On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the Washington, D.C. housing market amid large layoffs in the federal government. The two also discuss a proposal by Florida Gov. Ron DeSanctis to ban property taxes.
Related to this episode:
The impact of job cuts on the DC housing market | HousingWire
HousingWire | YouTube
More info about HousingWire
Enjoy the episode!
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
Related to this episode:
The impact of job cuts on the DC housing market | HousingWire
HousingWire | YouTube
More info about HousingWire
Enjoy the episode!
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about the
00:10D.C. housing market and whether we are seeing a big crash there, which was widely reported
00:15over the weekend. We'll also talk about a proposal to get rid of property taxes in Florida
00:20and a big drop in home builder confidence. Logan, welcome back to the podcast.
00:27It is wonderful to be here and I just want to say thank you, Darth Powell. Thank you,
00:32Alex Jones. Thank you to all the inefficient fake housing experts on Twitter over the weekend.
00:40I was sick with the flu, food poisoning, but I got up at like three o'clock in the morning
00:47and then I see Alex Jones talking about inventory in the D.C. market and how it's exploding
00:52and I'm like, oh, God, did they do the snapshot thing again? And they did. And of course,
01:02the talk is, you know, we talked about this in the last podcast we did that, you know,
01:06jobless claims are rising in the D.C. market. We're also continuing. Claims have been rising
01:11for several months, but the doomers can't help themselves. It's just like, you know,
01:16when you're a doom porn addict, you have to, like, jump on everything and exaggerate all
01:21the stories. So the story over the weekend was that there was a massive surge of inventory
01:27in context of like 15 times what normally would happen. And the person who I adore and
01:34love so much digitally enhanced the snapshot of Zillow. So rule number one, always. And
01:41I mean this with with every ounce of heart and blood and soul. You never, ever, ever
01:49listen to anybody who does a snapshot of Zillow, Redfin or Realtor.com on Twitter.
01:55Because they're actually cutting off part of it, right?
01:58Well, it's not. Even if it's true, it's it's it's inefficiency. It's it's rookie ball.
02:03You're not showing data. It doesn't show anything. Right. So what has happened over the years
02:08is that the doomers have taken snapshots and said, oh, my God, this is why I want live
02:13debates, Sarah. I want names and faces and forecasts and models. And you get these men
02:18into a camera and they actually have to talk about things and show their forecast. They
02:22don't have it right. But then everyone gets to see that they're just fraudulent doomsday
02:27groupers. But in this case, it was a perfect setup for me. I like didn't want to spend
02:31my weekend doing this. I'm like, oh, God, OK, this is what I must do. We have the live
02:36fresh data. So I the reason I say thank you is now people are coming to us because now
02:42the professionals are going to show you what it is. And we showed the weekly listing data
02:47of D.C. area. Nothing going on. There's like nothing abnormal.
02:53In fact, the national data on a year over year percentage is actually higher than the
02:57D.C. market. As far as new listings data, that is very key to something like this is
03:02actually slightly negative year over year. So they had a plausible theory, something
03:08we talked about last week, the jobless claims there's going to be fires. The whole the
03:12whole sector of D.C. there's going to be a lot of firing going on. But they went ahead
03:16and lied about it. The best part is that community notes had to come in there and say,
03:21yeah, this this picture was digitally enhanced. There's only like thirty three homes
03:25available. So thank you, because now we get to showcase our work.
03:29The big boys are here now, the professionals. And once everyone got to see it, they're
03:34like, wow. So I encourage everyone, if you are a D.C. real estate agent or anybody, go
03:39to read the tracker article. You get to actually see we track everything live.
03:45And I always tell this story to everyone when Mike Simonson tried to warn Lehman Brothers
03:51that new listings data and all these things were breaking and housing and Lehman Brothers
03:55ignored him. When he went to Goldman Sachs, Goldman Sachs saw it and go, whoa, oh, boy,
04:00we're shorting the housing market. Lehman went under.
04:02Goldman made ten billion dollars, survived and thrived.
04:06So if you're a D.C. agent, you really want to get versed with our data.
04:10We track everything live, fresh, and it is new listings, data, active inventory,
04:16price cut percentages.
04:18Then we have the historical data going back many years under, you know, you know, you
04:23know, if the if the inventory is growing or where it was normal.
04:26And then you have some context instead of a snapshot.
04:29The snapshot was fake, too.
04:31So there is a what I'm going to do is I'm going to take the role of a doomer right now
04:37and I'm going to teach you guys how to properly track this stuff.
