Logan Mohtashami talks forbearance and rising mortgage rates

Sarah Wheeler: Welcome, everyone. I’m Sarah Wheeler, editor in chief at HousingWire here with the first episode of season 7 of the “Housing News Podcast.” I’m so excited to interview our guest today, Logan Mohtashami, who is very familiar to our audience as HousingWire’s lead analyst. He’s also a frequent contributor, source, and podcast guest for “Bloomberg,” “Time,” “NPR,” Bankrate, and “The Washington Post.” Logan, welcome back to “Housing News.”

Logan Mohtashami: It is pleasure to be here.

Sarah Wheeler: Oh, we’re so glad to talk to you again. So, you know, we have a lot to talk about today. And some of this will be a deeper dive into your recent articles, but we’ll also lay the groundwork for your housing forecast for 2022, which you’re gonna deliver at our HW Annual event in just a few weeks.

Logan Mohtashami: Yes, it’s gonna be a wonderful event. Can’t wait.

Sarah Wheeler: People should come out to hear you and see you in person. They can meet you. I know that’s a huge draw. You don’t do a ton of events. So, we’re very excited to have you.

Logan Mohtashami: Be a good time.

Sarah Wheeler: Well, let’s get to my questions. First one is about a segment of the population you started calling the Forbearance Crash Bros about a year ago, which is a great name. I love the branding. So, tell us why you named them that and what their thesis looks like a year later.

Logan Mohtashami: Well, the Forbearance Crash Bros, a lot of them are just the housing bubble boys of 2012 to 2019. So, naturally, one of the worst crash-call groups ever in history whipped so bad for so long that when COVID happened, they thought COVID-19 would be their savior, went straight into crash mode right away. Of course, we wrote the America Is Back recovery model back on April 7th, said it’s not gonna happen. But by September, what this group does is they always move the goal post to next year. It’s a marketing gimmick. So, about September, I said, “Here we go again. Here they go.” They’re all talking about the forbearance crash. You know, it’s a lot of guys on YouTube sites and social media sites, forbearance. So, I said, “Let’s give these people a name, Forbearance Crash Bros, because my model shows that it was never gonna happen, there was gonna be a crash.” Forbearance itself wasn’t even bigger than the shadow inventory back in 2012 when demand was lower.

So, we have to show people why this group was gonna whiff, back to back years in the biggest stash in history. So that’s why I used September of last year because as the jobs were recovering in the article I wrote one year ago, you know, people will get off forbearance by themselves because the program has to do a lot of legal paperwork. It would take some time. So, the only thing that actually crashed in housing was forbearance. Forbearance has already collapsed 3 million. That’s about the amount of sales needed for the housing crash people to warrant their massive decline in prices, foreclosures, you know, the worst things you could possibly imagine. And we had to show people why this was gonna be the case. So, it’s kind of the one-year anniversary. And here we are, September 2021, there’s no crash. Existing home sales have been higher every single month this year than the total of 2020 and jobs have been coming and people are still getting off of forbearance.

Sarah Wheeler: Great point. Yeah, we just had those forbearance numbers last week that looked so good. So we went from…you know, I remember when we first started, when the CARES Act went through and we had COVID forbearance. People were worried it could go to 10 million, 15 million, even 20 million people.

Logan Mohtashami: Oh, yeah. There were a lot of people back then who talked about, “Well, you know, because of COVID, it was gonna be such a deep recession.” It’s funny, by the time they were staying these things, the recession was already over, right? You know, that’s why we highlighted our April 7th was the kind of bottom of the economy. But yeah, forbearance was gonna go 10, 50. And the reason they talk about 10 or 50 million because that’s was the delinquencies that we had in the housing bubble aftermath and some even talked about 20% or 30% unemployment rates, where you get up to 20 mil was never gonna happen, right? You know, this was not a economic crisis in the set that we were an overleveraged economy. This was a virus. It was pretty much like a really long winter storm, paused everything, everything came right back up. Mother demographics wanna beat COVID 19, for sure.

