Latest / Mortgage Marketing Radio / Why is the Housing Market Doing So Well with Logan Mahtashami

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Why is the Housing Market Doing So Well with Logan Mahtashami · Mortgage Marketing Radio

0:00
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1:03
Hey, listeners.
1:04
What's up, Jeff?
1:05
Zimphur.
1:06
Welcome back to another episode of Mortgage Marketing Radio.
1:09
So glad you're here.
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I am back from vacation.
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I was vacationing away up in Big Bear, California, the mountains of Southern California with
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the fam and doing some zipline and emboating and Brented mountain bikes, these e-bikes.
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This mountain bike that has a motor on it, right, an e-motor and electric motor that
1:29
allows you to go further and faster and higher.
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I rode 20 miles and 2.5 hours and increased elevation of 2,000 feet and burned 2,000 calories.
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Couldn't have done that with a regular mountain bike.
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I'll tell you that.
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But man, if you ever get a chance to try those e-bikes out, that's awesome.
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I hope you're taking some time during this summer, during this crazy market to at least,
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right?
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Relax, recharge, reconnect, because this is an incredible opportunity.
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We've got to reap this harvest while it's here.
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But also, we've got a rumor to take care of ourselves and our families and our loved ones.
2:01
What are we working so hard for?
2:03
So be careful not to fall in the trap of constant 24-7 work.
2:08
And then, of course, getting back into this, there's a couple of topics that I'm circling
2:12
around in my head for quite a while.
2:14
As you know, I've been doing the weekly live show on Facebook.
2:17
It's streamed over to YouTube.
2:19
So if you haven't checked that out yet, go to the Mortgage Marketing Institute page on
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Facebook.
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Or if you haven't joined the podcast group yet on Facebook, we've got a private group
2:27
just for podcast listeners.
2:28
We'll put links in the show notes.
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That's also on Facebook, Mortgage Marketing Radio Group, if you want to search that and
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or YouTube.
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Go check out my YouTube channel because I'm going to be adding some additional content
2:40
there in the near future.
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I'll let you know when that is.
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I've been thinking a lot about strategy, like content strategy with what I'm putting out,
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how is it working?
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By the way, I'd be curious to know from you guys, listening, now that we've mixed it up
2:52
a bit and we're basically repurposing the Facebook live show, the live shows being repurposed
2:57
to a podcast like this, like you're listening to right now, so you're getting an audio only
3:01
version of that.
3:02
I'd be curious to know if you like that or not, because I've had some thoughts about
3:07
a future of content here for you guys and I'd love your feedback.
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So feel free to email me anytime infoatmortgagemarketinginstitute.com or just message me on Facebook,
3:18
probably the easiest thing to do as well.
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I'll let me know if you have any comments, thoughts, suggestions about the content.
3:23
And hey, if you do like the podcast, leave us a review if you don't mind, right?
3:26
Where if you're listening to this?
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A review helps me to know that you are getting value from the podcast.
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Okay, so that said, one other quick thing I want to remind you of folks, if you in today's
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world post-COVID, right?
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The ReFi Boom.
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One of the things we've got to stay aware of and be cognizant of is that with the ReFi
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Boom that we don't let our realtor relationships go by the wayside.
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Now, if you're listening to me, then I assume to some degree you have realtors as one of
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the pillars in your business.
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It's not the only pillar, but it's one that's proven throughout the years to be profitable
4:01
and consistent when done correctly.
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But oftentimes what I find is a lot of originators have struggles or challenges with how do I
4:08
approach realtors?
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They're coal-calling, they're, you know, meeting onesy-tuzy, et cetera.
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And since COVID, everything's changed, meaning the face-to-face meetings, coffee meetings
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have pretty much gone away.
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The office presentations, lunch and learns have pretty much gone away.
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Will those come back?
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Yes.
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But it's a matter of when and how fast.
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So with that, I've got an incredible opportunity.
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If you don't know by now, we have an educational platform.
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It's called My Agent Classes.
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And what it is, as a growing library, if turnkey done for you classes that are ready to
4:39
go, plug and play for you to just deliver over Zoom, share your screen, the PowerPoint,
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we give you the talking points, the speaker notes, the transcript, I give you a video tutorial
4:48
teaching you how to do the class, we give you marketing promotional items like images
4:52
and stuff, show you how to set it up on Facebook events, tutorials on how to host a Zoom.
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I mean, literally, it is your educational platform in a box.
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And we have been doing this now for quite a number of years.