04:41If there was if there was a big crash coming.
04:44OK, let's do this.
04:47Be a doomer. I'm going to be a doer.
04:49Oh, America's broke.
04:51We're holding prices are going to crash in D.C.
04:54and everyone's going to get fired.
04:55First of all, we ignore all those rookie people.
05:00What we want to track is, number one, what's what's happening?
05:03Labor data. So we need to see jobless claims.
05:06Tick up more continuing claims.
05:09Tick up more firings.
05:11If the firings was a valid premise to the inventory data, the new listings data is
05:16first. Right.
05:18We've always said this for the last few years.
05:20New listings data will go vertical if there's a rush of sellers.
05:24Right. In in 2008 to 2012, I think this thing was running at two hundred fifty to
05:28four hundred thousand per week.
05:31It's 30 to 90 K nationally for the last few years, so we don't see a rush of sellers.
05:35But if we do have it here, right, because there's major job losses, it's not like
05:40D.C. is going to be a big government job hub anymore.
05:44Right. So there's going to be people that say, hey, listen, this might not be the job
05:47market. Track it in the new listings data first.
05:51OK, we'll see it. And if it ticks up, then we go with that.
05:54Then we go with the active inventory.
05:56Right. With the active inventory starts to pick up.
05:58It starts to accelerate from the previous year's historical context.
06:03This is why we like to track the data from 2018, 19, 20, to give people an idea.
06:08Then the price cut percentages would actually increase.
06:11Right. If we if there's not enough demand.
06:14Right. If you're taking the labor, you're taking the workers that would buy the homes.
06:17If there's not enough to have the price cut, percentages have to increase.
06:21None of that was happening the last few weeks.
06:24But if it's going to occur, that's how you track it.
06:27And you have the data to back it up.
06:30Right. That's how a proper doomer should have done it.
06:33Not say, oh, my God, there's a surge of inventory.
06:35Everyone's leaving. No, it doesn't.
06:37It's the wrong time of the year.
06:38I mean, inventory is at the seasonal low point right now.
06:41We're about to see the seasonal increase.
06:44Even if there was no jobs lost, we're going to see the seasonal increase.
06:48We need to see a deviation from the norms of the seasonal increase to make anything big out of it.
06:54So track us how we track the D.C.
06:58market. It'll be a more prolific and efficient way to see what's going on.
07:02Real time. Remember, we are fresh weekly data.
07:05We do not wait months for the reports to come out.
07:08We want to see something that's going to come out later in the sales data.
07:11This way, everyone kind of has a heads up.
07:14I love the tracker this week.
07:16So, you know, for those who aren't familiar, the housing market tracker every Saturday that Logan puts out with all those data points this week.
07:25He included not just the national data like normal, but went into the D.C.
07:29data. I thought it was incredible because I was seeing it everywhere.
07:32It wasn't just doing people you had.
07:34You had major outlets talking about D.C.
07:37You know, people are very unsure.
07:39And I think that's true.
07:40I mean, obviously there is a lot of change happening, but we are not seeing a housing market crisis there yet.
07:45You have Alex Jones talking about it.
07:47You got an issue.
07:48OK, so it's just not that it's just not the thing.
07:50So so they had the labor story right.
07:54They just went with the inventory thing so early.
07:56So so let's let's just use the premise.
07:59There's going to be a job market crash in the D.C.
08:01market and we're going to see a surge of inventory.
08:03Let the data get you there first.
08:06Right. Because if it happens, you can't hide it.
08:08Right. That's that's why we always challenge people to see their models and their forecast to see if any of them and most people don't make believe Mickey Mouse garbage out there.
08:18Right. So in this case, especially over the next three months, we'll see the normal seasonal increase.
08:25We'll see the normal new listings increase.
08:27We'll see the price cut percentages, everything that we want to see.
08:31Is there anything different about this period of time?
08:33And one of the charts I try to show is that in twenty eighteen, actually, we saw a very sharp vertical increase in active inventory back then.
08:42We're so far from that level in twenty eighteen that we are right now.
08:45But when the seasonal inventory does increase, let's see if there's anything deviating from the north.
08:52That makes sense.
08:53That's how data is supposed to be.
08:55There's no bull or bear or anything.
08:57That's just how we read the data, because you can't do a hypothetical theory and then assume something's happening, which it isn't.
09:03But you can look for the future to see, OK, this is it.
09:07This is a legit case.
09:08Right. So track the new listings, active inventory, price cut percentages.
09:12Right. The pending contracts data.
