The Fed’s Plan “Backfired,” Now They’re Scrambling

Dave:
Hey, everyone. Welcome to On The Market. I’m your host, Dave Meyer, joined today by Kathy Fettke to interview one of, I think, our mutually favorite people in the entire industry. Kathy, who do we got today?

Kathy:
Logan Mohtashami from HousingWire is someone I follow religiously. He just gives insights on some of these data lines that the news media gets wrong so often because it is confusing. So I think I’m just really excited to get his insights today.

Dave:
Likewise, and Logan’s been on the show, I think two times previously, and if you’ve listened to him before, or read, follow his work on HousingWire, or he’s very active on Twitter as well, you know that he is one of the best in the industry at taking macroeconomic information, like what’s going on with bond yields, and what’s going on in the labor market, and relating it back to specifically the housing market, and what is going on with home sales volume and home prices, and so today, that’s what we’re going to get into with Logan. We’re going to start by talking a lot about the labor market because I know he’s been really interested in this, and I think it’s something that a lot of investors don’t follow as closely as they should because it does actually have sort of these secondary or tertiary impacts on the housing market, and I’m really excited for Logan to explain to us how that works. Kathy, is there anything else you’re looking forward to?

Kathy:
No, just want a good idea of what we can expect in 2024 and beyond.

Dave:
All right. Well, with that, let’s bring on Logan Mohtashami, the lead analyst for HousingWire. Logan, welcome back to On The Market. Thanks for joining us today.

Logan:
It is wonderful to be here.

Dave:
We are super excited to have you, and you’ve been writing a lot about one topic, in particular, the last couple of months, which is the labor market. So can you just get us up to speed on where numbers are, what the headline data is showing about the labor market right now?

Logan:
Okay. So this is part of all of my macroeconomic work post-COVID. So I think, to explain to where we are here, we have to go back to the COVID-19 recovery model was written on April 7th, 2020. So we thought the U.S. economy will recover in this year. That model was retired on December 9th.
But then, the next aspect is, “Okay, so when are we going to get all the jobs back that was lost from COVID?” I thought by September of 2022, we’ll get there. Literally, right on cue, we got all those jobs back. Job openings are going to get to 10 million in this recovery. It got to 12 million, but now, we are in a very unique spot of my economic work with the labor data, is that, imagine there was no COVID-19. Imagine that the longest economic and job expansion in history was still going.
The labor market would be between about 157 million to 159 million. So once we are there, naturally, the job data should slow by itself. We simply do not have the population growth to have big numbers anymore. We’re going to go back to where we used to be, and that’s where we are right now. So I think what a lot of people are doing, they’re seeing the job growth data slow down and they think that’s breaking.
It’s not necessarily breaking, it’s just getting back to the trend. Breaking data means jobless claims start to spike, and when that happened, that runs with every single economic cycle we’ve had post-World War II. So the labor market is getting back to normal. I would argue it already is. For example, the Federal Reserve likes the job openings data, the job openings quit percentages.
The people that quit their jobs to get higher pay were already at pre-COVID-19 levels. The hires is already pre-COVID-19, so there’s no more tight labor market in that sense anymore. It looks pretty much kind of where it should be. People should take the last two jobs report with a grain of salt. There’s always seasonality issues with January data, and we’re just going to slow down, slow down, slow down till we get to even averaging under 140,000 jobs per month, but the jobless claims data hasn’t broken, and that data needs to increase, where people start to file for unemployment benefits, and when that gets to about 323,000, the labor market is broken at that point. So we’re not there yet, we’re just getting back to where normal is, right now.

Kathy:
So what you’re saying is all this talk that the labor market is slowing down, and that could lead to recession is really … Really, the way you’re interpreting that is we’re just coming back to normal to where things would be if there was no COVID.

Logan:
It exactly looks normal to me, and this is why when I talk about the economic cycle first, I always make sure that every jobs report I write, I give updates to this. In fact, one of the reasons why the labor data might be a little bit stronger is that immigration came back and we have a little bit more of the labor force growth, but that’s going back to normal anyway right now. So it would be highly abnormal to have any big prints going out in the future. We should be running at under 140,000, because most people are employed. There’s like 167 million people, really, in the labor force, so there’s only so much jobs that can be created and it looks about right.
We’re no longer in a tight labor market at all, whatsoever as the jobs quits percentages has fallen, so naturally, the jobs data is going to slow down, wage growth is going to slow down, and that would be the natural course of economic cycles, especially working off of a global pandemic.