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We've got lots of member success stories at a minimum away for you to change the game,
5:09
to no longer chase realtors, to no longer cold-called realtors, to choose who you want to
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work with, to have a top of the funnel system for attracting and converting real estate
5:17
agents, and educational platform has proven to be consistently.
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In my experience, being in this in 2003, the best way to attract, build and convert
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realtors to referrals and weed out the bottom feeders.
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So if you want to learn more about that, go check out mortgagemarketing.pro.
5:35
There's a brief video I put up there, and I'll give you an overview of what everything
5:39
is all about, mortgagemarketing.pro, and love to have you join, be a member there, and
5:44
help you expand your influence, capture more agents, and get more referrals, especially
5:50
as the refives die down, which they will in the coming months.
5:55
And if you don't prepare now for that, if you're not actively engaged with real estate
6:00
agents, someone else is.
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All right, enough said about that.
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Let's get into this week's show.
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We are, this is a repurpose of the live show that we had with my special guest, Logan
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Mottoshami, who is an incredible person, incredibly knowledgeable.
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He is a housing data analyst with housing wire, financial writer and blogger.
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He's a recently retired mortgage professional as well, his family being in the business
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since the 80s.
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So he has an intimate knowledge of what it means to be a mortgage originator, but his
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grasp and understanding of data and why the housing market's doing so well.
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Why we're going to see interest rates perform well for the next several years, why there
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is no student debt crisis, et cetera, why and who are the biggest demographic patch of
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buyers in history and how you can capitalize on that.
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This has been an education on how to better understand rates, markets, what moves them,
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and a way to hopefully help you articulate when you're talking to clients and prospects,
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to talk intelligently with them for those that you may hear, oh, I'm waiting for the
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housing market to go down.
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Oh, my rates are going to get whatever the case is.
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I believe more than ever we need to have, as my friend Dave Savage says, advice versus
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price conversations, position ourselves as a knowledgeable authority.
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That's what's going to build trust.
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That's what's going to keep the relationships sticky and minimize the shopping that people
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are doing when they have to wait for the re-five for 45 or 60 days.
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So I hope you enjoy this episode.
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As always, feel free to reach out to me on the channels that I talked about.
7:30
And don't forget, the book is out.
7:32
You want to go get Disruptor Die, makes a wonderful gift for real estate agents, a great
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rate for read for you, how to survive and thrive, the digital real estate shift.
7:39
You can go to the website to get the book, which is DisruptorDieBook.com.
7:45
That's it.
7:46
Enjoy this episode.
7:47
Without further ado, let's get into this week's show.
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Logan, Mata Shami, Housing Wire, Contributor, Retired Lone Officer, Data Analyst, Extraordinaire.
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Welcome to the show.
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Great to have you.
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Great to have you.
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Great to have you.
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Well, you and I obviously have had some conversations prior to this, and I'm very blown away by your
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knowledge of data and recall.
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And let me just check the people watching live here.
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Mark Gelben, what's up?
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High five to you, Mark.
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Good to see you here.
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Get ready to put your comments or questions in, because we are talking about leading it
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off with, well, Logan, why don't you do this?
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Before I start with the first question, I kind of talked about the, I love you to give
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your version of your bio, who you are, what are you all about?
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Well, I'm a Retired Lone Officer.
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Our family's had a mortgage company here in Southern California since 1987, and just
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about a month ago, I retired.
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My father's still working.
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Our family in general has been in banking since the late 1950s, but about 10 years ago,
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I started a financial blog.
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I started to talk about housing and economics.
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And every year, it kind of just got sharper and leaner.
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And then, you know, I did full-blown basically data analyst work.
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A lot of people kind of know me for that more than being a loan officer.
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A lot of people were surprised that I've been a loan officer all these years.
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But my job is charts all day, charts all night, total nerd fest.
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So about economics, housing, everything like that, you know, I'm the kind of the one
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man stop shop, because it's 24 or 7 all the time.
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Yeah, 100% absolutely.
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And for those that are looking to get better educated and informed on, the real story
9:28
about housing, what impact just interest rates are not, I definitely encourage you to follow
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Logan.
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We'll give you some of those links before we wrap up here.
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But Logan, let's open it up with, you know, the question I wanted to start with, which
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is why is the housing market doing so well, we're coming out of a pandemic, right?
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All these issues, job losses.
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So let's start with that.
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Why is the housing market performing so well?
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Well, in general, economics is demographics and productivity.
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The rest is kind of stamp collecting.
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But in housing, it's primarily demographics and mortgage rates.
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So right now in 2020, which is something I've talked about for eight years now, I thought
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this 2008 to 2019 housing would have the weakest recovery ever.
