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What's Happening With the Housing Market · Mortgage Marketing Radio

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Hey, listeners, what's up, Jeff Zimphur, your humble host for this episode of the Mortgage
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Marketing Radio podcast.
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You know the place.
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If you're returning listeners, thank you for tuning in.
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Appreciate you being here.
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If you're new, welcome.
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Glad you're here.
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Check it out.
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Search around some episodes.
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Search for topics you're interested in.
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And I would just say, hey, dive deep, listen to a couple of three episodes in a row.
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And whether you're new or you've been here for some time, I sure would appreciate your
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comments and feedback on the value you're getting from the podcast.
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So if you are so inclined, take a moment to leave us a review wherever you're listening
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to this podcast.
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And we appreciate that very much.
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Before we get into this week's special show, I wanted to bring to you another update from
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the streets, a success story.
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You know, this is the place that we help mortgage originators leapfrog from solicitor
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and vendor to becoming partner and peer when they're approaching, contacting, reaching out
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to real estate agents.
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One of the bigger struggles is, how do I get them to respond and engage and actually have
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a meaningful conversation?
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Well, I can tell you your approach matters, your value proposition matters, who you're
1:01
talking with matters, all of it matters.
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The first question is, in the sea of sameness, in this noisy world, how do you rise above
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the sea of sameness and noise, right?
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You've got to have some means or method by which you can rise above that and attract
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agents to hear what you have to say.
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In our community, we lead with agent classes.
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We teach classes that help agents solve problems.
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We teach classes over Zoom.
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We teach classes in person.
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We partner up with affiliates, a title, a little more into escrow insurance.
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We get in front of agents at scale so we can have conversations at scale to reach the
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agents who are ideally suited for us to become productive partners with.
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Let's face it, would you agree in today's market?
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You need at least double the amount of agents you've probably worked with in the past.
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You need to build your agent database.
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You need to create an audience of real estate agents and engage with them and nurture those
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relationships over time.
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But you need to do it efficiently as a system, not one Z2Z.
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And that's what we do in our community through our my agent classes platform.
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Here's a win of the week.
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I wanted to share with you coming at you again from Carmella.
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What is up, Carmella?
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You are just crushing it out there.
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Carmella is the latest win of the week.
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She's one of the most consistent people we have in our community.
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So shout out to you, Carmella.
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She recently did our Facebook ads for real estate class, all new and updated.
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She had 22 agents registered, 20 show up.
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How long does it take you to get in front of agents, 20 agents, and have a meaningful conversation
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where you get to deliver value and not pitch products and price where you get 45 minutes
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to 60 minutes or more to build, rapport, to have resistance come down and trust go up
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for you to differentiate yourself within 60 minutes, separate yourself from 95% of the
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other originators they've ever engaged within their career.
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Well, that's what Carmella is doing is she's just got this play on repeat.
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She's doing it month in, month out, and she's doing all the things I talked about just
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a second ago.
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In this case, she decided to bring her a local marketing person who is somewhat familiar
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with the Facebook ads to help her put the class on very smart.
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And he's helping those agents set up eight of those agents to properly optimize their Facebook
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business page.
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Yes, folks, Facebook business pages are still relevant.
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And if it's not properly optimized and set up, it's doing the agents of disservice, right?
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And never going to actually be able to run Facebook ads if they don't have a properly
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optimized Facebook business page.
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And so this is a key part of their tech stack and their online strategy.
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And because Glenda's bringing those, I'm sorry, Carmella's bringing those solutions
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to them, right?
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She's winning.
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So she had agents in the room who she had never done business with.
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And she's actually invited them to an additional class while they're sitting in that class.
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So she's again, continuing to stay in front of these.
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What does she say here?
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Eight agents are adding me as their preferred lender.
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So guys, again, 20 agents in the room, okay?
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Three of the agents they've never done business with before.
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Eight total agents, all of a sudden she moves from lower on that pyramid to the top of the
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pyramid of partner and peer by saying, Carmella, you're my girl.
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You are my go to primary, you know, premier loan, originator partner.
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If you got a better method for doing that and accelerating that at scale, hey, let me know.
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If you don't have a method for doing that at all, hey, let's book a call and talk and
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see if this is a right fit for you.
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You go to mortgage marketing.pro, book a call and we'll have a conversation if it's
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the right fit.
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If not, hey, well, part is friends, you keep listening to the podcast, mortgage marketing.pro.
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Okay, my special guest this week is back on the show.
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Last time he made an appearance on our show with July 2020, it was a completely different
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housing market in July 2020, right?
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Let's face it.
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So my special guest is Logan, Matashami.
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Some of you may know him.
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If you don't by now, at the end of today, you will be inclined and motivated to go follow
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him on Instagram, the links to all the things we talk about are in the show notes, but his
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Instagram profile is Logan underscore, Matashami, who is Logan?
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Logan is a housing wire analyst for the housing industry.
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He's a renowned expert in mortgage and housing data.
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He's recognized for insightful analysis and commentary on the US economy in the real estate
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market as a whole.
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As I said, he's the lead analyst for housing wire.
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He's a regular contributor on the housing wire daily podcasts, which you need to check
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out.
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There are links to all that in the show notes for housing wire.
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He's been in this industry for over two decades, nicknamed the chart guy.
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That's great about Logan.
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He has the ability to take these complex data sets and translate them into understandable
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actionable insights for you and me.
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I have a saying is that a lot of originators in real estate professionals know what's happening.
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Some understand what's happening, but few can actually explain what's happening.
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In the market that we're in, with some of the uncertainty, what people seek is context
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so that they can feel more confident in making a decision that's right for them.