Sarah Wheeler: That’s all good news. At least for those of us who didn’t, you know, have a whole economic model built on the housing market crashing, which is a problem. Let’s talk, on a related topic, let’s talk about jobs and job numbers. Tell us why you were so excited to see the recent job numbers.

Logan Mohtashami: Well, here’s the thing with…we had this big wave of jobs in the previous year. And then second of all, COVID-19 is still with us, but there were a lot of factors that I thought by August 31st of this year that would give us a good groundwork to get all the jobs back by September of 2022. Now, the previous job reports came in as miss. But if you actually look at the internals of the job data, and I’m a big job openings person, I’ve always been a big job opening person, you know, the previous expansion, this time around, I think I was the only person, not only in America, but in the world that was tweeting out job opening is gonna get over 10 million. Right?

So, if you look at the historical data of job openings, they’ve been rising every single year. Years 2020 to 2024 is gonna be different. Naturally, age, death, these things are potent forces of any labor force market. There is no Dorian Gray labor market. So, when you add COVID into it, then you add this unbelievable fast recovery, “Job openings, we’re gonna break through 10 million easily.” That was the easy call. So, unlike 2008, where job openings was a little bit over two million, the labor market is healthy, but it’s still dealing with some of the impacts of COVID. However, I think this is always the key with the labor market, most Americans were always working during the COVID crisis. Most Americans came back working during the recovery.

This notion that Americans are these lazy people that don’t wanna work, nonsense. Actually, they came in working during a crisis, doing stuff to feed American people, while the people sitting in top quarter offices are saying, “These people are lazy.” No. Right? That’s not who we ever were as a country. I never like that thesis that Americans don’t like to work, and it showed and now we’re gonna get all the jobs back. Now, the Delta variant is a new variable. That is not the best backdrop. But in time, the jobs are there. The jobs were always there, right? So I think the JOLTS data now which caught everyone by surprise could show you that the labor market is better, and then in time we should get all the jobs back.

Sarah Wheeler: One of the things that you’ve said throughout the last year is that the people who lost jobs, generally speaking, were not homeowners. So that helped too, that even the jobs lost many of them…you know, not that we don’t care about people who aren’t owning homes, but as far as the mortgage market, you’re not gonna crash the housing market if those people still have their jobs.

Logan Mohtashami: Yeah. If you looked at the internals of the data, just who are homeowners? Homeowners typically average income is usually $100,000. A lot of the jobs lost were service-sector workers, which were tied mostly to COVID because you need an economy that could, you know, functionally have people consuming goods and service. Now, a lot of those jobs have also come back. But if you look at the jobs that were left or the people that are unemployed, the income variables are tilted heavily toward renting. So if you wanted to make a kind of a COVID crash or housing thesis, you gotta say that investors that had tenants that couldn’t pay and they’re struggling, those are the people that would be for what we call forced selling. But the notion that Americans were just gonna purposely sell their homes in a foreclosure when they had all this equity and fix the debt payments, right?

If you look at the household debt payments versus disposable income, lowest levels in history. So, there was a lot of flawed housing crash thesis. That was one of them. And now, the highest unemployment rate right now still are those who didn’t graduate high school, about 7.8%. College educated Americans who finished school, four-year degree is 2.8%, 5% for those with some college. The income bracket of those 60,000 and more really got a lot of their jobs back by October of last year. So, this is one of the reasons why forbearance keeps on falling. These people are homeowners, right? They have families, they have a vested interest of staying in their house. They’re not investors. So, naturally, when they come back, they work through the process. And another motivational factor right now is everyone can see what’s going on with rent inflation. So, naturally, they’re like, “Okay, we have a really good low payment versus our incomes. Let’s stay here.” So, there’s even a higher motivation to get the last remaining 1.6 million off of forbearance, which is the single best government program ever recorded in history for homeowners.

Sarah Wheeler: Well, you know what? That’s great. I’d love to hear that. In what you just said, you covered some of this. But one of the things that freaks people out because of the trauma from 2008 is just like, “Oh, no, here it comes again. Home prices are rising. You know, it’s not sustainable. We’re gonna have a crash.” So. tell us why is this different than 2008? Why should people not be thinking of this in terms of 2008?