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But by years 2020 to 2024, we're going to have like a little sweet spot for about five
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years, where we have the biggest housing demographic patch ever recorded in history.
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And for something like myself and the people who follow my work, I've always believed in
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lower mortgage rates.
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So this is kind of, it's happening this year.
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Now, of course, it gets tested by a global pandemic and a virus.
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And initially everyone thought, well, housing's in a bubble, student-of-one debt crisis,
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housing has to go down.
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And I was like, no, just wait, right?
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The virus can cause a lot of damage, short term to the economy, but it can't kill off
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the two things that really drives the housing markets, its demographics and mortgage rates.
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So once, you know, after the first few weeks, when purchase applications were going down
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to 2030 percent year of year, we started to come back and now the last seven weeks we've
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had double-digit, positive year of year growth, which is faster now than was before the
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coronavirus.
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And before COVID hit, you know, housing, new home sales cycle highs, existing home sales
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cycle highs, housing starts were up 40 percent year of year and February.
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So it looks right to me, I think, explaining the story why is really important because
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it takes these housing crash bubble people off the line and usually these guys are just
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fraudulent grifters.
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And I think that's one of the things I've tried to stress over the last three years.
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That's a, is that a term of endearment, fraudulent grifters?
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Yes.
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Yes.
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Gold budget.
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Central bank people.
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Love it, love it.
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All right.
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So, yeah, give us, give us some of the data behind this, you know, the story that's not
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often told in, in normal media about, you know, the housing market, what, what's, why
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is demographics favorable, you know, for the, you said a window for the next what, what,
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to 2022, 24?
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Years, 2020 to 2024 and the reason I, the reason I say that is that the biggest age group
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ever recorded in US history are ages 26 to 32.
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So the first time meeting home buyer ages 33, so the notion that millennials aren't buying
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homes or that there's a student loan debt crisis and none of a, this makes no sense.
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We've had basically roughly six million total home sales for years now and it's not
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like Gen X is buying or the baby boomers are buying.
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It's millennials coming into their prime buying age.
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And I've always said this, you know, it's kind of explained it.
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People rent, they date, they make, they marry three and a half year at the marriage, they
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have kids, they, they do things a little bit later in life, but they do them.
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So I think there were, there was just a giant, titanic whiff on this millennials don't
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buy homes and there's a student loan debt crisis, there's an affordability crisis.
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We had 648 economic crisis events in the last 10 years and we had the longest economic
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and job expansion ever recorded in history.
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And the only thing that shut this economy down was a global pandemic virus.
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So I don't believe the hype of the doom and gloom tellers, you know, we've always had
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groups like this since 1790 in American, American bears have failed every decade since then.
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So follow math, facts and data, follow people that believe in economic models and always
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ask a bear, what's your economic model for recession, why is housing going to crash?
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They're just going to tell you the same thing, the fed, the fed, the fed gold, gold, gold
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debt debt debt.
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Right.
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Has it worked?
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So you're saying don't follow that, follow the demographics.
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Follow, follow demographics and mortgage rates, mortgage rates get above 4.5% housing
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slows down.
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So, you know, the people that say, well, mortgage rates are historically low, well, when
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you, when you're working with a certain kind of supply and demand equilibrium, mortgage
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rates above 4.5% in 2013, 2014 slowed the market in 2018, it slowed the market.
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So just remember that things aren't, you know, don't use previous models or previous
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interest rates, work with what you have right now and be careful of the doom and gloom
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housing crowd.
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You know, that's kind of how they make their living and it's just, hasn't happened.
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And this year is a prime example that demographics and mortgage rates matter more.
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Yeah.
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And you said mortgage rates when they get to about 4.5% can slow the housing market.
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It can slow, yeah.
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Yeah.
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They can slow the housing when they can't collapse the market, but it definitely does slow
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the market.
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So I always tell people when a 10 year yield gets above 2.62%, be mindful of that.
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You know, some people go, oh, don't worry, the historically these are low yields.
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No, there are levels, especially in hot coastal areas where demand gets, demand slows down
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and supply does increase.
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So, you know, for those of us that have a long view of history knowing that my, I mean,
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my perspective is 4.5% is still very cheap money, right?
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In terms of comparatively what interest rates were back in the 80s and all that when we
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had inflation, right?
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We had double digit interest rates.
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Do you foresee, because to your point about, let's look at the models for currently where
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we are in the world.
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I mean, do you foresee any situation where we would get back to that situation of double
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digits?
