In a recent episode of the “Real Estate Insiders Unfiltered” podcast, co-hosts James Dwiggins and Keith Robinson chat with HousingWire Lead Analyst Logan Mohtashami to discuss a variety of issues — including pending concerns of a recession, mortgage rates and housing affordability issues that persist across the country.
Mohtashami has worked in the mortgage and real estate industries since 1996, and he takes pride in his ability to quickly decipher data, form opinions and deliver actionable insights for housing professionals and consumers.
To kick off the conversation, Dwiggins and Robinson explore Mohtashami’s background and education before the analyst dove into real estate. Mohtashami says he originally planned to work as a high school teacher and basketball coach after earning a degree in history. His father owned a mortgage company, which gave him a window of opportunity to transition into mortgage lending.
Years later, Mohtashami joined HousingWire before the COVID-19 pandemic struck. Now he actively combats false narratives in real estate while offering quality insights and forecasts on the HousingWire Daily podcast.
Next, the conversation shifts to a hot topic — pending Federal Reserve rate cuts and their impacts on the job market and the overall economy. Mohtashami shares his unique recession prediction model with the hosts. To predict a recession, Mohtashami reviews residential construction job numbers and manufacturing rates.
Job losses and slow manufacturing rates are clear indicators of a recession, according to Mohtashami, and today’s economy is showing early signs of both phenomena.
He also speaks to the Fed’s attack on the overall labor market in an effort to justify pending rate cuts. In other words, the job market needs to suffer before policymakers can lower benchmark interest rates.
“We’re at that stage of this cycle where the Fed, on purpose, went to attack the labor market more than inflation,” he says. “They ran out an old Fed model about being very restrictive until the labor market breaks.
“If the labor market breaks, they go, ‘Hey, listen, we’ve got to cut rates. That’s our dual mandate.’”
Mohtashami says that inflation was never a factor for Fed rate cuts, and the government would have cut rates three to five times by now if it was. Instead, the Fed was waiting for the labor market to crash — and the country is starting to experience that reality now.
Mohtashami goes on to say that the Fed is waiting for wage growth to shrink to 3%, for job openings to reach 7 million, and for the unemployment rate to rise before they make deeper rate cuts. So, at this point, it’s a waiting game for consumers and housing professionals.
Later on, the conversation shifts into mortgage rate and home sales predictions. Dwiggins asks Mohtashami what rate levels are needed to drive the market forward. The analyst responds with a strong assertion that 4% to 6% is the sweet spot for home sales growth. But the market would need to maintain these levels for years before a positive trend emerges for home sales.
Robinson chimes in and voices a concern over rate decreases. He worries that the real estate industry will be too distracted by the recent business practice changes and new agent paperwork requirements instead of offering value to consumers and taking advantage of lower rates before 2024 ends.
Mohtashami echoes his concerns and wonders if the industry has enough manpower on the mortgage side to meet a potential increase in demand. The group agrees that the industry will have to wait determine whether this issue persists.
To close the conversation, Mohtashami offers key tips for solving housing affordability issues. He advocates for an increase in supply to lower rates over time. He also argues for more data-influenced decision making to help homebuilders, loan officers and real estate agents create sound strategies.