Logan Mohtashami: Volatility as market goes wild

HousingWire

On today’s episode, Senior Director of Data and Content Tracey Velt talks with Logan Mohtashami, HousingWire's Lead Analyst about market volatility and the impact on housing   Related to this episode:   Mortgage rates sharp reversal as market goes wild  https://www.housingwire.com/articles/mortgage-rates-sharp-reversal-as-market-go-wild/   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.

Transcript

00:00Welcome, everyone. I am Tracy Velt, Senior Director of Data and Content for HousingWire,

00:11filling in for Sarah Wheeler while she is out this week. Today's guest is Logan Manashami,

00:16and we are talking all about the market volatility and what we might see with mortgage rates gone

00:23wild. So enjoy the podcast. So I've got big shoes to fill today for Sarah being out.

00:30And it's been absolutely wild in the market. So let's start with that. Let's talk about what is

00:37going on. Yes, it is. I always say if I'm making seven Instagram live videos within a 24-hour

00:46period trying to explain everything, all hell is breaking loose. And what I'm going to try to

00:52explain here is, unfortunately, at times, the mortgage market gets caught up into market

00:59volatility. And what's happened with the stock market and bond market, this whiplash was something

01:05I was worried about that I had to make a video like on Sunday night and say, hey, listen, if there's

01:12any kind of good news or anything, literally, the bond, we're going to get such a reversal,

01:18it's going to rip your face off. And here it is, the 10-year yield is at 3.87. And I hate to get to

01:25my little geeky trader sense, but I was like, okay, that's the intraday or bottom that's being

01:30tested. And we're starting to hear more about deals. Right when I say this, Trump announces a

01:36104% tariff on China if they don't make a deal. So when it turns, it's going to turn fast. The problem

01:44with this is that the spreads tend to get bad in this kind of environment. So we went from, I think,

01:546.55% of mortgage rates. And today, we're at 6.85. So in the big scale of things, it's not like

02:01major. But everyone who's in the industry and knows, boy, you get a pricing level there. And then

02:09all of a sudden, within 24 hours, it just reverses on you in a very fast way or 24 hours in the business

02:16day sense. And if we didn't have Liberation Day or tariff headlines, the job market or the jobs data

02:26last week was good enough to where the 10-year yield being at 4.35% was warranted. We have a lot of

02:33economic data lines that are getting softer before the trade war headlines. But we saw such a reversal.

02:40I think the high point this morning was like 4.27. This is not normal for everyone in the industry

02:46that's watching. But when you have headline volatility and money going in and out of stocks,

02:52this could be the case. And I think one example that I try to explain to people is that imagine if

02:59you're a bond investor or a stock partner, you've gained so much in the bond market and you're

03:04sitting there looking at a bear market in stocks. You sell your bonds, you raise cash, or you sell

03:11your bonds to cover margin. Whatever it is, you're sitting on big gains. You want to rotate the money

03:16around. That's also in play. None of this is normal. None of this is healthy. Last year was so much

03:23better in the sense that the 10-year yield was falling and it was slow and the spreads were

03:28getting better and it was a more functioning market. But until this calms down, these headlines

03:35can do this to the up and downside with bond rates. And do you think there is that a lot of this is

03:42really confusion over what Trump's ultimate goal with the tariffs is? Because he, on one hand, says he

03:49wants to correct the imbalance, which would mean the tariffs would stay in place. On the other hand,

03:53there's like, oh, we're going to negotiate and we want 0-0, which means that the imbalance, I guess,

03:59would just go away because there are no tariffs either way. But the old imbalance was still there

04:05and not corrected. So how much of that is really just confusion? I would say this. The global markets

04:14were not ready for Godzilla tariffs. And I go back to when there was like a 10% tariff across the board

04:22announced, the stock market futures were actually rising and bond yields were because they're like,

04:27okay, that's not that whatever it is, that's manageable. But the reciprocal tariffs were so big

04:33and so extreme that it's always shoot first, ask later after you had a few drinks, and then come back

04:42and see what's going on. But it was such a wild few days that you, like the 10-year yield literally

04:49almost got to my forecast low of the year at 380. And I was like, well, you know, if the labor data was

04:57breaking and stuff like that, then yeah, I could warn that. But it was just money, right? Money flows,

05:04money chaos. The market was up so much. People sold, bought bonds. Bonds got such a great gain.