Dave:
Logan, you’ve mentioned a couple of different labor market metrics, the unemployment rate, the job opening rate, the labor force participation rate. For those in our audience who are trying to better understand or study the labor market themselves to use it to make investing decisions, are there two or three metrics that you recommend people who want to understand the housing market focus on?

Logan:
So number one, you never want to focus on the labor force participation rate. That, to me, is almost one of the most more useless data lines we’ve created. The labor force participation data is going to start falling down by itself. Older people are going to leave the workforce, so people misconstrue that as, like millions of people are sitting at home and not working. No.
So it doesn’t work that way. It’s like I still have people telling me, “There’s 100 million people out of work. They’re not working.” I was like, “Oh, no.” So the labor force participation can confuse you.
So, it’s basically like three data lines you want to attract. Number one, jobless claims runs everything. This is where the people file for unemployment benefits each week when they lose their jobs, and then there’s the continuing claims, right? Those are the people that file for unemployment benefits after 10 days. So those two things run every economic cycle post-World War II, so you need to always track that.
Then, the job openings data is a lot of fun for me. Job openings, labor turnover, quits percentages, these things are key to tell you if the labor market is tight. When the quits percentages increase, that means people are quitting their jobs to go get higher-paying job. The labor market gets tighter when that happens. That’s done.
We’re pre-COVID levels, so the job openings data itself, it’s like over nine million jobs. Take that number with kind of a grain of salt. The quits percentage right there is your better data line. So you go unemployment claims first, quit percentage next, and then also, the hires. The job openings has this hires and layoffs.
Millions of people get fired every single year. Literally, people get fired every week, every month. We have a natural layoff data line that stays kind of roughly flat for most of the times, but the hires is now below pre-COVID. So claims, recessionary or expansions, job openings quit percentages, if the labor market is tight, not tight anymore, and the hires are now below pre-COVID-19 level. So boom in labor jobs is over, so we’re getting back to normal, and we just keep an eye on that jobless claims data. That’s going to be the key to everything for the Federal Reserve, and everything we run, that’s going to be the number one labor data line to track.

Dave:
We are here, talking to Logan Mohtashami about the labor market and the Fed. We’ll be right back after this quick break. Welcome back to On The Market.

Kathy:
So Logan, that can change so quickly, and it has in the past. What could potentially drive the labor market off a cliff, and we start to see the unemployment rise?

Logan:
This is a very good question, and this is the, I think … When we track economists or stock traders or people on YouTube, one of the things I noticed is that they don’t follow old historical models with recessions. So the irony is that 2022 had the biggest and fastest home sale crash ever, and then it all stopped after November 9th, 2022. So what occurred is that people went 100% into the recession call into 2023, except the one data line that always works with every single recession. Residential construction workers lose their jobs first.
It happens all the time. Why? Because higher rates, remodeling, home building, construction, all these things fall first and they recover first. Well, rates started to fall, the builders pay down rates. They kept the residential construction workers employed.
They have a huge backlog, so when residential construction workers start to lose their jobs, typically, there’s the cascade of, “Okay, other sectors will start to follow. The Fed is overhyped. They kept policy too tight, and then jobless claims break.” Every single time, it works. So that’s why since 2022, I said, “Listen, let’s not go into the full recession talk until jobless claims break over 323,000 on the four-week moving average,” because it could lead a lot of people to false data reporting on, “Oh, the recession’s here, recession’s here.”
So that’s why I think a lot of recession calls didn’t work, because when I go back and read people’s models, literally, their whole thing was based on residential construction workers and it didn’t break. We’re not really booming in that area anymore, but we’re not breaking, and I think that explains why we had an expansion while we’re still in an expansion, but we’re not there yet, and this is why I say the Fed is kind of playing with fire at this point. There’s no reason for them to be this restrictive, but knowing them and reading how they looked at this, they were pushing everything on the labor market first than inflation. It doesn’t make sense. Inflation has fallen down so much.
They’ve hit their targets. Why aren’t they cutting rights? Why aren’t they being more positive? They would feel much better if jobless claims started to rise, and then they could start being more aggressive, which I don’t agree with that policy, but that explains why I’m not a, kind of a really big lower rate guy until I see the jobless claims back. They’re just literally waiting for that number to give them the okay, and it’s still very historically low.

Dave:
Logan, you just mentioned that the Fed … Inflation’s come down and they’ve hit their targets. From my understanding, they want get it to something around 2%. We’re still a bit above that. So do they still feel that there’s work to do with inflation or are they taking a victory lap now?