Logan Mohtashami: So, one of the charts that I’ve always used on social media and for my HousingWire articles, if you look at the credit expansion from 2002 to 2005, you can see a credit boom happening. The credit structures of those loans were what I call exotic debts. This is why so much of I work in the last seven, eight years is trying to convince people lending is very liberal. There’s no tight lending. But it’s fixed long-term debt versus your wages to ability to when you got the loan, right? So, people that got homes, their wages went up and then the multiple refinancing, right?

So, the whole theme is fixed slow debt costs versus rising wages. The premise that you could have the weakest housing recovery ever in terms of debt, inflation and adjusted mortgage that’s not even positive, going back to the housing bubble years, that people who make very good money would actually sell their house at a discount to 50…right now, the bubble boys need to go back to 2012 levels, a 56% to 86% price decline for no reason, right? It’s much different, right? You have to convince people that well-off homeowners will sell you their house at that much of a discount. They’re not, they’re staying in. Right? And a lot of this is if you look at total inventory levels from 2014 going down, all the way to 2021, it’s been falling slowly. The other data line purchase application data has been rising from 2014.

So, the fear should have been that you get an inventory crunch in years 2020 to 2024 like I’ve talked about. It’s the biggest housing demographic patch ever recorded in history and the lowest mortgage rates ever recorded in history. So, any human being who talked about housing crashing is not a real estate expert, is not an economist. There’s no way you can have the two things that drive housing being the best levels of history and warrant these massive declines in home sales, right? That’s the thing. Home sales need to drop like two to three million. When you’re working from 5.3 million, that means adjusting to the demand curve, you need a faster decline in home sales, much worse than what we saw from 2005 to 2008.

So, it was never gonna happen. But my job is always is to show people why these people failed so badly. And I can tell because none of them are real estate experts, none of them are economists, none of them are data analysts. Nobody is this bad. But I believe, like always, they’re purposely lying for attention, right? And then we documented this. This is one of the biggest web calls ever recorded in U.S. economic history and it’s a good learning lesson for many people in the real estate mortgage industry. Believe in people who believe in economic models, not some cheap YouTube side or Facebook page or Twitter account, right? They have failed in the longest economic and job expansion history, they failed in the COVID recovery, and they failed with their housing crash premise.

Sarah Wheeler: Love it. You know, you mentioned mortgage rates and, of course, our audience is always very interested in mortgage rates. So, we’re gonna talk about that, but first, you know, in related news, let’s talk about Jerome Powell. Let’s give our Fed watcher something to hear here because there’s always speculation, you know, is Biden gonna replace Powell? Is someone else gonna come in? You know, what are your thoughts? What has Powell done right or wrong?

Logan Mohtashami: Powell has done a great job. And I think Powell and the Federal Reserve have realized their old models on when to raise rates and when is wage inflation gonna breakout hasn’t been working, right? If you look at the past four decades, we’ve never really had wage inflation breakout due to low unemployment. And I think it finally hit them all that they need to update their models. Now, for me, this is something I’ve written every year since August 16th in 2015, that the models that are using are not adjusted to what the labor force is and what interest rates are, where unemployment rates are. So, they’re looking to try to get full employment, right? A tighter labor market is a good thing.

Now, Jerome Powell, you know, a lot of people want him, the progressives, which I always say, “When is a progressive ever happy?” Do not want him to be the Federal Reserve. They want somebody else because of climate change or whatever. It is what it is. I don’t think progressives can actually be happy. So they have to pick up Powell. He’s done excellent job. And there are a lot of progressive people who are saying this guy really wants full employment. So, part of this is, you know, Kabuki theater to a degree, but I think Powell gets reappointed. But the Fed has changed. Right? And I think a lot of things have changed.