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If I see 6% mortgage rates ever in my life, and I'm 44, I will be shocked, shocked beyond
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belief.
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I mean, we must have done some kind of massive government stimulus spending plan to get
15:11
growth back to those levels, because what, you know, since 1981, if you look at the
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chart of the 10 year yield, it's been going down every single cycle, it's never broken
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that downtrend.
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And it shouldn't, because the world is older, we're an older country, demographics and
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technology or deflationary population growth is slowing down.
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We're not going to get the kind of the growth rates or the inflation rates that people
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are thinking that would go inside with high mortgage rates.
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So in the United States dollars, the reserve currency of the world, it just gets too strong
15:42
and bad times.
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So no, I mean, I would honestly be shocked if I saw 6% mortgage rates in my lifetime.
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So do you have any concerns with, you know, Fed buying mortgage back securities, right?
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And as we hear the term, keeping rates artificially low?
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No, artificially low is one of these gold bug gripping tactics that they've used forever.
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So it's just, it's just not, I mean, you think about it, mortgage rates and interest rates
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have been falling for decades, and this is the Fed started a QE in 2010.
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So the QE actually ended in 2014 and actually yields rise right after that.
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So again, ignore people that have used Fed, gold and inflation.
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If you take those three, if you just ignore people that use those three, then you're going
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to be okay.
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But when you start to say the Fed, they keeps artificial rates, these are all marketing gimmicks
16:30
for your doom and gloom.
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And so, and they fail really.
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I mean, we just have the longest expansion ever in history, and if it wasn't for this
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virus, we'd still be moving along.
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So you mentioned a moment ago about we don't have a student loan debt crisis, and you've
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shared some specific data around why that is.
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And I think that goes into your point about perception and media.
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Let's talk about some real facts when it comes to student loan debt crisis.
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Break that down.
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So when people talk about student loan debt crisis, that Americans can't buy homes because
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they have too much student loan debt, what they don't show is actually they break down
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the data.
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You see that like 72% of the people that have student loan debt are actually under 17,000.
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The people that have a lot of stress with their student loan debt are mostly college dropouts.
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And then the balance is roughly 10,000.
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So you're talking about people that never finished college and don't have, you know, when you
17:23
finish college, you have debt, but you have the income capacity usually with that debt.
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That's why college educated Americans make more money than everyone else.
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That's why college educated Americans actually have more financial assets.
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So when you break down the data, the people that go to school, that finish school, that
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go to work right away that have very low unemployment rates, they're okay.
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But if you talk about people that took on debt that never finished school, even though
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the debt size isn't that big, that's where the stress is.
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So it's not like baby boomers are buying all these homes or Gen X are buying these homes.
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It's millennials that are coming into their kind of first time home, home buyer age.
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And they go to college.
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So I mean, you could make a case that some of these people just can't buy bigger homes
18:04
because the debt payments or the debt balance is too much.
18:06
But the notion that student loan debt crisis was here when we just had the longest job
18:11
in expansion, longest economic expansion.
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And now housing is the single most outperforming economic sector in the world shows that something
18:21
was really wrong with that thesis.
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That's something I've been talking about for many years now.
18:25
So how about the job loss situation, right?
18:28
Whatever that number was, I'm sure you know it better than I 40 some odd million, what's
18:32
the impact?
18:33
Well, here's the thing, we have job loss times are running about over 40 million if you
18:37
combine them, continuing claims are a little bit over 18 million.
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But one of the things that if you looked at the job losses, a lot of these are tied to
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what I call renter households and people that are future renters.
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And immediately the doom and gloom people said, oh, look at these major job losses.
18:55
It doesn't impact homeowners as much.
18:57
But I think what we see a lot is especially on Twitter, financial media, labor economists
19:03
and economists in general focus on the unemployed people.
19:06
But they never talk about that there's 138 million people still working, right?
19:11
So if people go, how could housing have double did you go?
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There's 138 million people working and the key is the housing market just needs 4 million
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mortgage buyers per year to keep demands stable.
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And this is why 2020 as soon as you've got this fear out of this virus out of, we just
19:29
go back to because it's not like the car sales market where you need 17 or 18 million
19:34
to create new highs, you need 4 million mortgage buyers per year.
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And then you know, you still have a very high level of cash buyers in the market.
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And that's how you keep sales demands stable.
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And that's why you don't see this parabolic spike in inventory and even with the four
19:49
bearance plan, it's still people are homeowners now are in much better spot than they were
19:54
in 2003 to 2008, where it was a credit bubble.
19:57
And we did not have a credit consumer bubble going into this crisis.