Logan:
The Fed is confused because their own model … This is the honest truth I’m telling everyone. The Fed actually forecast their recession last year.

Dave:
Yeah.

Logan:
Right? And then, they just assumed that if they hiked rates to a certain level, the recession would occur, and then they could start to be more progressive in terms of maybe lowering rates. However, the Fed also said in 2022 … This is why I always harp on this. Jerome Powell said, “We want the Fed funds rate to mirror three, six, and 12-month PCE data.”
That’s their inflation, personal consumption expenditures. Well, three-month PCE is under 2%, six-month PCE is under 2%, the GDP deflator, the quarterly is at 2%, and headline PCE is at 2.6%, so they’re there and they’re like … Their model backfired on them.

Dave:
Yeah. Exactly.

Kathy:
That’s encouraging.

Logan:
Yeah. They’re absolutely confused because they’re like, “Okay, the labor market didn’t break.” Well, the stock market rebounded, and growth was above trend. Wait a second. Of course, because this is the problem.
They ran a 1970’s inflation model. This is why they always say, “The 1970’s and 1970’s, 19 …” But it was a global pandemic, and the history of all global pandemics, it’s very inflationary, and then the disinflation happens, especially with rents. You see a very inflationary rent period, the disinflation, so they’re kind of like, “What do we do now? We totally messed up.”
Not only did the labor market didn’t break, the stock market rebounded, and growth went above trend, so I think they’re just like, they’re hesitant to actually do the right thing because they’re so worried about the 1970’s, and they don’t really need to worry about that. We don’t have that economies. If the Fed was here, I would ask them, “What do you think is going to reaccelerate inflation?” In the 20 years, in this century, we had low interest rates, Fed balance sheets go up, everything, we couldn’t get core inflation above 2% and stay up there if our life depended on it. So what changes now?
So the global pandemic, supply chains don’t work. There’s a lot of things. We had a very strong rebound, but those things have gone away, so how do we get inflation to reaccelerate? I just don’t think we have that kind of labor force dynamic or economy, so they’re kind of stuck. This is why I always said, since 2022, they will be old and slow on this, because they’re running ’70s models versus a pandemic, and that’s not going to work for them, so we’ll see this occur when the growth rate of inflation falls and they’re like …
And even here, Powell’s not pivoting. They’re not talking … Neel Kashkari came out and said, “Oh, we might not even need to cut rates.” We’re not tight because they’re running the wrong model for the wrong century, and here we are, just waiting for them to do the right thing.

Kathy:
So Logan, if you were in Jerome Powell’s position, what would you be doing right now?

Logan:
First of all, I would’ve never done the last one and a half percent rate hikes. I would’ve just stuck to the original 2022 premise that they talked about. I wouldn’t have panicked. Second of all, I’m already cutting 75 basis points. I’m saying 75 basis points, we’re still very restrictive with the growth rate of inflation.
We’re nowhere near neutral, right? So if you’re looking at neutral, even being higher, Fed funds rate is 3%, so there’s no reason. I’m telling everyone, we are going to neutral. We want the tenure yield to go down. So I call it the COVID-19 policy, right?
The United States government has a COVID-19 housing policy, and this happened last year when Neel Kashkari, who’s my number one target, when he said 6% mortgage rates makes their job harder. I was like, “What?” No. People, buying homes, having sex, having kids, doing stuff that normal people do, it makes our job harder. How are we going to beat inflation?
So right there, I was like, “Oh my God, they’re running this model that says that they can’t have housing come back.” So I said, “Fine, we’ll just wait for the whole year.” We were a whole year, and we have one in two handles on PCE inflation, so we have to somehow get them off of this, and just get something back to neutral because-

Kathy:
Can you give him a call, Logan?

Logan:
Yeah. I mean, it’s one of these things where it’s really interesting. Every sector of our economy is somewhat normal, but the existing home sales market is in the third calendar year of great recession laws of demand, and they won’t even admit it. So this is my thing. They don’t know what to do here.
Neel Kashkari said, “The interest rate sensitive sectors are doing well, or holding up well.” Homie, it’s the third great recession laws of demand. How is that thing …” And it’s like they’re looking at the builder-