Like, I think the fact that government involvement during recessions can really hinder the downside or, you know, prevent things from happening, I think that that’s something that we have to look for the next 10, 20, 30, 40 years. I mean, what if they do forbearance every year, every recession? Is this the end of the business model for buying distressed property in mass and trying to flip it? There’s so many new, exciting things that the Federal Reserve, the government, it showed that it worked. And I think Powell should get a lot of credit for that. And I do believe he will be reappointed.

Sarah Wheeler: I love asking you those questions. You’ll give it to us straight, exactly what you think. That’s hard to come by these days. A lot of economists, especially are like…you know, like they always hedge it. So, I love hearing those really straight-to-the-point answers on that. Well, let’s talk about mortgage rates, specifically mortgage interest rates. With what you just said about Powell, when are interest rates finally gonna start rising?

Logan Mohtashami: Here’s the thing. For me, it’s always been about the bond market. I’ve never been an MBS mortgage-backed securities guy. I think that conversation leads to the worst housing discussions ever. So, a lot of the confusion is QE, right? Quantitative easing. People believe the bond market is a bubble that it has to go up higher. No. You look at that four or five decade downtrend from 1981, it is still state and intact. Every year when I started to incorporate bond with 10-year yield forecast, I’ve always said that 10-year yield should be at 160% to 3%…let’s say 3.375% to 5% range. But during this crisis, you know, I talked about negative 10-year yields or bond yields under 62 base points. It’s the reason why I thought we were recovering because the 10-year yield was higher.

But for 2021, my forecast was the 10-year yield would be 0.62 to 1.94, that range. I believe in ranges, which means that the lower end range for mortgage rate is about two and a quarter to 2.375. The higher end range is about 3.375 to 3.65. I think we only had 3.375 for maybe a day or two. So, the bond market and mortgage rates look pretty much in line. And I think that goes back to the America’s Back recovery model on April 7th. He said, “The goal is for the 10-year yield to create a range between 1.33 and 1.6.” So, it did that.

When they started talking about taper, what happened? The bond yields went down. So, I just wanna remind everyone when QE1 ended, bond yields and mortgage rates went down. When QE2 ended, bond yields and mortgage rates went down. When the tapering was ending in 2014, bond yields and mortgage rates went down. When QE3 was ending, completely over, that’s when a lot of housing bears came in, “Oh, well, mortgage rates are gonna go to 6%, 7%.” Bond yields and mortgage rates went down. When taper was talked about really in 2021, bond yields and mortgage rates went down. So be careful of the QE. Mortgage rates have to go higher. Find ranges that you could work with. And look, trust me, nobody was more bullish on the United States of America than I was, but I can’t get above that 1.94 level in 2021. So that level should stick even today. I think the 10-year yield is at 1.33, fortuitous number, right?

Sarah Wheeler: Right. Well, you know, I mean, people with mortgage love low interest rates. But truthfully, you’ve said that one of the things we need to see a healthier housing market would be a little bit of a rise in mortgage rates. Tell me why you think that’s a good idea.

Logan Mohtashami: This was the painful reality of what happened toward the end of summer and going into the winter. I was like, “Oh boy, home prices are about to take off.” I think that was the theme of mines for Bloomberg at the start of the year. Everyone needs to worry about home prices overheating because of shortages, right? This isn’t amount of credit boom, just the simple, raw shortage of homes, the forced bidding, right? And when the housing bubble crashed, there was forced selling, this is forced bidding. The only thing that has materially changed the rate of growth of the pricing or slowed housing down is mortgage rates. You know, really a 4.5% percent or higher really cools things down. But in this case 3.75%, above that level can change the narrative a little bit, is just it wasn’t gonna be a 2021 story.

You know, when I talk about this is the most unhealthiest housing market post-2010, it’s because when you don’t believe rates are gonna get to a certain level to kind of cool things down, you have this four spitting action. You can see what’s happened. The exact opposite of the forbearance crash bros or housing bubble boys, it was the biggest, you know, year-over-year growth and home prices ever, not the most healthiest aspect, but again, these homeowners, all legit, best of the best, right? If you look at FICO scores, down payments, everything, and they’re staying in their houses for a long time. So that is another start of another 10 to 15 years of housing tenure because these people don’t move around as much.

