February RERU: A Positive Outlook for the 2024 Housing Market

Last month’s Economic Forecast with HousingWire’s Logan Mohtashami set a great tone for the new year! (Missed it? Watch the recording here!)

Here are some of the takeaways Logan emphasized, and if you have questions, give me a call! 

Why This Isn’t 2008 

“We look back in the history of economics for 500 years, and there's been nothing that we have seen where you have still stable demand and low inventory and prices crashing. It does not exist.” 

“Back in 2008, the credit markets were much different...A new bankruptcy reform law was put into place, and a lot of people wanted to file for bankruptcies before that law took effect, and then we had exotic loan debt structure.” 

“How many homes in America don't have a mortgage? It's 42%. We now we have the best loan credit profile ever recorded in history, and we think it's going to be 2008 again? It doesn't work that way.” 

The Fed and Interest Rates 

“Some people think the Fed has pivoted; I don't believe so. I believe they are still extremely restrictive. The growth rate of inflation is falling…but they’re late to the party, and they should be cutting. So things should be better as the year progresses.” 

“Whenever we have stress in the marketplace, the spreads between the 30-year mortgage and the 10-year yield get very wide...The spreads were getting better last year, and then the Silicon Valley Bank issue actually hurt the U.S. housing market...However if we go back four or five decades, the spreads do eventually get better as there's less risk. Mortgage rates can get better faster if the spreads get better, and we never know, the Fed might surprise us by being pro-housing.” 

Labor Market  

“As of right now, the jobless claims data - these are the people filing for unemployment and collecting benefits - it's still very low historically especially against the civilian labor force. If this breaks, I think the Fed should be cutting rates.” 

“We’re getting back to a normal pre-Covid labor market...157 million people working. This is a positive for the housing market.”   

Builders  

“The builders were growing at double digits last year because they could offer sub-6% mortgage rates. Builders are here to make money...to build homes and sell them...so they'll offer lower rates because their main competition is the existing home sales market.” 

“As of today 78,000 is all the new homes that are completed and available for sale. People think millions of homes are coming to the market, but no. Builders don't ever flood a marketplace, but they don't like new homes completed staying on the marketplace for more than three months, so they’ll make deals.”  

Rents 

“Rents are the big drivers of inflation...Renters have a different problem because rents go up. Rents keep going up...you don’t have that fixed cost there.” 

We’ve “Never Looked This Good”  

“The homeowners in America have never looked this good. I come from a family that's been in banking since the late 1950s. You have never had homeowners on Planet Earth have such good nested equity or cash flows.” 

The views expressed in this content are those of Logan Mohtashami and do not necessarily represent the views or endorsement of Atlantic Bay Mortgage Group L.L.C. The content is intended for general informational or educational purposes only and should not be relied upon by you. Information deemed reliable but not guaranteed. Not a commitment to lend. Atlantic Bay Mortgage Group, L.L.C. NMLS #72043 (nmlsconsumeraccess.org) is an Equal Opportunity Lender. Located at 600 Lynnhaven Parkway Suite 100 Virginia Beach, VA 23452.