Kathy:
You got banks failing and …

Logan:
Yeah. I was like, “What are you looking at?” And then, I saw Jerome Powell at his press meeting say, “The housing market is subdued.” See, they don’t want to acknowledge this because they’re afraid of it, right? This is like last year, last year when purchase application data.
So we have this whole tracking model at HousingWire now, that Altos Research and I combined forces. And the forward-looking data was actually … It wasn’t crashing, but it was getting negative, and Fed presidents were going on their tour saying, “The housing market has recovered, recovering.” I was like, “Oh my god, staffers.” So in my podcast I say …
Because I know the Fed staffers listening. “Fed staffers, don’t rip that out of the Fed’s president’s speeches. Don’t say this.” It’s like purchase application data is back to 1995 levels. Gangsta’s Paradise was the number one song.
No Doubt was the band back then. This is not a recovery. Down is not a recovery. A recovery is when things go up. So they’re utterly confused here, and I get it.
Whatever they’re running their models on doesn’t make sense to them, so they’re hesitant to pull the trigger. Now, a lot of people thought the Fed pivoted last year when they said, “Okay, listen, we’re really restrictive.” What occurred was a few Fed meetings ago, the Fed said, “Okay, we need to still be restrictive here.” The bond market just crushed them, right? The ten-year yields shot up to 5%, and literally, we had fed presidents come on record, go, “I don’t know what’s going on. Why is the bond market …”
It’s like you went hawkish when the bond market was shorted and every trader burned you, so this is not the most efficient or coherent fed in terms of housing and modeling this cycle out. So old and slow, that’s my thing.

Kathy:
Yeah. What are going to be the consequences for them not using these old and slow models?

Logan:
The consequences is … The irony is Jerome Powell talks about, “We want to help the lower income households. We want to help these people that, the cost of living …” Well, guess what? It’s a credit-based society.
So auto loans, delinquencies are rising. Credit card delinquencies are rising. They’re also rising for younger people who are also … A lot of them are renters as well. So this data line is breaking on them, and I always say, “These are the Fed’s pawns.”
They’re willing to sacrifice these people, but the longer this goes, the higher the risk of a bigger downturn, because we’ve already hit the inflation number so we don’t have to worry about that, but they’re stuck, so that just means that these data lines could keep on deteriorating, and then the job loss recession happens, which escalates that problem even more. So we just got the credit data from the Fed, from New York Fed, and auto loans and credit cards are rising. Nothing like too dangerous, but they’re increasing in an expansion. There’s your problem. It’s one thing to increase during a recession.
That makes sense, but if this is increasing during an expansion, that means your policy is too tight already, and that’s the missing link. Remember that this was happening in 2005, ’06, ’07, and ’08, and they ignored it then, and then the job loss recession happened, right? We were having foreclosures and bankruptcies, all increase five, six, seven, eight, then the job loss recession, then they’re like, “Oh, God. Now, we’re going to cut. Now, we’re going to do this.” So I’d rather them get ahead of the curve, kind of like what they did in 2018, but it’s just problematic for them.

Dave:
Logan, when you extrapolate this out to the housing market, what does it mean for home sales volume and price direction in the coming year?

Logan:
So this becomes an interesting housing discussion. How the hell did home prices get back to all-time high, in 2023, right? I mean, everyone went in. I mean, the funny part is I have this lovely relationship with the housing bubble boys for the last 12 years, so I’ve always documented every single year the wrong takes. So what happened was after November 9th, home sales stopped crashing.
So when home sales stopped crashing, that means we are in a stable demand in a very low inventory environment. So you don’t even need demand to really increase big, but in a low inventory environment, prices can still increase while sales stay low. That’s kind of not what you want to see. You’d rather have to see rising demand and rising prices if that’s the model you want to work with, but here, we are third straight year of great recession lows, which means that we’re missing 4.2 to 4.7 million home buyers, and they’re still there. They didn’t die.
This is not like Logan’s run, where everyone dies at 33. They’re still living, right? So eventually, at some point, when rates come back down, unfortunately, this means we’re going to have this group all try to come back in at the same time, and whatever inventory increase we get, that becomes problematic about getting down. So when you over-hike, you just … I mean, I naturally don’t believe in the pent-up demand theory, but now that this is now the third calendar year of the great recession, laws of demand, those people are just sitting there, waiting till they could qualify or get to a certain thing, and you can’t run an economy like this for a decade, right?
This is why I say this COVID-19 policies. This is not like … We’re not like Japan or Germany, we’re an old country or anything. We have a lot of young people that always rent, date, mate, get married, kids, marriage kids. People got to go start moving their lives, and the more we hold this back, the bigger that pool gets.
And it’s not like prices are falling, right? That’s the problem. That was a whole savagely unhealthy housing market thing, is that prices could still increase even with historically low demand because inventory’s low, and it’s just not a good place to be in. This is why we got to get things somewhat going, so we don’t have this, “Okay, here comes the other group that I’ve been waiting for three or four years.” We don’t want this to be three, four, five, six, seven years.
We got to get everything kind of moving. The growth rate of inflation fell, right? So I’m not even asking for much, just like six, five, 60% mortgage rates just to get things going again, but they are so slow on this. That’s my concern, that eventually, we get a little bit more people coming in, and inventory’s not high, and that inventory tends to go down when demand picks up. Guess what?
We’re back in this very low inventory environment, which we’ve seen other countries have to deal with before the pandemic, and that was the whole fear about years 2020 to 2024, because we get a little bit of boost of demand by the millennials that are coming to age, and here we are. Now, they’re waiting out there.