09:14We can do that for every zip code, every area in that in that area.
09:17And we're already getting people legitimately like really smart.
09:21People are saying, hey, listen, I got to find out this.
09:23Come to us. We're the show.
09:25Right. We're the real deal.
09:26Not them. Not some gimmick snapshot, you know, digitally enhanced.
09:31The other thing that you track that you can see with Altos data is the percentage of price cuts.
09:37Right. And as you always say, like a normal market, you have about one third of houses taking a price cut from where they were listed before they're sold.
09:46And that can be because, you know, sellers are trying to get everything they can.
09:49They might be inflated.
09:52So sellers are greedy.
09:54So there's always someone who always overpriced their house.
09:58This is how it's worked.
10:00About a third is normal.
10:01So, you know, I think the last national thing that I saw, it's sometimes it's it's thirty one.
10:07Sometimes it's thirty four percent.
10:08If we look at that specific market, we'll be able to tell pretty quick if it's having that.
10:13But you'd have to have a whole bunch of listings and then people not coming in to buy.
10:16I mean, we'll be we'll be able to see it.
10:19We'll be able to see it first and we'll be able to showcase it.
10:22Right. And we're not going to digitally enhance any chart.
10:25We're not going to do a snapshot.
10:26We like to show long historical trends of active data and put numbers into it and context and everything.
10:32It really was it really was a blessing because it really showed how like how a professional does it.
10:38But then how a prolific doomsday group of people in America.
10:43But let's not forget, I think that doomsday group got like 10 million views on that.
10:47Oh, my God. Bless his heart.
10:48Darth Powell got, I think, like 12 million views.
10:50So I loved it.
10:51And I'm sitting there literally chowing.
10:54There's any grifter wants to take me on on the explosion of inventory.
10:58Anyone I challenge every any American man to come on right now on space is to take me on zip.
11:04Nothing. Not a word.
11:05Do you know what the pit of hell is?
11:07It's Twitter. It's X to shut every man down in that thing, to challenge any man to say, come on.
11:14And I want to see your forecast and models.
11:15I want to see your data. Nobody wanted anything.
11:18They know what's going to happen.
11:18I would say, let me see it.
11:19They're like, we faked it.
11:21I know you faked it.
11:22Community notes told you like so they know what they're doing.
11:26Listen, I people have to understand this.
11:30Has anybody seen Saks Realty like their YouTube page?
11:33It's literally a documentary of doom.
11:35They got the doomsday music and everything is doom porn sells.
11:40They're like these things get like two, three hundred thousand views.
11:43Right. Darth Powell got like 12 million views.
11:46It sells. It's not like economics done right.
11:49It's not supposed to be that way.
11:51Right. It's not supposed to.
11:52So myself, a few others, pilgrims in an unholy land.
11:57Right. We don't mind dancing with the devil in the pale moonlight.
12:02We don't mind getting them in front of everyone, showing their forecast and models.
12:06But you have to have a certain personality to want to engage them and then bring them into the light.
12:12And like all demons and devils and orcs and goblins, when the light shines on them and the Lord looks at them and goes, no, my child, you shall not enter.
12:21This is the world of math, facts and data.
12:24That's it. You have such a dramatic take on these things.
12:28I love it. You imagine these whole worlds going on.
12:31Yeah, that's that's what makes it interesting.
12:33OK, so that story, very big story.
12:35But we had a whole bunch happen over the weekend.
12:38So next topic is property taxes.
12:42And Governor Florida, Governor Ron DeSantis, a good friend of President Trump, I think, at least, you know, when they're not fighting each other.
12:53And, you know, property taxes is a huge issue in Florida.
12:57And he proposed getting rid of it.
13:00So let's talk about that.
13:01So oddly enough, a Texas homeowner came to me and said, hey, Logan, can they get rid of taxes here?
13:08Property taxes in Texas.
13:10Why should I want to know where my money is going?
13:13I'm paying more in property taxes.
13:14I got to find out what's going on here.
13:16Where's my money going?
13:17And I was like, oh, boy, what happened?
13:20And then again, I don't follow a lot of people on Twitter, so I just I don't know everything.
13:24And then I see that, you know, Ron is talking about getting rid of property taxes.
13:29So you and I have talked about this, about the Florida markets.
13:33How do you make Florida cheaper?
13:35Right. The migration to Florida slowed a lot last year.
13:41But what happened is what is housing?
13:43Housing is a total cost.
13:44Principal interest taxes and insurance.
13:46Insurance is exploding.