05:10It's hard to make sense of it. But if you have the chaos factor into the stock market and bond

05:18market, we're talking trillions of dollars that could be moved like this. So until you get a

05:25little bit of clarity, and I think that's what Secretary of Treasury Besant did. The storyline is

05:32that he flew to Florida and kind of told Trump, let's talk more about maybe deals. I think as we

05:39talked about in the last week's podcast, I think in the end, that's the goal. It was such an egregious

05:46tariff percentage right away that I just don't think that was ever the plan. But if you think about

05:51blitzing people and forcing people to do deals, today's a good example. You got 104% tariff on China

05:59now. You're trying to kind of ram them into making a deal. And this is the tactic that's being used.

06:07But now I think what Besant and some other people does, let's kind of, the other people, let's get

06:13some deals done so people think that there's actually a coherent game plan toward the end of

06:19this. And in a few days, it might be a little bit more understandable. Or in a few days, we might

06:27see more crazy stuff. But until then, this market volatility is part of it. And I advise everyone,

06:34you got to keep your eye on any headlines news, because as you can see, things just move like

06:39this, seconds. And for people that have to lock rates or quote rates, man, it's got to be brutal out

06:45there. Yeah, I saw a headline about South Korea is negotiating, sending a team over to negotiate

06:53that and other issues. I think you said it was kind of one-stop shopping. Yeah, this is just, you know,

07:00this is just how President Trump operates. And this is a very, very aggressive, again, we're already

07:08seeing fights between Elon Musk and Peter Navarro out there. So there's chaos. It's just chaos. And for

07:15those that remember 2018 and 19, 2018 was like this. This is why we kind of did that podcast

07:21out of Trump, get ready for some headlines. And back then, the markets didn't like, it was a very

07:28tactical, small trade war, you know, we're doing NAFTA 2.0. It wasn't as extreme as this. And even back

07:35then, the markets threw a fit. But the thing about 2018 and 19 is business investment went down to zero.

07:45President Trump did not do the trade war tap dance until 2018. He made sure to get the

07:51corporate tax cuts in first. Then he went at it because he knows everyone in the White House knows

07:57the markets aren't going to like this. And business needs a little bit of a cushion while this goes on.

08:04And eventually, he went and did some deals and the economy, if anyone remembers, the economic data was

08:09actually getting better toward the second half of 2019. And the first two months of 2020 before COVID

08:15hit us, all the data lines were good. Jobs were beating estimates, manufacturing data was up, retail

08:21sales was up, housing broke out before COVID hit us. So there's a playbook. When there was a rumor of a

08:3190 day tariff hold, stocks just shot up within like seconds. And then they said it was a fake

08:36data line. Was it a test balloon to see what, you know, can happen? Maybe, but it's just, this is,

08:45this is not normal. So I understand if you don't, if you have a life, I don't have a life. So I follow

08:51this stuff 24 seven. So, but if you just like went to lunch and you came back, you said, what just

08:55happened? It's, it's, uh, it's, it's, it's an extreme volatile period. Yeah. I don't even look

09:02at my investments. I've chosen to not look, um, and how, you know, I've heard a lot of reports of,

09:11oh, we were due for a market correction anyway, probably not this extreme. How much of that plays

09:18into it? This is a good excuse for that to happen. So for all my stock trader friends that are listening

09:24into this in 2017, the market was very stable. There was no volatility. Then we went into the

09:32trade war and then things started to pick up. So this is something we actually talked about in the

09:38podcast a few months ago that everything is quiet, but if the headlines start to get aggressive, watch

09:44this. I just think this, this was such a big Godzilla tariff plan that nobody, not even the, like the

09:53people that were forecasting the worst case scenario thought this would be it. I think that's the

09:58volatility. Uh, and they're sitting on so many gains over the last few years, since the, the lows in

10:062022, that you shoot first, you ask later, put money into bonds, bonds rallied so much that everyone's

10:13like, oh my God, I'm sitting on big gains here. So, you know, it's, it's, it's just one of those

10:17things where the news itself really, uh, uh, took everyone by surprise. But I, I would also address

10:24this to, to another fact. There's a lot of people out there that are sending videos out that saying

10:29we are purposely trying to destroy our economy because we have to refinance government debt.