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In today's conversation, Logan delivers on that and more.
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I want you to listen intently.
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I want you to rewind.
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I want you to listen.
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I want you to share it with either other colleagues of yours, most importantly, real estate
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agents.
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If you want to help provide some context and education about housing, what's going on
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in the housing market, share this episode with your real estate agents.
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You will get credit for it.
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They will thank you for it and this will drive conversations, by the way, if you follow
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up on that chair and say, hey, what do you think?
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Love to talk with you more about that.
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How can I help articulate what you heard on that podcast from a housing mortgage rate
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angle?
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How can I help you articulate that with your potential clients?
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Here's another question.
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Who have you talked to in the last 30 days or 60 days that might benefit from a discussion
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around what's really happening with housing and interest rates?
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So guys, leverage this podcast in this way.
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Follow Logan on Instagram.
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Go to Housing Wire.
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Subscribe.
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Join the newsletters.
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Join the Housing Wire Plus.
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It's worth it.
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And then make sure you subscribe to the Housing Wire podcast.
7:08
So without further ado, let's get into this week's show.
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Logan, welcome back to the show.
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It is wonderful to be here.
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It's been too long.
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As a matter of fact, I looked it up.
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The last time you were on my show was July 2020.
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2020.
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Oh boy.
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That was actually right in the COVID-19 recovery model period time when I set up the housing
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bubble boys with again, because we had a V shape recovery and purchase application data
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and actually two months later that I created the term forbearance crash bros after that.
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So you have all kinds of cool terms, man.
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Yeah.
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We got to make it, you know, unfortunately, the academic side of economics, not the most
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exciting group.
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We try.
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Yes.
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So when I do these tours across the country, you know, a lot of after the throughs, I try
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to make it as fun as possible and go, you're so much different than your, your economic
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friends.
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They're, they're so dry and, you know, I said, yeah, I got a, I got a spice, spice it up
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a little bit.
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And I think the other neat thing about your style and approach is you do make it understandable
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if you will, right, for the quote, common man.
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Yeah.
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I mean, that's, that's the thing.
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You know, the, the presentations and the charts are, you know, in some ways, they might
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be complicated, but they're, they're presented in a way that to keep it as simple as possible.
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And at least, at least what, what I've seen in the last, I would say 18 months is that
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people go, wow, I first didn't know that chart existed or that data existed.
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And then I draw lines, like I'm known for these, taking these black lines and drawing
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in certain places and just trying to guide people to where they need to look.
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And then after they look to go, oh, I could really tell my clients, this was happening
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in 2008. And this is not happening. And I think if you make things simple that everyone
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should understand, then you know what you're talking about.
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I think a lot of complicated conversations stay complicated and just, it just can't
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get through to the other side.
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And that's the person's fault.
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The person should be able to explain it.
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And that's the old high school basketball coach of me trying out, you know, making sure
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that the kids know how to play defense properly and you got it, you got to make them
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understand.
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Well, I'm glad you said that because I think that's a good transition to our conversation.
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I was doing a class a couple of weeks ago for real estate agents that my mortgage originators
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also give across the country.
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And it was called Master of the Market, how to close 2023 strong and dominate 2024.
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And one of the premises in there is, you know, that a lot of agents or originators understand
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what's going or know some understand, but few can explain, right?
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And I think that's what I'd love to kind of pull out of our conversation here today is
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to help the people in the latter two categories is better understand, but also be able to
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articulate and explain because I think that's what I also wrote down this.
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We'll set this whole frame up and then we'll jump into the charts and graphs and data.
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But I wrote down in these times of uncertainty, this is where I think you have so much value,
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is people are seeking context so they can have some confidence to make a decision.
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That's right for them.
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Do you think that's absolutely because, you know,
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finances, a lot of it, of course, if you're financially could buy a house,
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you know, that's a check mark, but emotionally and confidence is another thing.
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And, you know, if you're always thinking housing's 2008, you're never going to pull the trigger.
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Right? And there are some, there are some, I don't think there's a lot of them,
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but there are some individuals that every year say it's going to crash, it's going to crash,
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it's going to crash, it's going to crash, and then 10 years of your life goes away.
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And you only have so many years in your life, right?
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And this is the part of the things I explain with housing is millions and millions of people
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buy homes every single year, like we traditionally have five to six million homes, total home sales
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bought. And even in 2008, they bought even in COVID-19, they bought.
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So definitely you're shaking a hand of a bank and saying, I've taken a 30 year fix mortgage
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and your family's part of it. So absolutely confidence, context of the data is always key.
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Okay, so what we're going to do through this conversation is help the listener,
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mostly mortgage originator, some real tourists sprinkled in, but we're going to help them
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feel more confident and be able to explain to their clients and prospects about what's really
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happening. So with that said, I saw one of the recent posts that might have just been hours
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ago or yesterday in housing wire, which by the way, we're going to link up all this stuff in the
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show notes. But timely for Halloween, what did you say that the housing market is,
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what was the term? There was that there was a tie in there for Halloween.
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You mean the savagely unhealthy savagely thanks that's actually yeah, you know what that's
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that's kind of my key phrase for some time now. So I have to always explain it because people go,
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what are you talking about? Well, the housing market, what's the one thing that changed in the
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last few years that's never happened in US history role inventory broke to all time lows.
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And guess what? We have 335 million people now and 157 million working. So when inventory
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breaks to all time lows with the workforce, this big, it creates what we call forced bidding,
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right? It's not like credit is booming and we have all this housing credit being given out
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to unqualified homers. We just have normal people bidding against each other. And what it did is
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it facilitated, you know, home price growth to go beyond trend. And it was actually February of
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2022 that I think 78% of the homes in America were being multiple bids on. A march of 2022,
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this is a real stat. We only had 240,000 single family homes available for sale.