13:48Some people can't even get it.
13:50What if you take the taxes away out of it?
13:53Right. So that, in a sense, for homeowners.
13:57The cost of living in Florida goes down for home buyers, the cost of living goes down.
14:04I don't know how you're going to fund everything, you know, police, firemen, schools, you know, everything.
14:11But you can see what's happening.
14:14It's starting to to get to the politicians in Florida that this is an issue.
14:20And Florida has relied not just on tourism, but, you know, people moving there.
14:26It's a difficult problem.
14:28That's just one of the solutions that he's bringing up.
14:32I mean, you need a 60 percent majority to get that approved.
14:36But I think the interesting aspect is, does if that happens in Florida, what's Texas going to do?
14:42And these are these are these are two red states.
14:45And Texas is going to Florida does it.
14:47Why can't we do it? Right.
14:49So I don't want to get into the state budget discussion.
14:53That's not my wheelhouse or, you know, how everything's going to get funded.
14:55But the reason they're not they're not they don't have state income tax or anything is they get so much of the property tax.
15:03So we'll see how that works out.
15:06But I think that was the first shot into trying to make housing more affordable in Florida because insurance are going up.
15:15Remember, with Florida situation versus prices, prices escalate out of control, then rates, then the insurance issue and then taxes added onto it.
15:23So the only thing you can do here, withdraw the taxes.
15:27Rates haven't come down.
15:29Prices haven't crashed in Florida in any big way in that light.
15:33So we'll see.
15:35But I mean, if Ron is talking about that now, then, you know, there's things going on in the background about maybe the concern of the insurance issue hitting Florida.
15:48So as a Texas homeowner who who pays a lot in property taxes, I'm very interested in this conversation.
15:55I know that at least in Texas, you know, sales tax is a big way that the state makes money.
16:01But the property taxes is how we pay for schools and fire and police and all that kind of stuff.
16:07So it is a really interesting discussion.
16:09You got to figure out where that money could come from somewhere.
16:11But to your point, it's interesting that someone's raising it.
16:14I think that story has gone viral on our site because people are super interested.
16:20It's like, oh, I mean, you know, who wouldn't want to pay less property taxes if you could find another way to pay for the services that you want?
16:27Right. I think this might be an eventual headache for Abbott if somehow Ron gets to pass that, because you can't have a red state like Florida do that.
16:38And then all of a sudden, you know, and I know Abbott is very proud of his his, you know, his budget and everything like that.
16:46So time will tell on this.
16:48But at least, you know, it's something to think about now going out in the next few years, because everything's going to get more interesting these next four years.
16:56So we've already seen it. It's, you know, still February 2025.
17:00And there's a lot, a lot of drama going out there.
17:03It's only February. I can't believe it.
17:05That's crazy. OK, and we have another thing to talk about, which is homebuilder confidence.
17:11Yes. And of course, the wild card for 2025, when we wrote that article in December was about, you know, the builders have a supply and demand problem and it really is going to impact their margins.
17:25If rates stay elevated, it becomes more of an issue for them in 2025.
17:30Now, we brought this up in April of 2024.
17:34We talked about this, that is construction labor at risk?
17:37Well, mortgage rates were getting towards seven and a half percent.
17:40We actually had not a lot of people know this still, but we actually had a negative residential construction worker month when rates were that high.
17:47Builders confidence was falling.
17:49Then mortgage rates went down to six percent and then everything was solved and, you know, things got better.
17:55Then rates went up again.
17:57The situation now is that total units, we're talking about housing starts.
18:03Those things are being completed and it's rolling over.
18:06OK, so for a long time we had housing permits rising and the total completed units were just going nowhere.
18:13It takes forever to close everything.
18:15Well, they're being closed now.
18:18Permits and total completions falling together, not a good thing.
18:21On top of that, the tariffs came in.
18:25So when you look at the builders confidence, they're saying we're concerned about tariffs because guess what?
18:29If it's a margin story, tariffs make things more expensive.
18:33So that hits the margin aspect.
18:35That means you're going to have less money to pay down for mortgage rates if rates stay elevated.
18:39So the builders future looking six months, we always say the way to track the builders and housing starts and economic cycles is look at the six month.
18:47It literally collapsed.
18:48I mean, it was at sixty six two months ago and is now down to forty six.
18:52So the whole builders index is falling apart.
18:56So before the whole tariff thing came part of the discussion, there was already issues because, again, the builders are not they are not the March of Dimes.
19:06So in this environment, are they really going to be issuing a lot of permits?