Dave:
Now that we’ve spoken about the Fed, the labor market, and a bit about the housing market, after the break, we’re going to talk about the relationship between the bond market and the housing market.

Kathy:
Welcome back to the show. So Logan, you also pay a lot of attention to the bond market, and we know that when Jerome Powell was on 60 Minutes, the next day, the yield went up and mortgage rates went up. Why is that, and what’s the relationship?

Logan:
Well, here’s the … Every single year, when I do my forecast, I give a range of where I think the 10-year yield should be, and it’s like 3.21 to four and a quarter, mortgage rates between 5.75 to seven and a quarter, and we’re not going to break lower until jobless claims start to break. That’s the whole Gandalf line. If people don’t know what I’m talking about, last year, when mortgage rates were falling, I said, “That’s it. I don’t think we’re going any lower than this,” so I brought Gandalf the Gray.
Literally I was doing, “You shall not pass” tweets all day. We’re going to hold right here. We bounced off of that. So when Powell talks about maybe not cutting or waiting, the bond market will go off of that, and kind of the 10-year yield and mortgage rates is really Fed expectations, inflation expectations, and the macro data. So because the economy is still here and we’re still in restrictive policy, the 10-year yield went up, but we’re kind of still in that range.
We should be where jobless claims data is at, so I don’t agree with what they did, but I’m not a Fed pivot person. I haven’t been a Fed pivot person since 2022, and even going into this thing, I said, “They’re not pivoting.” I literally did a podcast before the event, and I said, “The Fed hasn’t pivot.” They’ll show it to you, and it’s just that he’s not fully engaged into getting that into a neutral policy yet, and the 10-year yield went up. We’re still kind of in this little range up here, but I think the frustration for the real estate and mortgage side is that they were told that if the growth rate of inflation falls, the 10-year yield and mortgage rates will fall one-to-one.
I didn’t agree with that premise, but that’s where the confusion is, because the growth rate of inflation has already fallen a lot, and the 10-year yield is higher. Mortgage rates are higher now than when we had higher inflation and lower mortgage rates, so it’s totally confusing to people. That’s why I try to get people to focus on the labor data more, and that the Fed hasn’t pivoted. If you just look at jobless claims and believe that the Fed hasn’t pivoted yet, you can see why mortgage rates are this high and the 10-year yield is still high.

Dave:
Logan, given the Fed’s confusion in this generally unusual and confusing economic climate, what advice would you give to people who are interested in getting into the housing market, either as an investor or a first-time home buyer?

Logan:
Well, for investors, one of the things that we do at HousingWire, we have a weekly tracker, and what we have is the inventory models that we do, that we could break down to every single zip code. We can give people pricing. If you care about pricing, you’re going to have to find the supply and demand equilibrium in each zip code. There are places where … Austin has a lot of supply. Their pricing is more difficult.
There are places like Virginia that are doing better than the national data, so each and every single city is going to be different. If you’re going to be investor, you’re going to have to be smart, and if you want to be smart, you’re going to have to have the data out there. So if you’re going into it with a naked mindset, okay, it’s not going to work well for you, especially if you’re new into this. You’re not going to have the experience about how much money you’re going to put in or what the thing is, but there’s so much data now that makes sure you run the numbers on anything on the investment side. For first-time home buyers, this is my token line.
If you have to ask someone if you should buy a house, you’re not ready to buy a house, right? Like, seriously … People tell me that all the time, “Should I buy a house?,” and I say, “No,” and they’re like, “Why not?” I say, “Well, I don’t know you, and you’re asking me if you should buy a house, so my first reaction is, you’re not ready,” because guess what? It’s a 30-year fixed mortgage.
You can’t qualify to buy a house unless you’re qualified to own the debt, so you go to a mortgage person, you get pre-qualified, you know what you can buy. Then, you say, “Okay. I’ve got to make that personal decision myself.” So what’s the benefit of housing always? Fixed debt costs, rising wages. What’s happened? Homeowners in America have never looked better.
Why? Because they’ve stayed in their homes longer, mortgage rates go down, everyone’s refinanced. Now, if you can qualify, you have to ask yourself, “Is this a comfortable mortgage payment for me?” And don’t go into it, thinking that, “I’m going to refinance later.” First of all, you can’t qualify for payment now, and then hope it goes lower. That whole sector or that part of the economy is done with.
So ask yourself, “It’s a comfort payment.” That’s it, and do not ask anyone else. Don’t ask anybody on YouTube, don’t ask anybody on TV or ask. You have to make that decision because you’re the only person that knows all your own variables, like the schools your kids are going to go to, “Where’s your job at?,” everything. When you are comfortable with it, go with that.
If you’re not comfortable with it, don’t do it, right? It should be one of the easiest decisions you ever make because it’s the cost of shelter.