20:01
So if we had a time in history where a global pandemic occurs, this is not a bad time to
20:07
have it because we have a lot of fiscal space, we can borrow a lot of money, we can help
20:11
people, interest rates are low, inflation is low.
20:14
But the demographics are favorable and this is one of the reasons why you see some of
20:17
these data is just sharply rebound up.
20:20
Once you get this virus out of the system, game is on again, right?
20:24
And we go back to some of the old school thinking of what's going to create a recession
20:29
that never happened.
20:31
So when you say game back on again, once we get out of this virus, I mean, you and I both
20:34
know the mortgage industry is incredibly hot right now, the housing industry is on fire.
20:39
What does that mean?
20:40
Is that mean it's going to get even busier?
20:42
Well, one of the things that people are going to have to realize that once we got the
20:47
sharp rebound in purchase applications, and then we're going to flatten out because we're
20:52
at cycle highs, I mean, pre cycle highs, we're already showing double digit growth.
20:56
We're already here, right?
20:59
We're the only sector that is actually for eight weeks have been showing double digit
21:03
growth right now.
21:04
So at that point, it becomes basically a traditional or what I call is act for housing 2020, you
21:11
know?
21:12
So it's not like, you know, we're going to be working from a very low level for a long
21:15
time.
21:16
We had the V shape recovery, it already happened.
21:19
So you're not, you know, we were looking at probably 6.4 million total home sales before,
21:25
you know, this crisis hit.
21:26
So you just want existing home sales to kind of be above 4.6 million new home sales market
21:32
yesterday, the new home sales purchase applications were showing 54% year-to-year growth.
21:36
You get 700,000 right there.
21:38
It's a stable marketplace.
21:40
And then we got to deal with the virus and then what's going to happen in 2021.
21:43
And for right now, it's pretty much done.
21:47
The leg work is done.
21:48
All we need to see is flat to positive purchase application year-of-year for the rest of
21:53
your housing should be okay, because we already did the V shape recovery already.
21:57
Interesting.
21:58
So we came in and out of this, the rebound from the pandemic pretty quickly.
22:03
After three weeks, the purchase application data started to show its recovery.
22:08
That's all.
22:09
That's because social distancing was rolled back.
22:10
People could go out and look at homes again.
22:12
Well, they could look at house, but in general, you know, people were still buying and selling
22:16
homes across the country, you know, every state, every state kind of had their own kind
22:20
of lockdowns.
22:21
But, you know, technology and productivity and everything, you know, the world has changed
22:25
so much.
22:26
You could still do deals.
22:27
Right?
22:28
But I think the big thing is that, and what I try to tell people, credit still flowed.
22:34
And that's the most important thing in economic cycles for America.
22:38
We had a mortgage market meltdown in March 9th.
22:41
You know, rates didn't go up.
22:42
Some of the non-QM lenders were gone, low pico scorch, FHA, general markets.
22:46
But that's, I always talked about it.
22:48
That's about 4.5 to 6.2 percent of the marketplace, fretting fanny, because they are not publicly
22:53
traded companies and out of government conservorship, we're able to keep the market flowing.
23:00
And this is why I'm a big advocate.
23:01
Let these two giants stay with the government, because if they were publicly traded companies
23:05
or stocks would have gone down, credit would have tightened.
23:09
We would have not had this V-shape recovery.
23:11
You wouldn't have seen the four-bearance plans, because the government has the ability
23:15
to take losses on their books.
23:17
These two giants should not be publicly traded, because we probably would have had to do
23:22
congressional hearings, get them back into conservatorship.
23:25
We would have wasted it a lot of times, but no.
23:27
After three weeks, you could kind of see, purchase application decline stopped.
23:31
We started to slowly get back up.
23:32
In the last eight weeks, we're positive.
23:34
The last seven weeks are actually showing double vision year-over-year growth.
23:37
And we still have a virus out here.
23:39
And we're now seeing more states do more lockdown protocols and taking some of the re-opening
23:43
spec.
23:44
So, what we're going through right now with the housing price increase, the appetite,
23:54
the activity levels, and of course, people tend to look back to 2008 and all that kind
24:00
of stuff.
24:01
And I know this isn't the same thing, so I'm not delusional to think that.
24:06
What about, I mean, where is the end for housing prices, like you and I've talked before?
24:12
Socal, California, coastal cities and stuff.
24:14
I mean, it's outrageous at some point, right?
24:18
Doesn't, you know what I'm saying, the market correction?
24:20
Here's the thing.
24:22
Last year, the housing market was like a van Gogh and a Monet put together.
