Logan Mohtashami Discusses Recession Concerns and Housing Affordability with the ‘Real Estate Insiders’
In a recent episode of the “Real estate insiders unfiltered” podcast, co-hosts James Dwiggins and Keith Robinson chat with HousingWire Principal Analyst Logan Mohtashami will discuss a variety of issues, including looming recession concerns, mortgage rates and housing affordability issues that persist across the country.
Mohtashami has worked in the mortgage and real estate industries since 1996 and prides himself on his ability to quickly decipher data, form opinions and deliver actionable insights for housing professionals and consumers.
To get the conversation started, Dwiggins and Robinson explore Mohtashami’s background and education before the analyst dove into real estate. Mohtashami says he originally planned to work as a high school teacher and basketball coach after earning a degree in history. His father owned a mortgage company, which gave him the opportunity to move into mortgage lending.
Years later, Mohtashami joined HousingWire before the COVID-19 pandemic hit. Now he is active combats false stories in real estate while providing high-quality insights and forecasts on the HousingWire Daily podcast.
The conversation then shifts to a current topic: pending Federal Reserve interest rate cuts and their consequences for the labor market and the economy as a whole. Mohtashami shares his unique recession forecasting model with the hosts. To predict a recession, Mohtashami analyzes the number of housing construction jobs and manufacturing figures.
Job losses and sluggish production rates are clear indicators of a recession, according to Mohtashami, and the current economy is showing the first signs of both phenomena.
He also talks about the Fed’s attack on the labor market as a whole, in an attempt to justify the upcoming rate cuts. In other words, the labor market must suffer before policymakers can cut interest rates.
“We’re at that stage of this cycle where the Fed, on purpose, started attacking the labor market more than inflation,” he says. “They have used an old Fed model that is very restrictive until the labor market breaks.
“When the labor market breaks, they say, ‘Hey, listen, we’ve got to lower rates.’ That is our dual mandate.’”
Mohtashami says inflation has never been a factor in Fed rate cuts, and that the government would have cut rates three to five times by now if it had. Instead, the Fed waited for the labor market to collapse – and the country is now beginning to experience that reality.
Mohtashami goes on to say that the Fed is waiting for wage growth to shrink to 3%, job openings to rise to 7 million and the unemployment rate to rise before making deeper interest rate cuts. So at the moment we have to wait for consumers and housing professionals.
Later, the conversation shifts to predictions about mortgage rates and home sales. Dwiggins asks Mohtashami what tariff levels are needed to move the market forward. The analyst responds with a strong claim that 4% to 6% is the sweet spot for home sales growth. But the market would have to maintain these levels for years before a positive trend for home sales emerges.
Robinson intervenes and expresses concern about interest rate cuts. He worries that the real estate industry will become too distracted by recent changes in business practices and new paperwork requirements for real estate agents, rather than providing value to consumers and taking advantage of lower rates before 2024 ends.
Mohtashami reiterates his concerns and questions whether the mortgage side industry has enough manpower to meet a potential increase in demand. The group agrees that the industry will have to wait to determine if this problem persists.
Concluding the conversation, Mohtashami provides important tips for solving housing affordability issues. He advocates an increase in supply at lower rates in the long term. He also advocates for more data-influenced decision making to help homebuilders, loan officers and real estate agents develop good strategies.