10:34This is a lie. Okay. Progressives and conservatives have group people doing these marketing themes on

10:40all social media outlets. We're not, we do not have to worry about like a, one of our bond auctions

10:47blowing up or, or we're going to become like a third world country where you have a debt situation.

10:52We can handle this. And the treasury secretary of a set said, we're moving a lot of our issue debts

10:57to short-term debts. We'll be okay. So I think that's kind of like a cover of trying to say, Hey, listen,

11:04if the 10 year, there's a lot of people that represent the white house on social media and say, well,

11:08it's working in the 10 year yields lower. It's just that when you, when you put a shock like

11:12this into the system, bond yields go down because people perceive that lower growth is coming. Uh,

11:18so be careful with people that say we are intentionally trying to destroy our economy

11:23because we need to refinance our debt. Like we're a third world country that we have problems. No,

11:28we're, we're, we're the United States of America. We're the biggest economy in the world. We're

11:32literally like four or $500 trillion worth when you put everything together. We'll, we'll be okay.

11:37But, uh, it's just the shock of the event is making the markets go crazy. Kind of like what

11:42it did in 2018 as well. We had a almost near bear market the day before Christmas in 2018.

11:49So here's just an extreme version of that. And let's talk about, uh, mortgage rates and kind

11:56of their volatility as well. Um, what are, what are you thinking? What is your prediction for?

12:02Well, because the 10 year yield almost got to the bottom of my forecast. Um, the rates didn't get

12:09close to the bottom end of my forecast either, because the speed of the speed of the 10 year

12:15yield falling and then the spreads got worse, right? So, uh, last year we got towards 6% with

12:23the 10 year yield. I think the intraday low was like three 62 here. Mortgage rates did get to the

12:29low of the year. Uh, but then they shot up and we're, we're talking 30 basis points in the grand

12:35picture of things. It isn't too crazy, but we're in the industry where you, if you're locking

12:42something, boy, and it turns on you like this, it's, it's, it's problematic. So the volatility of

12:47the pricing was, was, was damaging in that sense, but going out in the future, right? The bottom end

12:55range is three 80. The economic data was getting softer before this trade war stuff happened. If

13:02that softness gets worse and worse where the labor market starts to break, the 10 year yields can go

13:07lower, uh, uh, out there, but we get down to that three 80 level, or we get towards 6% mortgage rates

13:14again, which would be the, you know, in a sense, almost, uh, the, actually the third time this

13:20has happened since 2022. Then we start to say, okay, what's that next stage? What does the federal

13:26reserve do? Are they going to cut rates and become a commative when there's jobs lost? What, how are

13:32they going to react? Then that could go into another level of lower rates. But until then we work off the

13:39economic data, it's, it's unfortunate that the markets are really dictating everything now,

13:43but in time, this should calm down and we'll, we'll, we'll take it with the economic data after

13:50that. But man, I did not expect to get close to my bottom end range, uh, uh, before tax day happened,

13:58uh, because the quite, the quite didn't see the velocity of the downturn in, in, in the labor data yet,

14:04but here we are and, uh, we'll take it one day at a time. And thank you all for the Instagram

14:09family. We're almost at a million people a month. Now we try to keep live updates because every time

14:15we hear a headline, we want to see what the bond market does to it. Uh, but again, the, the lower

14:19mortgage rate theory is just a lower economic growth and labor data getting, uh, if the fed had

14:24cut 1% lower on, on the rates, then you could get to 6% easier, but we're not there yet. And

14:31oh, there's going to be a battle between Trump and Powell for the next, for the rest of the year.

14:36And, uh, that's, that's a popcorn. Let's watch, see how that, uh, folds out much like your

14:43conversations with Diego. Yes, by the way, Diego and I have these, these, these epic battles on Slack

14:51and, uh, um, it, you guys will all trust me. Everyone would love to just sit there and watch

14:57that, you know, very interesting. And I learn a lot from them too. My stuff is always designed to

15:03be informative, right? So no matter who I'm talking to, uh, even if I don't agree 100%

15:09with the person, my job is to assume that people are watching and learning. And even the person

15:14that's talking to me, it's done in an educational format to teach. That's the old high school

15:19basketball coach and the story in me teaching something is, is, is very useful because then

15:25it could stay with the person for a very long time. So how is the housing tracker data looking

15:30Logan? You know, this is the surprising thing. If somebody would have told me that all of our

15:35forward looking data lines are positive year over year by April 1st, I wouldn't have taken that bet

