Key Highlights
- Logan Mohtashami, housing data analyst for HousingWire, predicts no housing bubble crash in 2020
- Long standing thesis that housing market to improve during 2020-2024 due to demographics
- Believes that demographics and mortgage rates dictate status of housing market
We’ve been covering the thinking of Logan Mohtashami, housing data analyst for HousingWire, for some months now. Mohtashami bases his predictions for the housing market based upon demographics and mortgage interest rates. He’s encouraged us to “wait and see” where the market is vis a vis housing data until July 15 before predicting a healthy and recovering or sick and crashing housing market.
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The data’s here now. Here are Mohtashami’s thoughts:
- “Let go of the crash thesis. The reality is this: it wasn’t going to happen in 2020 even with a pandemic virus.”
- Mortgage Banking Association (MBA) data points to purchase applications rising for the last 7 weeks
- +18%. +13%, +21%, +18%, +15%, +33% and +16% each of the last to most recent seven weeks
- Purchase applications for new homes have increased +54% y/y, according to the MBA
- Mohtashami believes this double-digit rate of growth in purchase applications will likely not be sustained during the second half of 2020.
- Pending home sales increased +44% m/m, according to com
- So far, we’re not seeing any desperation selling despite massive unemployment due to the COVID pandemic. Why? Homeowners are in better shape because they have more nested home equity
- There will be more foreclosures and short sales than we’ve seen in years BUT foreclosures and short sales will be balanced by demand from Millennial buyers who have come of home ownership age
- Mortgage interest rates are setting new records with last week’s rates coming in at 2.98%
- These rates are fueling home sales.
- Mohtashami DID NOT foresee the surging increases in COVID cases now sweeping the country.
- New COVID cases absolutely impact the health of the housing market HOWEVER Mohtashami encourages market professionals to focus on what, in his mind, really matters for the future of the housing market: demographics, mortgage rates and national efforts to combat the pandemic
Mohtashami’s bottom line per the housing market health – “As long as purchase application data stays flat to positive on a year-over-year basis, housing will be fine in 2020.”
Thanks to HousingWire.
Also read: Are Low Rates & Rising Incomes Transforming Housing Affordability?, Podcast: Mindset, How To Show Emotion Without Being Emotional | Tim and Julie Harris, Podcast: What Happens Next For Housing, Economy And You? | Tim and Julie Harris