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And you know, that was the, you know, February, I said, okay, this is the savagely unhealthy
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housing market. We have to do something or else home prices are going to go up another 20% and,
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you know, that was a concept. And it's just the same thing is here. Too many people are chasing
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too few homes. And this is really the main reason why home prices have held up so well in this
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environment. That's what really gets interesting. You know, when you start having conversations with
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the people because, you know, obviously the mistake we make is let's not follow the narrative
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of the mainstream media because that's all, you know, the sky is falling and everything. But
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there's this interesting dynamic like yes, inventory is low. But demand is also kind of at a
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standstill or pause, partly because of mortgage rates. And yet we're seeing in a lot of markets,
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prices still go up, right? Stellars are buyers. That's kind of the one thing I've always
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tried to stress. And what's occurred is inventory has been slowly moving low and lower for many
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years. And what's happened is traditionally people don't sell their homes to be homeless, right?
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75 to 82% of the people sell to buy another house. So what happened is when mortgage rates got
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above 6% mid July, one of the data lines that we track at housing wire every week,
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new listings data took a noticeable dive lower. And we weren't working from very high levels. We
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were working from the lowest levels ever. So for the last 15 months, new listings data has been
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trending at the lowest levels ever recorded in history. So supplies of function of demand in housing
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because the seller traditionally buys another house. So you can have very low demand, but not have
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the inventory data escalated out of control. Now what happened in 2002 to 2005, we had a massive
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sales and credit boom. But a lot of people don't remember this because they're not nursed,
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they're normal people to have lives. But me, on the other hand, we had rising sales and rising
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inventory. So it was very abnormal, you know, in context to what happened in the last 13 years
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here. And when the credit boom busted, inventory escalated out of control for the first time in five
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decades, not the case anymore because majority people have 30 or fixed mortgages fixed at
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cost rising wages. So inventory didn't escalate out of control. And then toward the end of last year,
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the seasonality of inventory came lower than what occurred as mortgage rates actually fell. And
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because mortgage rates fell, demand got a little bit better. So we're back to the low inventory,
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stable demand thing. And now mortgage rates are going back up again to 8%. Demands getting a
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little bit softer, but where we are historically, we are at very, very low levels of sales, especially
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when you adjusted to the workforce. And we don't traditionally break much lower than 4 million.
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This has been a big working theme of mine for the last decade. So trying to convince people that
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these buyers here are much different than the home buyers when we were at 6.5 million. And so it's
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like the housing market is two cowboys looking at each other, both have keys instead of guns,
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and it's just a battle about who's going to flinch first. And we're not accustomed to that kind
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of marketplace. So the days on market is still 20 days using the NAR data. It doesn't take that
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long to sell just because there's not that much out there. Okay, right. So there's various data
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sources. As you know, out there, you know, housing wife, of course, has got some some great data,
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and y'all listening should go there and subscribe and become a premium member I have. And I've got
16:24
to tell you that like paying whatever that nominal fee is to become a premium member to get access
16:29
to that extra data is definitely worth it, especially if you want to be able to explain what's going
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on. That said, I also use another website where I'm allowed or allowed where you can get this from
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your title reps as well is you know, you can look up like days on market, median, sole price, how many
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homes are over asked versus under. And it's funny. I've been playing around looking at some of these
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different areas around the country, including Orange County. Like, you know, the over ask is still the
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the higher percentage of sales. Yeah, it's the best way to explain this. So one of the things I do with
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the tracker article each weekend is that I'll give the new listings data the active inventory data.
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Those are two different things new listings are the people that put their homes on the market for
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that week. And then the active inventory is up until Friday of the week, you know, we get that
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data. So it's very fresh. And then we give the percentage of price cuts. Now one data line that I
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didn't realize that a lot of people didn't know one third of all homes have price cuts year round.
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So a lot of the kind of the trolling grifters in America, they take the red fins price cuts or
17:34
Zillow price cuts and they go, oh my god, home prices everywhere are crashing. That's not the case
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because you always have one third of price cuts. Now this year price cut percentages is 4% below
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what it was last year. So how do I explain that? Well, last year we had the biggest home sale crash
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ever in history from six and a half million trending all the way down to four million. It took three
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years for that to happen from two thousand five to eight. So the velocity of data was much faster. But
18:02
here, even with home prices higher and rates higher, the price cut percentages lower. And that explains
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part of why pricing isn't crashing this year. We just don't have the same type of market that we
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dealt with last year. Okay. And this is, I mean, it goes against the traditional narrative. I think
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that you see out. Let me give you an example. I was talking to somebody or you probably see this
18:26
on social media. So I'll post about this the other day. And somebody said, you know, basically to the
18:31
effect of, you know, when when rates quote come down, let's say they come from eight to seven,
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even six, let's say, you know, the presumption is we're going to see a flood of inventory happen
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when that occurs. And I want to get your take on a second. But somebody I was talking to,
18:48
who's a very well seasoned housing investor owns lots of property was presenting the case that,
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Hey, if if I'm a seller and I'm sitting on sub four percent, like I need a really compelling
19:01
reason to sell in six or seven percent, isn't it? So this is a, this was the 2021 premise.
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At toward the end of 2020 and early 21, many people told me that mortgage rates are down.