19:09No, they're going to be trying to manage what supply they have left.
19:13So it it's not shocking that the builders confidence fell.
19:17It's really not. I also think, you know, we have a very volatile or uncertain number of things happening.
19:25Even if you think about the D.C.
19:26firings, you know, they want to they called for 50 percent of the HUD staff to be cut.
19:31It's unclear if that's actually going to it's unclear what what the original announcement is, what the first actions are, what the eventual actions will be.
19:40I think tariffs is a great point about this.
19:43But if you're a builder, you can't really just, you know, cross your fingers and hope that that those tariffs aren't going to affect you at some point.
19:50And even if there wasn't any tariff discussion, the builders had issues because rates are elevated again.
19:58Rates getting down to six percent changes this, but we go back to Neil Kashkari's.
20:03How do you balance an economy with six percent mortgage rates?
20:06Because people are having sex, having kids, buying homes, household formations, that's inflationary.
20:14There's more stuff being bought.
20:15So as Kevin Hassett, the White House Economic Council, we like to create higher labor supply and lower aggregate demand.
20:23So it's it's this is for somebody like myself.
20:27It's a very, very interesting year.
20:29There's a lot of things going on.
20:31And you can see why the White House wants lower mortgage rates.
20:35Like who wants to deal with this?
20:36Like we are we we made this a talking point in November, in December.
20:40Like who wants to deal with the builders going into a recession and laying off workers?
20:45Right. So we'll see how this goes.
20:49Just add this to another crazy week of things happening.
20:53But between the D.C. market, you know, the property taxes and now the builders, there's a lot going on that's housing related out there.
21:01And we are here to track everything because that's what we do.
21:05So this raises something that we've talked about a couple of times on here.
21:09I'm going to keep asking you, because obviously it's like, does this mean that we have to go into a recession to get mortgage rates where they're where everybody wants them to be?
21:17The White House and everybody in our industry?
21:19Definitely. We need we need lower rates.
21:21So, I mean, does that mean you have to have a recession first?
21:24You don't need to see the thing is that it really depends on what people want.
21:29If people want like sub five percent mortgage rates, you're going to need you're going to need a recession.
21:35But for me, it's I can't forecast below five point seven five until a bunch of things happens.
21:41But I could start to get down toward the low sixes without the labor market breaking.
21:47And that means that the Fed funds rate now, here's a good this is a good thing for everyone.
21:52We had a two percent lower move in mortgage rates.
21:56For eight percent down to six percent with no rate cuts.
21:59And that was like over and over again in twenty twenty three, we had eight percent mortgage rates in twenty twenty four.
22:06We had near six percent mortgage rates, but we had no rate cuts.
22:09Then the rate cuts happened and mortgage rates started to go up.
22:13Why? Because the economic data started to get better.
22:16Right. The market was anticipating more economic weakness that all stopped.
22:20Right. So the whole that's why we created the Gandalf line, the Hordor line, all that stuff.
22:24So but if mortgage if the Fed funds rate falls another one percent, getting to that lower base of six percent mortgage rates becomes easier and easier.
22:37So you don't necessarily need to have the labor market break.
22:40But we're kind of far still from cutting four times.
22:46So, well, I know Waller talked about, you know, we could still have four rate cuts this year, but just kind of sixty five, seventy five percent of where the 10 year yield of mortgage rates are Fed policy.
22:58And then we just move off the economic data, inflation, expectations, growth, everything in that manner.
23:04Mortgage spreads have gotten better this year on a year of your basis.
23:08So that helps out here.
23:10But it doesn't it's it's so frustrating because it's not we're not that far off from a level to where we don't have to talk about this as much.
23:18But getting that last one percent lower, you know, I thought would be a little bit more problematic.
23:23It's becoming very, very sticky in this situation.
23:27We get there. We just can't be able to hold it.
23:29But with another one percent of the Fed funds rate now, you got to have the the the Federal Reserve on board on something like that.
23:37That's a whole different story.
23:39But you can have rates near six percent without the labor market breaking.
23:44But I think a lot of people just wanted rates fast.
23:46That's why everybody wants a recession.
23:48And nobody believed the jobs data and everything.
23:50But in this context now, it's it's it's a little bit different.
23:53Oh, boy. OK, well, Logan, so glad that you are here to walk us through all these things, because I think things are happening at a you know, got a lot of velocity right now.
24:03So very happy to have your analysis.
24:05Thank you for being on.
24:06And we'll talk to you again soon.
24:07Pleasure.