And what it’s created is what started in 2014. It could create bad home price growth of demand, picks up a little bit when inventory gets to all-time lows. And that was the fear, you know, at the start of the year, and we all saw what happened in 2021, right? It occurred because Americans make money. They’re not poor, they’re not uneducated. You know, people need shelter, right? Shelter is like living, food, water, clothing. And the people who make money buy homes, right? And, you know, now, the dealing with the rental inflation picking up as well. Everyone needs somewhere to live. And if demand wasn’t there, you couldn’t get prices to get up here, or you couldn’t get rent inflation. So, mortgage rates were the only thing. But again, it wasn’t gonna be a 2021 story.

Sarah Wheeler: Okay. Well, you know, one of the hallmarks of your work is demographics. So, you talk about this huge way, but you talk about demand and you said that between 2020 and 2024. So why is that the big wave? And can we say, “Yes, there’s gonna be this kind of demand for the next three years”?

Logan Mohtashami: Well, if you look at home sales, and this is why I’ve emphasized this in a lot of my articles and tweets and things that I mention on social media, 2020 existing home sales were only 130,000 more than 2017 levels. So, there is no sales boom, right? And this is why I use the term replacement buyer demand, replacement demographic built-in demand. I don’t like to use the word boom because I have to show you a credit boom. I don’t even believe in the credit boom. I just believe that years 2020 to 2024 has the best housing demographics. You have the biggest younger patch of home buyers running into the first-time homebuyer age, 32.5 million, ages 27 to 33.

Then you got move-up buyers, you got move-down buyers, you got cash buyers, you got investors. You have to put ’em all together, right? And then you should be able to get 6.2 million total home sales, new and existing, every year and years 2020 to 2024, which never could happen from 2008 to 2019. 2020 check, 2021 check. The only thing that could change is if home prices accelerate too much and that number comes down if or when rates rise, or it just becomes too much problematic for home price growth to cool off sales to get below that. So, I’m not even a big sales…I probably have the least amount of sales growth out of anybody, but they’re there, right?

People buy homes. The Federal Reserve doesn’t buy homes, QE doesn’t buy homes, a 10-year yield doesn’t buy homes, stock traders don’t buy homes like through their stock trades. People need shelter. So, it’s just this once-in-a-lifetime historic event where we had to have a lot of people, baby boomers, Gen X, millennials, Gen Z, everyone put together with the lowest mortgage rates ever. So, you could see the concern about home prices accelerating. But demand will be there just because the replacement buyer, every year, you’ll have some kind of a home buyer coming in. Whether they’re a first-time homebuyer, whether they’re a move-up, move-down, cash buyer, investor, they’re all there. You put ’em in the hole together, this is a once-in-a-lifetime period. So far, year one and year two has passed.

Sarah Wheeler: Really interesting. Well, let’s talk a little bit about home building because, you know, we’ve mentioned inventory several times and, you know, you wrote an article for us about a month ago that was…or maybe six weeks now that it was like, you know, why we can’t build our way out of this, you know, rising home price. So why can’t we build our way out, Logan?

Logan Mohtashami: And here’s a longer-term thesis of mines that, you know, it was really hard to convince people in the previous expansion. One of the reasons why I said we’re gonna have the weakest housing recovery from 2008 to 2019 is that new home sales collapsed, 82%. To get new home sales above 750,000 where you could talk about 1.5 million housing search, which is, you know, just like a little bit under the 50-year average, you need to wait until years 2020 to 2024. That was the hardest thing for me to convince people that it was gonna take that long.

Builders don’t care about you, they don’t care about housing economies, they don’t care about the existing home sales. Like, they make money. It’s the business model. So, the notion that the builders were ever gonna oversupply a market, especially after the beating they took oversupplying a market from 2002 to 2005 and then having that crash and then having the weakest housing recovery ever, remember, we had missed sales in 2013, ’14, and ’15. In 2018, we had a supply shock where one of the builder CEOs talked about, “It’s the worst quarter since the great financial crisis.” You’re not gonna get them to build unless demand is there.