15:43if, if they told me mortgage rates would have been above 6.64%. So we have this tracker article

15:50every week. We have these forward looking data lines, purchase application data. We have a weekly

15:54contract data, things that go into contract. And then we have a total monthly pending sales

15:59data as well. They're all positive now on a year over year basis. This data line does not,

16:07it's not going to go into the existing home sales report that's coming out in a few days,

16:11but this is like, uh, weeks and months ahead before you see it in the sales data. And for

16:17it to go positive now, the last two years, I've already written an article saying, okay, we saw the

16:23peak in, uh, existing home sales. That was it. Uh, rates have gone up. The forward looking

16:28data is negative. We're not going to go back there. This is the first year in many years

16:32that all of our forward looking data lines are positive. It's nothing spectacular. It's

16:35not blowing up higher. It's nothing in that matter, but it is positive. This, this to me

16:41means that if mortgage rates can just head down towards 6% and stay there, I believe everyone's

16:47sales estimates and, and, and, and forecasts will be wrong because the forward looking data is

16:52getting better. It's a really good year in my sense, because I'm a, I'm a team, team higher

16:58rates, higher inventory person. So I'm getting my inventory growth. The new listings data is going

17:03to get, I believe to 80,000, which is the seasonal peaks in the previous decade, you know, we're like

17:1080 to 110,000. So positive there. But I, I am surprised that both purchase apps, weeklies and

17:16monthly contracts are all positive year over year and rates really haven't broken under 6.64

17:22and head towards 6%. That's the kind of the, the shocking thing to me. I would not have taken

17:28that bet early on. So we'll see how this, by the time this podcast comes out, uh, purchase application

17:34data will be out again. We'll, we'll, we'll see what happens. There's when markets get wild like

17:39this, you just, you just don't know how people are going to react, but it is, it is a very, very

17:44encouraging sign to see what I love to see rising inventory, rising new listings, rising sales data,

17:51uh, that looks like a normal housing market that I just can't wait to get back into again. Um, all

18:00this chaos can be, uh, uh, a little problematic on sleep, but that's, that's the positive news so far

18:07year to date. And this last week, all of our data lines went positive together.

18:12Yeah. I, I don't even know what a normal housing market looks like after the past several years.

18:18Yeah. You know, it's funny because a lot of people thought that 2018, 2019 market was so wild and

18:24crazy. And, you know, because mortgage rates got to 5% slowly, but they got to 5% and, and it, we,

18:33COVID has ruined so many data lines and it's also created some extreme moves on data lines that we

18:39never thought could be possible, but that's a global pandemic. But housing, it, the 2024, I thought was

18:45good in the normal sense in 2025 is, uh, we haven't seen any, what we call a rush of sellers, um, uh,

18:53new listings data during the housing bubble crash years. We're running at 250 to 400,000 per week for

18:59years. Uh, even if I took the peak new listings data in the last five years and doubled it, it wouldn't

19:05even come close to the bottom end range of back then. So homeowners again, solid, most part, all of them

19:13are doing good. They're just kind of doing, going to work, doing their thing. Um, the markets on the

19:19other hand, chaos, we say middle, middle-aged. See, this is a really good example. Middle-aged

19:23podcast stock traders. They sell things in a second, right? You know, so when they talk about

19:29housing, oh my God, everyone's going to rush to sell their house. No, that's you. You did that this

19:33week. You sold all your equities. You put it to bonds. Homeowners don't act that way because they

19:39have to find another form of shelter. You can sell your socks like this. It doesn't matter.

19:44You go up, go to your kitchen and get a drink or whatever, but housing just is not as liquid.

19:50And again, this, the supply is a function of demand in housing because 70 to 80% of sellers

19:55are buyers. So it's a whole different marketplace. Like it's, that's structurally different.

19:59Yeah. Well, Logan, thanks so much for, for sharing all of that. And I look forward to the

20:05next two podcasts that we're doing together. Yes. And also for everyone listening to this

20:10for the first time ever, Ivy Zellman and Logan Motoshami are both speaking at the same event.

20:17This has never happened. All of you can come watch that. You could register free there. The link is in

20:23housing wire. We have another wall street analyst joining us, Dale. So it should be a really, really

20:29good conversation with, uh, uh, three people with three different views and, uh, we'll, uh, have that

20:35on Friday. Can't wait. Sounds good.

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