24:27
Nobody realized it.
24:28
What happened was that mortgage rates had gone up.
24:32
The start of the year inventory increased year by year, just slightly.
24:36
Nothing dramatic.
24:37
Demand was down slightly.
24:39
The rate of growth of home prices actually went negative when you adjusted to inflation,
24:43
the equivalence of rent.
24:45
I thought that was one of the best things we could ever see.
24:48
I'm a big believer that real home prices that they stay negative is good for housing
24:52
long term, because we're getting to the point.
24:54
If you look at per capita income and home prices, we're kind of right there where, you
24:58
know, it's almost connected right now.
25:01
Even the housing bubble years, home prices just blew well above per capita income.
25:06
So, and it was a credit bubble, but we're talking about three years, really.
25:10
2002 to 2005, real home prices were double digits.
25:14
We only had that one year in the previous expansion.
25:18
That was 2013.
25:19
And what happened in 2013, mortgage rates, this got to four in a quarter, four and a half,
25:23
that rate of growth slowed down dramatically.
25:25
So if you look at a home prices on a year of year basis, look at it adjusting to inflation,
25:30
but we saw from 2012 to 2020 looks nothing like what we saw from 2002 to 2005.
25:36
So my fear always, in years 2020 to 2024, was that home prices would escalate higher
25:43
too much.
25:44
Now, I think the virus has calmed that down.
25:47
So I'm going to put kind of a, let's worry about that if it gets there.
25:52
But because you have this massive demographic patch, and then you have low interest rates
25:56
and housing tenure, I think that's the story.
25:58
If you had one main story about housing in the last few years, people are just staying
26:02
in their homes longer and longer, which means that the sum of the supply that you would normally see,
26:08
people just don't need to move.
26:10
It's not like they're locked down on mortgages, but they just don't need to move.
26:13
With that bigger and bigger homes for many decades, people just stay put.
26:17
And I think that that could, you know, get to really hot home prices.
26:22
But I think for now, it'll be okay, because the virus has impacted demand to a degree.
26:28
And, you know, if we saw real home prices going back 5, 6, 7%, not a good sign, you know.
26:34
And initially, when we started off the year, home prices, especially the NAR data, was
26:39
way too hot, but it's kind of come back down.
26:41
So we're in a good spot right here.
26:43
Hmm.
26:44
Interesting.
26:45
So far, income wages is keeping up then with home prices.
26:49
We're, yeah, we're at the point to where, you know, home prices still, you know, outpace
26:53
for capital income, we're at troubles.
26:56
But for the longest time, you know, per capital income was actually above home prices.
27:00
No, not a lot of people know that because they take the do-go-go-to-story away.
27:04
And this is one of the reasons why we had the longest job expansion, longage economic
27:07
expansion.
27:08
We've got 6 million total home sales, new and existing homes, mortgage purchase applications
27:12
that have been rising since 2014.
27:14
And now we've got the demographic patch, the one time in history right here where we
27:18
have low rates and the biggest housing demographic patch ever.
27:21
All right.
27:22
So put your loan officer cap on for a moment and harken back to maybe some of the comments
27:27
or questions you've heard from consumers over the years knowing our audience is mostly
27:32
loan originators.
27:35
Throw a couple of comments at you.
27:36
Well, I'm just waiting for the housing market to come down.
27:39
Yeah.
27:40
What do you say to that?
27:44
Well, it's a number one question I get, you know, from real estate agencies.
27:48
How do I explain to my, you know, clients that, you know, housing isn't a bubble?
27:53
And I actually have a, I always use the case shiller year over year real home price
27:57
growth.
27:58
And you can kind of see, there's nothing here.
27:59
There's nothing like what we saw in 2002 to 2003.
28:03
And a good point, a good reference and what I tell real estate agencies of Lord Officers,
28:07
we had 7.26 million existing home sales at the peak in 2005.
28:12
We had a million new homes.
28:14
That's a credit bubble, right?
28:16
Non-owning capacity did.
28:18
We just had the weakest housing recovery ever.
28:20
I'm talking about new home sales and housing starts.
28:22
So there isn't this big demand, and I think this is what happened in 2020.
28:28
We're not working from such an elevated level that sales are just going to collapse and
28:32
inventories that's going to go up.
28:34
So kind of use those metrics.
28:37
And that's been right.
28:38
That's been right for the last eight years.
28:39
The people that are talking about prices have to come down.
28:42
It's a bubble.
28:43
It's going to crash.
28:44
They've been wrong because they don't have any economic models.