So, what happens? New home sales broke out, housing search broke out in 2020 early right on queue. But they pushed prices because they had pricing power. That’s a different kind of problem than the existing home sales market. They really pushed a level, “Oh, lumber price is up? Oh, it doesn’t matter. We pass it on to consumer. As long as a consumer can pay it, we’re all good.” Then they said, “Oh boy, this is getting a little bit too hot.” Everybody pulls back a little bit. New home sales moderated like we’ve talked about. You know, the new home sales moderator is not the issue. The builders know not to push the lever.

So as long as sales are growing for the new home sale, they will slow and steady build. But the notion that they’re gonna catch up to what people think should be where we build that, never gonna happen. I promise you, that will never happen unless the government comes in and starts paying the builders to do this up, it will never happen. This will be a failed premise from 2008 until every housing economist or economists goes to the grave, because they don’t operate that way. They operate a business model and they have to protect their margins. You look what happened in the oil sector, oil sector booming, oil shale railings. Right? Great. Two oil crashes already, you know, since then, too much supply. So, the builders are mindful of this.

So, whenever I hear, “Well, we have to build X amount of homes,” it’s only gonna work if new home sales grow and if monthly supply stays below six and a half months. So, monthly supply has been rising the last few months. We talked about that early on when we saw the first increase, “Hey, watch out for this. Be careful of this data line. So, the housing starts are slowing. Nothing dramatic on either sides. It’s just rising with that uptrend since the lows.” So don’t expect the builders to, like, pound the pavement and start building homes like crazy. There’s a lot of variables that work against that, but they have to make money. Right? And now that lumber prices are falling down, some people thought, “Oh, new home sales prices to go down.” No, they’re not. They’re going to the profit margin there. The builders are gonna bank it right there.

Sarah Wheeler: Well, let’s talk about that a little bit. This is a little bit off topic, but, you know, lumber prices, prices of chips, prices of steel, prices of whatever goes into buying a house, where are we with that? And what is your prediction on that going forward?

Logan Mohtashami: Well, lumber prices have obviously collapsed. So that’s a benefit. You know, I think we’re already back to pre-pandemic levels. Everything else just has shortages. And this is the history of global pandemics, or just pandemics, in general. I mean, I’m not a commodities, boom, or inflation person, but, you know, you gotta go with it. Right? One of the reasons I was able to retire is major investments in commodities, just because when you have demand pick up and then the world isn’t functioning right, other countries don’t have the kind of vaccines that we have. So, until everybody starts functioning normal again, global pandemics usually have one to two years of shortages. If the world doesn’t get vaccinated or we don’t get back to normal, this might take a lot longer than people think.

Once it does, shipping container costs go down, you don’t have all these boats sitting outside the ports right now. This is gonna take a little bit longer until the world gets back to normal. So, commodity prices typically a fall just because demand can’t keep staying up that levels. But you can see what’s going on everywhere. There are shortages everywhere. If you look at retail sales, they’re 15% above the pre-pandemic trend. That never happens, right? It never, never happens. A lot of that is demographically driven, a lot of that we gave a lot of people money. They spent it, right? They have spent it buying a lot of goods.

The service sector is catching up still. But again, the whole Delta variant, even though it doesn’t really impact us in a negative way like it did in March and April of 2020, it still shows that, you know, COVID is still out there, people aren’t functioning normal, and the world has to function normal more now than ever because it’s a global economy, right? Once it gets better, you’ll see shipping costs come down, you’ll see ports having boats come in normally, and then commodity prices will cool down. But until that happens, they’re elevated. They’re elevated for the right reasons.

Sarah Wheeler: You know, you mentioned Delta, there are other variants out there. But in your estimation, even if it slows some things down, we’re never gonna go back to that…you know, to the shutdowns we had, you see economically a different path. Correct?

Logan Mohtashami: You know, if you look at surges two and three last year, you know, a lot of people were worried that that was gonna impact the economic data like it did in March. Okay, never happened. If you look at Delta, has it really impacted…our jobless claims went down again last week. What we have is we have very hot, high economic data that cannot be sustained. So even if Delta wasn’t here, the rate of growth on some of these data lines are not sustainable. We’re not a fast-growing economy. We just had unbelievable amount of rebound in a very short amount of time. The data’s gonna fall on its own.