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Nobody listed their homes during COVID. We're going to get a massive wave of new listings data
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and people are going to sell their homes and it's going to flood the market and home prices
19:24
are going to crash. New listings data in 2021 was trending at the lowest levels ever with three
19:30
percent rates. New listings data in 2023 with seven to eight percent rates are now in effect
19:37
trending at the lowest levels ever. There is nothing in the data we have seen after 2010. And the
19:43
reason I use 2010 is qualified mortgage came into play after that. That actually shows that lower
19:49
rates creates more active inventory. What we have seen in the data is that higher rates actually
19:54
create more active inventory because the days on markets can grow and active inventory can
19:59
accumulate. That's what we saw last year in our weekly data. That's what we saw in 2013-14. That's
20:05
what we saw in 2018-19. Nothing big in real terms, but that works. But the thing with rates going
20:12
down in new listings is that the sellers of buyer, so whoever puts their home on the market,
20:18
they've already talked to their mortgage professional. They're already pre-qualified and then
20:23
the demand is there because naturally the entire buyer pool picks up because rates go down. That's
20:29
what we have seen after 2010. So I hear this narrative all the time. It's never happened. In fact,
20:35
Sarah Wheeler and I and our podcast, we have this ongoing debate. She calls it a mortgage rate
20:40
lockdown. I don't believe in that concept entirely. I think there's more variables in play.
20:46
It is not so much. People have to move every single year, but the people that are moving are
20:51
qualified. So if you look at it in that light, you could maybe understand that why inventory
20:58
is still negative year over year. We're literally sitting here a few days away from Halloween,
21:03
and inventory is still negative on a year-over-year basis because whoever's listing their homes,
21:09
not all of them, but majority of them right now, as long as the economy is still expanding,
21:13
are putting their homes in the market. If they get a buyer, they're going to buy another house.
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That's 75 to 82 percent of the market. There's another group that has to sell because they lost
21:22
their job or their investors or they're taking the profits or they're selling to go rent,
21:27
but that's not the majority of the market. So there's this natural equilibrium with supply and
21:31
demand that nobody has really talked about for a very long time because I think so many people
21:37
are used to. Demand goes up, inventory must skyrocket, and it hasn't been here for 13 years.
21:44
Demand goes down, inventory could slowly accumulate higher. That has been the case. As long as the
21:51
economy is expanding and people are employed, they sit in their homes and so much of my work over
21:56
the last few years, but especially the last 80 minutes, what was the best hedge on planet earth
22:01
against inflation? America's 30 year fixed mortgage. Why fixed debt costs, your wages rise during
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an inflationary period, your wages rise more. All my housing costs is very low. People have been
22:12
living in their homes longer and longer. 1985 to 2007. It was five to seven years from 2008 to 2023.
22:18
It's been 11 to 13 years depending on who you listen to in some parts of the US 15 to 18 years.
22:22
I've lived my house for 20 years. My total wages versus my housing cost is very low. So it's not
22:29
only a hedge against inflation, but the Federal Reserve is hiking rates, trying to create a recession.
22:35
The best way to fight Jerome Powell was your 30 year fixed mortgage because the one thing they
22:39
can't break is that fixed debt cost. That's another reason why the effective rate of where
22:47
everyone has their mortgages is so much lower than the nominal rate that's out there right now
22:52
for buyers. So you don't have the urgency to move or you just have people who can't afford to move.
22:59
And this has kept inventory levels low. And part of this is the qualified mortgage changed
23:05
everything after 2010. And the charts really show the historical differences between 2000 and 2008
23:13
versus 2012 to 2023. You couldn't have two more different housing cycles ever in history.
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And a lot of that is credit, you know, credit channels run inventory channels. So people just buy
23:25
homes. They live in their homes longer. They're doing very well. They don't necessarily act like how
23:30
I say middle-aged men's stock traders middle-aged men's stock traders will sell their house in a second
23:35
because they're on margin. Nobody's on margin on their homes. You can't get a margin call at 12 o'clock
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on your house and you have to sell it, right? So two different kind of mindsets and a lot of those
23:45
people that think people are going to rush because I've done the dealt with this for the last two
23:48
years. We're going to rush to sell our homes to get out because we got to get our equity. Okay,
23:52
where are you moving? Right. Right. There you go. Where are you going to move that the cost of
23:57
housing is the same or lower? A lot of people would have to rent higher than what they're paying right
24:02
now. What about this debate? I've seen a couple articles pop up recently about this that let's face
24:08
it quote unquote, right? We've reached a place where renting is less expensive than buying more affordable.
24:15
Rent has been better on the nominal side for some time now and my argument has always been that
24:23
one-third of the society are what I call lifelong renters and their wages do not support home buying
24:31
unless they're a dual household income. So now we can see it. Housing affordability got hit so
24:39
bad that it created the biggest crash in home sales because home prices escalated out of control
24:44
and then mortgage rates escalated out of control and yet even today we're going to probably end
24:50
the year near five million total home purchases just because there's a certain group of people that
24:56
buy homes that have the dual household incomes and for them owning a house and raising their families
25:03
or downsizing is more beneficial than renting. So we're always going to have that to be the one-third
25:09
of the renting profile because rental deflation in major terms doesn't really happen in America
25:17
because most people are working in renters. You basically have to live somewhere if you can't rent
25:23
then you're homeless. So that group can pick up some in the sense that maybe first time home buyers
25:29
can't afford to buy but you don't usually see well I have a very low housing cost. I'm going to sell
25:34
my home and go find somewhere to rent because a lot of homeowners just have a lower cost of living
25:40
than what it is out there to rent and also it's not the most fun thing to move.
