Instagram too I mean fantastic um you Know reals you guys you do you make and Everything so really good content so Thank you very much for being a guest on The show really appreciate you Logan and Everyone watching today's video please Like And subscribe and check out Logan's
Information in the link below hope you Guys have an awesome day look forward to Seeing you on the next video [Music]