28:47
They just simply say that a Federal Reserve has kept interest rates low and rates are going
28:52
to go up in inflation wrong.
28:55
Four decades have been wrong out here.
28:57
And I'm not even talking about just the goal, but economists and housing economists, everybody
29:02
has been wrong for four decades because all they need to do is look at the chart.
29:06
There was never any time that we broke that downturn going up.
29:10
So I tell people, most likely see one handle on mortgage rates before you see six handle
29:17
on mortgage rates.
29:18
Yeah.
29:19
So I was just going to ask you.
29:20
You're going to talk the other day is you are bullish on rates going even lower than they
29:26
currently are?
29:27
Well, mortgage rates should be lower right now than what they are.
29:32
The business of doing mortgages and rates just went haywire.
29:37
And we had margin calls.
29:38
We had early payoffs.
29:40
You had basically 90% of production in America, basically at risk for an early payout.
29:44
There's no way they're going to let that go down.
29:46
So I'm curious to see where mortgage rates are going to go after September.
29:51
Because after September, that six months EPO payments that's pretty much gone, you might
29:56
see a little bit of loosening in mortgage rates even if the 10 year yield stays right here.
30:01
And kind of before, before we had this big collapse in bond yields, I talked about my recessionary
30:06
yields are about a negative 21 basis points, yes, negative on the 10 year and 62 basis points.
30:12
That's where I think the 10 year yield should be.
30:14
The fact that a 10 year yield just refuses to go below 62 basically shows me that the
30:19
bond market, the stock market, the markets are saying that credit stress has been relieved.
30:24
Once you get through this virus, the U.S. economy is coming back to some of the data.
30:27
You kind of see that right now.
30:29
But after September, maybe rates come down a half percent of quarter.
30:34
But I could go as low as 1.875 on the 30 year based on just those that negative 10 year
30:40
yield forecast.
30:42
After that, I think that's it.
30:43
And I'm talking, that might be a very brief amount of time.
30:45
So we're kind of almost toward the end.
30:48
Just remember that every housing cycle is at 2% plus lower mortgage rates with duration
30:54
to expand it.
30:55
For that to happen again, you need about a 1.25 to 2.25 or 30 year fixed for about 5 or
30:59
6 years.
31:00
Most likely, that's not going to be the case.
31:03
Just because the business of doing loans is just going to be worth it and money is a
31:06
cycle of flow there.
31:07
No matter how much the Fed presses it, it's just probably not going to see that.
31:10
So we're entering a new era in terms of, you don't need mortgage rates to go back to
31:15
5 to 6%.
31:16
If they stop going lower like they have, it's going to be a little bit different.
31:20
So that's why the home price is going out of the future.
31:22
It's going to be a little bit different than what we saw just because we're not working
31:25
from a bubble crash anymore.
31:27
And the chances of mortgage rates dropping another 2% state is very unlikely.
31:33
Wow.
31:34
So very positive news for those that are in the real estate mortgage business over the
31:39
next four or five years.
31:41
Yeah.
31:42
For purchases, it is.
31:43
For refinances, I think we just took another wave of supply off.
31:48
And unless you get, unless the economy goes into a double-dipper session, that supply refinances
31:54
are going off.
31:56
But then even when the 10 year yield rise, so I think 1.94% might be the high point for
32:02
some time, you're creating more supply again.
32:05
We just go back and forth, back and forth, back and forth.
32:07
That's kind of what happened in 2017 and 2018 when the 10 year yield was higher.
32:12
You created more supply for refinances, and then right away when the 10 year yield goes
32:16
back down, that's your refinance supply.
32:18
But purchase applications, housing demands should be okay in this period.
32:22
I've always talked about this period.
32:24
You have great replacement buyers.
32:26
But if the first time owner is moving up, then you have an extra layer of demand.
32:30
And I think that's what we saw in 2020 in the first two months.
32:34
You saw that extra layer of demand, and then even for myself, home sales were 300,000
32:39
above where I thought, what would it be?
32:40
So the demand is there, right?
32:44
As long as mortgage rates stay below 4.5%, it should be okay.
32:47
Just because the massive demographic patch and the first time owner is actually in a much
32:51
better spot than what they were from 2003 to 2008.
32:54
Very cool.
32:55
Well, looking closing out, I want to spend just a couple of minutes on talking about
32:58
data and how to leverage data to increase your influence, grow your brand.
33:03
You obviously are passionate about data.
33:06
But if you share just a couple of points for those loan officers watching, because I mean,
33:11
you've been around long enough to know this isn't the first time that you've heard
33:16
somebody say, you've got to in this market, right?