25:47
Right you know I make a joke I said imagine a husband telling his wife honey we're going to go sell
25:54
and we're going to go rent somewhere and then we're going to time the market and Jimmy has got to go
25:59
to another school but we'll you know at some point that home prices will crash and then we'll get
26:03
back in your wife's going to slap you your kids going to throw all their toys at you you're going
26:09
to be sleeping on the couch until you change your mind so that conversation doesn't usually happen
26:14
unless somebody financially has a reason to move to rent or something in that nature so that rent
26:21
gap is so much higher just because home prices accelerated out of control mortgage rates
26:26
accelerated out of control and we see it in the demand data as demand has fallen so much so it
26:31
makes sense in that regard to what the sales data we see. Okay so yeah they refer to that as like
26:39
what the 3ds divorce diapers death something like that as far as you know like you you've got to
26:44
find they're really motivated in this and that has been happening every single year and inventory has
26:48
been falling for 13 years really so I know a lot of people say death divorce and everything
26:54
and inventory has been the channels have been slowly moving lower for over 13 years because there's
26:59
not that much of that group and this is why I've always say that the housing tenure story which never
27:05
gets any love is still one of the reasons why people are staying in their homes longer because you know
27:10
we always have people dying each year their homes got to go to probate we always have people
27:14
divorcing well you know in some cases even in divorce they're going well we don't want to sell
27:19
this house because you get a house at 8% and you got you know so that is always going to be part
27:25
of every single year but it's not as big as people think and that's one of the reasons why
27:30
total act of listings have been falling for 13 years in this country. Okay I think this is a good time
27:35
to pivot for a moment we'll come back to forecasted rates after this little segment but being a former
27:42
mortgage regenerator yourself all right if you could take a moment and act as if you are
27:48
originating today how are you navigating what are you saying who you know to both your realtors
27:53
and potential buyers and prospects how are you finding the motivated getting people off the fence
27:58
right giving them the context to feel confident. I usually say the same thing when I was in
28:05
hello I would say housing is the cost of shelter to your own capacity to own the debt you know better
28:12
than anyone else when you're ready to buy the house so that total payment should be the final
28:19
determination because I don't know you that well personally but you know yourself and your finances
28:24
better than any bank or anybody so this way millions of people are buying homes this year why
28:30
because they're ready and when you're ready you don't need to ask me you just get the process
28:36
starting and then you're part of that five million total home sales that we're going to get from
28:41
new homes and existing homes and in that light you yourself know the answer to buy now of course
28:48
a lot of people say I'm waiting for rates to fall down because I want a cheaper price then you're
28:52
you're doing what's your what's best of your own interest and we saw this last year when rates
28:59
started to fall from 7.37% down to 6% guess what happened we had three months of positive purchase
29:06
application data what happened it gave us one of the biggest month-to-month home sale prints
29:11
ever in history we almost had almost 600,000 homes bought at one month that's very abnormal
29:16
so the buyers are there I mean we have 157 million people working 335 million population the
29:22
housing demographics are unbelievably good now because ages 28 to 35 were the biggest in US history
29:28
but you yourself have to you know tell your clients when you're ready trust me you'll let me know
29:34
and we just get people as prepared as possible because boy everyone jumped on the market you know
29:41
last year when rates started to fall so now some people say oh you know what home prices are higher
29:47
well when when you're ready to pull that trigger you got to be ready to pull that trigger
29:51
so all you have to do is give them the best amount of information it's possible and keep them
29:55
updated as possible so when they're ready you got to jump on it because guess what hunger
30:00
hunger hippo game again you don't have that many active listings out there and it's not 100% sure
30:05
that you'll even win that bid when rates fall or when that payment level is so you all you could
30:10
do is prepare your clients for the best possible situation for them to win and then trying to deviate
30:16
from that is you're kind of doing something that you're not supposed to do you just get them ready
30:20
it's like your coach get them ready to go out there and play that game and when they win this game
30:25
time you got to get that deal in the pipeline as soon as possible yeah very interesting
30:32
lot going on in that because you know well enough of course that you know each hike of 1%
30:38
interest rate reduces the buyer pool right x amount of millions of people just based on a
30:44
qualification or whatever that number is we just we know it does so there are simply some people
30:49
or less people that will available to qualify at 8% right yeah every every every one percent up
30:56
every one percent down the qualification the demand factor gets less with 1% higher it gets more
31:04
and again also you can have a lot of people that are qualified to buy but it's not their time
31:09
right so you know some of that gets pulled into and there's some people that you know hey listen
31:13
I've got to I've got to buy a house because I need that extra room but the thing now is the
31:19
qualification matters right there's no more exotic loan debt structures if you're in it you're
31:26
in it and you're legit so the job is to get people prepared and ready in the realities of what
31:32
it is to own a house these days because it's not just a mortgage rate you know property taxes
31:36
insurance everything you you got to get prepared as soon as possible well like what you said
31:43
in the context of if you're an originator listening to this what do you do right now
31:47
you I think you simply double down on being engaged right via content via education be present
31:56
help educate both referral partners and prospects and clients and you know kind of what you alluded
32:01
to earlier is which is you know you do your your fiduciary responsibility and you know if it's
32:06
not the right time for them it's not the right time right you're not going to force that we've
32:09
got no Negam arm loans to force people into you know no everyone's legit and I think I think in
32:16
this day and age especially now that social media has been created if you don't engage with your
32:23
clients yeah someone else will well that's what I'm saying is like you're saying you know so
32:30
what do you do as an originator right stay present stay engaged because there are people people
32:35
when they're ready they're ready they're going to jump off the fence but who do you want them to
