What Happens When Rates Drop?

On The Market

BiggerPockets

News, Investing, Business, Education

4.8 • 820 Ratings

🗓️ 30 December 2024

⏱️ 35 minutes

🔗️ Recording | iTunes | RSS

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Summary

Are we finally at the end stages of this harsh housing market? With housing inventory increasing, mortgage rates steadily falling, and inflation cooling, we might be returning to a much healthier time to buy a house. But one of these improvements we’ve seen over the past year could begin reversing, and that’s creating some interesting future scenarios. One that even we’re surprised to hear as we bring on top housing market analyst Logan Mohtashami. Logan has referred to 2022-2023’s housing market as “savagely unhealthy,” but he’s a bit more optimistic now that we’re seeing relief. While we’re still not at 2019 inventory levels (which were already low), we’re slowly getting there. However, we could see the positive inventory trend start to reverse, leading to even more affordability problems for homebuyers. So what has to happen for affordability to see meaningful improvement? Today, Logan is giving us his take on housing inventory, where mortgage rates could be heading, and why we may NOT see a spike in home prices even if rates fall significantly (something most analysts are bullish on). In This Episode We Cover Logan’s housing market, mortgage rate, and inventory forecast Why our increasing housing inventory could reverse once rates start to fall The one thing holding affordability back and whether Logan has hopes of it improving Why watching the labor market and jobs numbers will help you predict mortgage rates Were we wrong about the “lower rates = higher home prices” premise? And So Much More! Links from the Show Join the Future of Real Estate Investing with Fundrise Join BiggerPockets for FREE Find Investor-Friendly Lenders Dave's BiggerPockets Profile On The Market 86 - Here’s What Will Cause Mortgage Rates to Finally Fall w/Logan Mohtashami Learn More from Logan Know the Ins-and-Outs of Real Estate with “Real Estate by the Numbers” Jump to topic: 00:00 Intro 00:58 The "Baby Pivot" Stage 04:33 The Home Sales Recession 07:36 Housing Inventory Update 14:17 Rates Will Decline MORE If... 18:47 Mortgage Rate Forecast 23:35 When Will Affordability Improve? 27:53 Biggest Takeaways Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/on-the-market-282 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Hey friends, it's Dave. Happy holidays and welcome to On the Market. If you nerd out on real estate
0:06.4	as much as I do, you probably already know that Logan Motoshami is one of the sharpest
0:11.6	housing market analysts out there. When I first started getting into real estate market,
0:16.6	housing market analysis, he's one of the main people I started following. I still read everything
0:21.3	that he writes. And we've had him on the show a couple times. The last time was back in September
0:26.4	to talk about market dynamics at the time and what he expected to see through the end of
0:31.1	2024 and into 2025. And his way of looking at the housing market doesn't just work for a particular moment in time.
0:39.5	It really helps you understand the right lens to see the housing market through as we enter a new year.
0:46.7	So we're going to bring this conversation back to your feed today.
0:50.4	Enjoy. enjoy Logan welcome back to the Bigger Pockets podcast good to see you again
1:01.8	it's good to be here
1:02.9	Logan you've been known to come up with some colorful and fun terms for the
1:06.9	housing market like the savagely unhealthy housing market you had deemed it over the last
1:12.9	few years. Where we sit today, August of 2024, how would you describe the housing market?
1:19.5	You know, we're at the kind of the baby pivot stage of the economic cycle. To be honest, this has probably been the most confusing housing cycle
1:31.1	for everyone out there. And, you know, one of the key differences, what we're dealing with now is
1:37.7	that the new home sales sector, especially the big publicly traded builders, are able to grow sales. They have the ability to
1:47.1	work in a sub-6% mortgage market world, but the existing home sales market still has not been
1:55.1	able to be tested yet in a sub-6% mortgage market world. And one of the things I'm, I've been trying to do this year,
2:03.2	and it's probably to my failing over the last 14 years talking about housing, I don't think
2:09.2	people understand how rare it is for nominal home prices to fall going back to 1942. And I think
2:17.4	so much of the confusion has been that, well,
	...

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