33:20
You've got to really position yourself as an authority to understand what moves mortgage
33:24
rates, what's really going on with the housing market.
33:28
How can the loan officers be better at equipping themselves to understand data so they can
33:33
have more intelligent conversations?
33:36
Yeah, Americans are true for things.
33:40
Copying paste people, which are a lot of people.
33:44
We got that game down.
33:45
We like to copy and paste stuff all the time on social media.
33:48
That's our past time.
33:50
Anybody can do that.
33:52
But if you want to learn about why mortgage rates are low, why the housing market is holding
33:57
up, then you become yourself, somebody of authority, and then you can draw more people
34:05
toward you because if you're trying to sell doom and gloom, you're just another kind
34:10
of boy band troll that's been here since 1790 talking trash about America all the way
34:14
until you die.
34:15
Okay, we've got millions of those.
34:18
But if you want to up your game, learn why?
34:22
Find out why something is happening.
34:25
Because anybody could just copy and paste stuff and put it around everywhere, and doom
34:29
and gloom cells.
34:30
Find out why so people could come to you and they could trust you.
34:34
If as soon as people trust you and they think, then you could go into your business and
34:41
why people should go to you, but use this time in history when information is so available
34:47
and learn why.
34:48
Because once you get that trust and then that word goes out, hey, this guy knows what he's
34:53
talking about.
34:54
He's not selling and doom and gloom or he's not trying to get you to use his website.
34:58
Learn.
34:59
Find out the why for something and be better than the 99% who just copy and paste out
35:04
there.
35:05
100% amen.
35:06
And it's really reminds me of my friend Dave Savage, who coined a phrase, I believe to
35:10
have more advice versus price conversations with your clients.
35:15
And in order to do that, you have to be informed.
35:16
So I want to give a shout out to a couple of resources, first and foremost, let me show
35:20
you this on the screen here.
35:21
Is your website, people should, and I put it here in the comments as well, people should
35:25
number one, go there and subscribe because that's an incredible place, a learning place
35:29
to, to better understand what moves markets, what's going on, right?
35:33
With somebody of your, you know, broad understanding of all that.
35:38
So logonmarachami.com and then also, of course, let's not forget to mention housing wire.
35:44
You are an analyst for housing wire.
35:46
And so anybody, I think, listening to this live on the replay on the audio, if you're
35:50
not a subscriber to housing wire, particularly to their pulse and other tools and resources
35:55
they have there, you should definitely subscribe to housing wire because I get the emails
35:58
every day, right?
35:59
The updates and notifications and it's just, we've got to be better educated, I think,
36:02
as a profession because, you know, people often come to me for like the sales and marketing
36:07
stuff, right?
36:08
Scripting or hey, how do I deal with rate shoppers in this?
36:10
How you deal with them is you be more informed, be more educated and demonstrate that for
36:14
people, you will win trust and influence by doing that.
36:19
Absolutely.
36:20
And for everyone, just, you just Google my name, my Facebook page is open to the public,
36:24
my Instagram, I do Instagram stories.
36:27
It's 24-7 nerd live all the time.
36:29
Okay.
36:30
I don't sell anything about my business.
36:31
I don't know your show.
36:32
24-7 nerd.
36:33
Yeah.
36:34
Yeah.
36:35
I'm just, my blog is free.
36:36
There's no advertising.
36:37
There's nothing.
36:38
My job is to teach.
36:39
And this is my, the ex high school basketball coach in me right here.
36:42
My job is to teach you why something is happening.
36:45
I don't care about the price or how to get this somewhere.
36:47
I want you to understand that, you know, why is something happening?
36:51
And that's the most important part because then that means you've got the knowledge yourself
36:54
and then you could pass that on instead of copying and pasting doom and gloom sites and
36:58
then, you know, sharing that on.
37:00
Right on.
37:01
So once again, hey, people, don't forget, if you want to get a copy of the book, there
37:04
it is disruptor.com, disruptor.book.com.
37:08
We want to thank Logan and Housing Wire for teaming up on this.
37:11
More good stuff to come as a collaboration between us and Housing Wire.
37:14
So Logan, once again, man, an amazing audience, the audience went wild.
37:20
Thank you so much for being here.
37:22
Appreciate it.
37:23
My pleasure.
37:24
All right, everybody.
37:25
Hey, you know what to do.
37:26
We'll see you on the next time, same bad time, same bad channel.
37:28
See you next week.
37:29
Thanks for tuning in.
37:30
Bye for now.
37:31
Hey, guys, what's up?
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Real quick.
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