32:38
think of first right is so don't just do the prequel and disappear right maybe a lot of this is
32:45
a timing issue right it is a timing issue and I would say that you know the the the more you put
32:51
into making sure everyone is informed and more engagement the better people you would attract
33:00
to stay with you you know when I when I started to do this as an L.O. I had no intentions of being
33:05
an analyst or anything like that but when I started to write about economics people were you know
33:10
still okay Logan you know he's a loan officer you know what I have a cousin that you know it wants
33:15
to buy home in California as long as you make an effort to keep engaged they will know you or they
33:21
will come to you or they will stay with you and now you know having 160,000 social media followers
33:28
you know I've got to keep them engaged by giving them content every single day 24 hours seven
33:34
and then they stay so when the time comes boy well what's going on in the world I'm going to
33:40
Logan's Instagram page because he's got a video up and ready and he's going to explain something
33:44
so you always want to if the market cannot give you demand that doesn't mean you rich you know
33:50
retrench back and then you become a ghost you know you have to make yourself accessible and
33:56
and to your clients in that matter so they don't forget and when it's ready when they're ready to
34:02
go you got to jump on that right away so it's a hard market when you sense demand is not there
34:08
but you don't want to back out in that time well yeah and by the way real quick if you're not
34:13
following Logan you need to link is in the show notes on Instagram it's Logan underscore
34:17
Matashami we'll put that link in the show notes but make sure you follow them there it's got tons of
34:21
great content yeah 100% stay engaged stay present because if you there's no such thing as a secret agent
34:28
right no how much of this then you know this adjustment of of rates you know is a new normal
34:37
or we have to settle into the new normal so one of the things I do with rates is I don't really
34:43
talk about mortgage-backed securities I talk about the tenure yield and I always say that if you
34:47
take a chart for the tenure yield and mortgage rates go back to 1971 these two have been a love
34:54
couple they've been slow-dancing with each other since 1971 all the way down to 2023 now when
35:01
the spreads get bad right now you know they're not slow-dancing close enough but wherever the
35:07
tenure yield goes mortgage rates will follow right the spreads can be bad you know the spreads can
35:12
get better of course where the spreads are really bad only 1980 and 1982 recessions with spreads
35:18
but traditionally they move together in in that light so this year one of the things I had to do
35:26
is I didn't believe mortgage rates can really break under 6% because the labor market to me
35:31
mattered more than inflation the growth rate of inflation was going to fall no matter what just
35:35
basic arithmetic but I had to stress so much that I didn't think the tenure yield could really
35:40
break under 3.37 that I had to bring Gandalf I literally not even joking I brought Gandalf to
35:46
great early in the year I said you shall not pass and the damn thing tested the level eight times
35:52
I don't like my god you really don't want to pass you know so the labor market is better than what
35:58
people think and to me jobless claims really runs the show so what's occurred is you know today
36:05
economic growth was 4.9% jobless claims have been slowly falling for many months the tenure yield
36:11
has been rising in that environment we are at what I call very restrictive policy right now even
36:17
the Fed has talked about it before the before the last move up in bond yields the Fed was telling
36:22
everybody hey listen we could cut rates next year because we're really restrictive right now
36:26
if the growth rate of inflation falls we'll cut rates and then they ruined everything by having a
36:32
very hawkish Fed meeting and then technically if you're a bond trader you short the market in that
36:37
and bonds can escalate and that's what happened so right now we're in very restrictive policy the
36:43
history of economic cycles and what I mean by restrictive policies the tenure yield note is
36:48
higher than what the growth rate of inflation is or the Fed funds rate is higher than what the
36:52
growth rate of inflation is so it's restrictive in the Fed's model next year has a better backdrop
36:58
of rates falling than this year because the labor market will soften up labor supplies slowly
37:05
rising but when it starts to break jobless claims will break with it what happened early this year
37:10
is that because of the banking crisis people thought we're going to you know the Fed's going to
37:14
cut rates sooner than later and we're going to go into recession once the banking crisis stop our
37:19
spreads got hit bad so in a sense the banking crisis for the economy still kept intact but the
37:25
mortgage market had to deal with worse spreads then you know the economy kept trucking along and
37:31
it's not just us here in America global bond yields are much higher than ever so you can't have
37:36
global bond yields high in the US economy still expanding and think mortgage rates are going back
37:41
to what we saw in the previous decade but next year the labor market softens up a little bit more growth
37:47
slows down a little bit the growth rate of inflation falls then you have a more concrete reason
37:53
for the tenure yield and mortgage rates to fall for me jobless claims is the most important
37:58
economic data right now and my key level is 323,000 on the four week moving average today we're
38:03
about 210,000 when that breaks the bond market will get ahead of the Fed the Fed will do what they
38:10
usually do they're old and slow that's what I call them and they'll be behind a curve but the
38:15
tenure yield will start to go lower mortgage rates to go down so people say well here comes a
38:19
recession right nobody's going to buy house because millions of people I said okay cute
38:26
back in covid we had 20 to 30 million people unemployed we had 5 million in four
38:30
bearance people buy it cut my economic price it Logan you're crazy you think who's going to buy
38:35
this home when I'm thinking oh you forgot the 133 million people behind me that are still working
38:42
right if home sales are at 4 million any kind of increase in demand raises sales right and that's
38:46
what happened six weeks the purchase application data rebounded so now if the labor market breaks
38:52
you got over 157 million people working assume like the Fed gets what they want 2 to 3 million
38:58
people unemployed that is 154 million people working with lower rates so they all don't buy homes
39:07
but whenever rates fall it disproportionately helps the housing market whenever rates rise it
39:13
disproportionately affects housing in a negative way last year was a great example we had 4 million
39:19
jobs created didn't matter mortgage rates spiked out of control prices were high demand hit but it
39:25
also works on the other way and credit really can't get tight anymore like it did from 2005 to 8 you
39:30
know everybody's 30 year fixed Freddie and Fanny are in conservatorship the credit will flow so much