I think the fear with Delta is that immediately people go back to March ’20 and April 2020. That’s never gonna happen because we were working from the longest economic and job expansion and we did not all of a sudden, kaboom, bam. Like in 10 days, we have an active virus infecting and killing people. That shock was just as damaging as whatever lockdown protocols or everything. We are off of that stage. And this is why I keep on saying this in a lot of my work. As crazy as this sounds, we have learned to consume goods and services in this country with an active virus infecting and killing people.

That might not sound like something economists show, but that’s what the data show. So, yes, can it slow things down? Could people not travel or not want to go out? Yes, that’s sure. But it’s not March 2020 or April 2020, right? That’s over with. And the data has shown this in surge two, three, and even the Delta. Rate of growth is gonna cool down. Even if there was no Delta, some of the action Delta’s definitely impacting the data, but it’s never gonna be like March ’20, unless there’s some type of new virus that has a much higher infection rate, much higher killing rate. So far, that hasn’t been the case.

Sarah Wheeler: Well, that’s good news. We would all wish for that, that it would never get back there again. All right, like, we…

Logan Mohtashami: Yeah, well over 70% of the country has at least one vaccine shot and then, you know, there’s a lot of people that already have COVID. So, we’re in a much different situation now than we were back then.

Sarah Wheeler: Very true. Okay, well, you mentioned rents going up. We’ve talked about inventory. Something related to that that we hear a lot is are there big institutional investors out there that are buying all the houses, that are beating people out and making this situation worse as far as inventory? I know you have very specific thoughts on this. I’d love to hear those.

Logan Mohtashami: You know, I think it’s a really sexy headline, “Wall Street’s buying all these homes. It’s all their fault. You, not demographics, not mortgage rates, not primary resident home buyers, but the Wall Street firms like BlackRock and Blackstone, whatever.” You know, it gets talked about a lot. And I always refer back to, “This is not the first time we’ve talked about this.” We talked about this in the previous expansion as well. And if you take all the pension funds and Wall Street funds from like 2011 to 2017, they bought roughly about 200,000 homes. Compare that to the over 40 million homes that were bought, right? So, the Wall Street firms buying are not that big of a buyer. Are they buying homes? Yes. Are they gonna outbid other people? Yes. But for me, it makes it sound like housing’s invincible. Like, it’s driven by Wall Street, they have the money and housing is never gonna fade. No. Primary resident mortgage buyers drive this market always. When they fade, housing fades, right?

You saw that in the crisis, right? You know, purchase application data dropped, home sales dropped, purchase applications rebound, home sales rebound. Wasn’t Wall Street, guys. It wasn’t even flippers. Flippers are actually at the bottom, you know, the lowest percentage of many years. This sector is driven by demographics mortgage rates and primary residents. That is a squirrel that people are looking at and it just diverts intention from what really drives housing. And I hate the aspect to think that people think housing’s invincible because Wall Street’s buying all those. No, it doesn’t work that way. They are, investment and cash buyers are part of the variable, they’re part of the equations of buying. I talk about that all the time. But we’re not even anywhere close to where the cash buyers were after the housing crisis, right? They were 30% to 35%, even 40%. And that’s when home sales were falling, right? You need primary resident mortgage buyers to drive this market. It’s always been the driver of this market. So don’t put too much weight on, “It’s all Wall Street.” I think that’s more of a distraction.

Sarah Wheeler: I love to hear that. I’m gonna work that into a headline, “It’s a squirrel. Don’t get distracted by the squirrel.”

Logan Mohtashami: Don’t get distracted by the squirrel.

Sarah Wheeler: That’s great. Thank you so much for talking to us. This is just a preview of what we’re gonna do at our event in a couple weeks. So people should come out for that. But Logan, always a pleasure. Thank you so much.

Logan Mohtashami: Pleasure to be here as always.