39:37
different backdrop in that light but you do need that 10 year yield to fall to have mortgage rates fall
39:42
with it so just to be clear you like the dance of the the the not the feds funds rate for
39:51
for trailing or tracking mortgage interest rates it's the 10 year yield and what goes into that
39:56
economic data inflation expectations you know those things to me the fed funds rate of course you
40:02
know we had inflation rising in 2021 and going into 20 to the 10 year yield didn't really go into
40:11
a full expat or rising until the fed pivot happened and then global inflation took off as well so
40:16
it was a much different ballgame after March of 2022 but here where we are now
40:24
we're very restrictive policy right now the fed in the fed in a sense if it was honest with everyone
40:29
they would be talking about cutting rates earlier so the next fed meeting is actually going to be
40:34
very interesting because they should be changing their dot plots and everything because
40:40
they messed up they did not need to do the hawkish tone and it blew up on them that's why you see
40:46
fed presidents hey listen we're not going to raise rates we're not going to raise rates you know so
40:51
that falls and there's the comma which is we're not going to raise rates but if we do they just
40:57
they just oh my god they're so frustrating just shut up you've already hiked rates right
41:04
rate of inflation is falling this is the this is the problem here because what the fed did and this
41:10
is the honest truth they were forecasting a recession this year because then they said you know we
41:15
can't have the growth rate of inflation fall without a recession because they were running their
41:19
1970s model okay this is a global pandemic the history of global pandemics very inflationary
41:24
than the disinflation part happens so now with kind of egging their face the labor market is still
41:30
tight based on their mark metrics and we had you know good economic growth and the growth rate of
41:35
inflation is falling in fact the core PCE data that the fed tells us to track on the GDP numbers 2.4
41:41
percent we're almost at that two handle with the labor market still intact so they kind of messed up
41:49
and they don't really know how to like get out of that so they they're keep on hawkish hawkish hawkish hawkish hawkish
41:55
so they overdid it they can't just take the back I always say land the plane Jay just land the plane
42:01
you don't need to do this and they did and it just oh you almost like take this mic and just throw
42:06
on a wall like come on right what was the point of that he's not a good poker player right he's
42:11
kind of rivet man too much yeah I would if it was me I'd take every fed president just put a
42:17
taper on the mouth for the rest of the year and just go just shut up and just let the ball
42:21
market let the data go and just stop rooting because one fed president says one thing the other
42:25
says the other it had the bottom it and it's just like all right glancing over here in the last
42:31
few minutes that we have at the MBA forecasts they just of course had their annual meeting I don't
42:37
you've probably looked at some of this data but for the listeners who may not know according to
42:42
the MBA forecast for mortgage rates to end 2024 at 6.1 reach five and a half by the end of 2025
42:51
demographic fundamental still support housing demand and lower rates will improve housing
42:55
affordability and unlock some housing inventories is more owners become willing to give up their
42:59
current rates and list their homes what do you say so no I would rather drink chlorox than to do
43:05
a two-year forecast so that's why I you know I mean the yearly forecast I do but I begrudging
43:11
I'm a weekly guy so we track weekly data more than it's so dynamic today right it's yeah yeah
43:16
it's just like could you imagine like all like remember all the people that said home prices
43:20
were going to be down 10% this year and 10% next year right and they're like six months later oh
43:26
you know so youth the market doesn't care how slow you are because the market will move without you
43:30
so for me it's we can get down to six percent mortgage rates but the tenure yield has to
43:37
retrace the labor market has to soften the spreads would in a sense get better so I would follow
43:45
jobless claims data that's the one data line that reverse to the positive as the as rates were
43:53
running higher so it the where the tenure yield has is still a little bit higher than I believe it
43:57
should be but it made sense with the labor day when the labor of data breaks then all of a sudden
44:03
oh the growth rate of inflation really matters now because the labor market's getting softer the
44:07
Fed changes its tune because then they become a dual house dual mandate Fed where it's just
44:13
price stability in the labor market they don't want to or they we're not going to do that until
44:17
the jobless claims rate you can get in the six handled next year not not a problem the only way
44:22
that doesn't happen is the economy stays very firm the labor market stays hot so better economic
44:28
data means rates could stay higher for longer softening of the labor market means the 10 year
44:34
ago and really we saw better data at the end of last year the early part of this year with
44:39
6% mortgage rates so you don't need to wait down to five or get under 5% and then we take it from
44:45
there and then the history of bond markets and rates you know we've been in a downtrend for like 800
44:50
years right so do does the demographic deflationary aspect of all of earth go back to normal I believe
44:57
in time that gets back to normal unless you have like commodity wars or stuff like that
45:02
so global pandemics I think a lot of people just because nobody everyone's normal it's not a nerd
45:09
global pandemics are very very inflationary early on and then the disinflation happens to go back to
45:14
what was normal war has this as well because the supply chains of what we produce as good
45:20
as services during wartime changes as well that's more world war one and world war two things are
45:25
different right now so inflationary period disinflation period especially like with rents
45:32
rents go really inflationary 1918 to 1920 then the disinflation happens that we're seeing that
45:37
right now shelter inflation rents drive that so there's a lot of good variables for rates to fall
45:44
next year labor market softens up that's your model right there this year I just I know a lot of
45:50
people thought because the growth rate of inflation was falling that that mortgage rates would fall
45:54
with it what the growth rate of inflation is falling but global bond yields and the labor market is
45:59
still too high or too strong too and that's the reason why we weren't able to really break under
46:05
six percent that's why the Gandalf line was created and I could bring the Gandalf line to my high
46:09
level at four and a quarter on the ten year yield once the labor market gets softer but we're not
46:14
there yet it's a it's a more probable variable in 2024 well to put a cap on that for those that
46:22
want to you know geek out which anybody listening should once again understand um you know what's
46:27
going on uh and how to explain it most importantly so I think today's been helpful for that but
46:31
one last note is back to the NBA forecast is I guess this is the bright side you know to your point
46:36
about everything you just said with softening of the labor market etc and kind of relief in interest
46:40
rates um is that NBA is forecasting an increase uh of what is this here x percent from it's from
46:49
1.6 trillion this year forecasting 1.95 trillion in 2024 uh which is uh 90 percent uh total mortgage
46:58
originate generation nation units forecasting increased by 90 percent so hey there's a bright light
47:04
we have the lowest bar to work from and let me tell you when you get one one and a half percent
47:08
rare lower rates guess what purchase to go up and you get refinances again so uh the bar is so low
47:14
we can all trip over it and you know this is one of the reasons people people see the pending
47:18
home sales today and they're like it's up month to month how's that possible i said context people
47:23
look we're really at these very low levels you know the interesting aspect is new home sales is growing
47:29
new home sales were up 22% year over year new home sales have been trending higher why because they
47:34
can offer sub six percent mortgage rates imagine the us housing market with sub six percent mortgage
47:39
rates with sales this low yeah things are going up right uh more business for everyone refinances
47:45
the existing home sale market doesn't have that luxury the builders do because the builder sell
47:50
homes as a commodity and they don't have the you know seller buyer uh factor they just make a house
47:55
build it and sell it move on to the next one uh so we actually do see that uh in the new home sales
48:02
where they're growing double digits year over year but the existing home sale market is still
48:05
rates are too high but you just got to get that 10 year yield to fall and then mortgage rates
48:10
of fall and then that slow dance stays together and more people buy homes more sellers will be buyers
48:15
so you get more people listing the sell to buy another home you know doesn't mean in total inventory
48:20
grows but you get more sellers that'll be buyers in that sense and then what's the big difference now
48:25
first time home buyers why they don't offer you a home but they finance 90% plus of their home buying
48:32
where the baby boomers are less than 50 so you get more demand on the mortgage side there that kind
48:37
of keeps inventory at bay to a degree so definitely it's all to me to me I I remember going on CMBC
48:43
like the second month of the year I said literally the entire housing market moves around the 10
48:47
year yield so 10 year yield goes up to me out of get weaker up to 10 year yield falls demand gets
48:52
better and when you look at purchase application data you could really see that relationship hold
48:57
fantastic well this has been a clinic I think in understanding housing and how to explain it
49:02
before we go we want to make sure people can connect with you once again and housing wire so
49:07
once again the Instagram link will be in the show notes but if you're listening right now you want
49:11
to go to Logan underscore modashami on Instagram let's tell them what they can find over there
49:15
housingwire.com you guys you have a podcast you do as well yes we have an apple top 10 business
49:21
podcast Sarah Wheeler myself housing wire daily news is every day but Sarah and I they come out on
49:27
Thursday and Monday and we just geek out and talk about everything on the weekly basis and keep
49:33
people up to date on everything housing wire itself the tracker article is very popular in a sense
49:39
because I get all my information Friday night all the weekly inventory up to that and then talk
49:45
about it the next day so people could actually see new listings data weekly actively inventory price
49:49
cut percentages and that is so much ahead of all the sales data so this way you could be the person
49:55
that says you know I how did I didn't know well we we provide the data we think forward looking
50:00
housing data is the most efficient data and it's up to date every single week out there so
50:05
housingwire.com gives you all the mortgage and real estate information the tracker article and
50:10
the articles I write for economics is just my work housing wire plus hw plus Logan VIP 20 if you
50:17
wanted a discount code use that one and considering that it's better than a lot of Wall Street
50:23
information at a tiny fraction of the cost you know compared to them our job is to keep people
50:29
as informed as possible with real data and not the crazy noise. Absolutely and by the way that's
50:36
a good headline for the listeners as originators keep people informed with the right data not just
50:40
that you know the noise so as we said at the beginning right know what's going on understand what's
50:45
going on but most importantly be able to explain what's going on that's what's going to separate you
50:49
as a true right advisor in today's market so Logan you're freaking brought at home again man thanks
50:55
for crushing it today my pleasure and I always leave by saying you always want to be the detective
51:00
and not the troll right math facts and data wins you know give people the right data and then the
51:06
charts will be like wow it's really easy so so hopefully that's my job and hopefully I could explain
51:11
it to you also then I every one of you could explain to your clients why it is in 2008 and why the
51:16
Airbnb busted and happened this year and all that stuff oh love that love it all right listeners you
51:20
know what to do first of all share this episode if you're a mortgage professional listening to this
51:24
share with a real estate agent because there's a lot of good context in here for them and then of
51:28
course listen to this again and make sure you check out the resources we talked about housing wire
51:31
Logan's Instagram and we if you like this episode as well please leave us a review we appreciate
51:36
you and we'll see you on the next one bye for now hey guys what's up real quick you've heard about
51:41
the mortgage marketing pro membership before and I just want to quickly remind you if that you're
51:44
in a place in your business where you simply need more purchased loans you need to fill your pipeline
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with purchase business let's just face it agents are still a solid pillar of business and
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you'll get access to a database of 200 agents in your local market that have closed anywhere to
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from eight to 50 transactions in the last 12 months and we'll provide that list upload
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into our platform for you so you can get off to a fast start in reaching actually productive agents
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so what are you waiting for you can check out more at mortgage marketing dot pro see more of the
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if it's a fit don't miss out on this opportunity to take your mortgage business to the next level
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right now head over to mortgage marketing dot pro