Kathy:
And the fear is that they’ll buy, and then home prices will crash. I think that’s where that question comes from.

Logan:
Yeah. Then, you should never buy a house. I’m telling you … I always joke this with guys because there’s always the same guys I talk with. They always say, “Should I buy a house?”
“Should I buy?” Says, “Dude, you’ve been asking me this for seven years. You’re not going to buy a house, and you already own two houses.” Right? So if you are putting prices more than payment, then you’re always going to live with that angst.
Why do that to yourself? Right? Because everyone who owns a house, they’re doing really well. Why? Because the payment is fixed. It’s your own employment, right?
Hopefully, by now, we’ve already shown so much over the data that these major home price crashes would need all these different variables to work together for it to … And every day you don’t make that decision, you’re closer to death. So time is not on your side. So you have to make that personal choice, but make it about a payment. Don’t worry so much about the price, because even if the prices fell, your payment stays the same.
That means your job, the schools your kids … Those things are more important than anything else, but if you care about price more than payment, I’m not sure if you’re ready yet to own the debt, because there’s a young female in Ohio right now that just bought her house. She’s ready to go, right? She’s ready to go, she’s buying a house, she’s going to start a family. That’s what home ownership is, and if you’re worried about price, you have to ask yourself, “Why are five million people buying homes last year and this year?”
“Why are they doing it, and you’re not?” They’re ready.

Kathy:
Well, and especially if the concern is, “I might move. I might have another job somewhere,” but if whatever that payment is that you’re locked into is equivalent to the local rents, then you don’t have to sell that house. You can rent it out.

Logan:
Yeah.

Kathy:
Any concerns about rents changing?

Logan:
The growth rate of rents for apartments should slow down. Naturally, we’re getting a lot of supply, so the apartment boom is actually over in that sense. We have all these apartments that are under construction. I don’t even think they’re going to finish that. The Fed raised rates so much, that construction loans, everything.
It doesn’t make sense for a lot of people to do that. So the growth rate of apartments have been slowing down. In some parts of the country, it’s negative. You’re seeing a lot of people offering one or two, three months free to just get them in, but single-family rents are actually holding up well. That’s the one sector that’s a little bit different than the apartments, so you have to separate the rent story, that single-family rents are doing, and just remember, single-family rents are a different type of renter, typically have more income than apartments.
So the apartment sector, you’re going to see rental deflation, in some cases, but the history of rent deflation is not common. Why? Because most people are working, right? So vacancies, the areas that are seeing higher vacancies are seeing more pressure on rents coming down. The areas that have single-family rentals, those things are holding up better out there.

Dave:
Logan, thank you so much for this. I have just one last question for you. You said something earlier about looking at data if you’re going to invest this year and how different markets are going to perform differently. Couldn’t agree more. If you could recommend for us a couple of data points that our audience should be paying attention to, what would those be?

Logan:
So we have a live weekly housing tracker. We have the freshest inventory data. Mike Simonsen, Altos Research, he is the best on this. What I’ve done with my model is that I’ve brought my economic ten-year yield credit models. We’ve united them together.
So what we do with the tracker articles, we let everyone know that you will never be wrong in your life because this forward-looking data looks out 30 to 90 days, and since the Parpaldian War, it always works. So we’re going to talk about what it is, number one, active inventory. We have the weekly single active inventory. These are the homes that are on the market that aren’t in contract, okay? So we give people that. Then, we have new listings data, the homes that come onto the market that aren’t on contract, so new listings data.
Just to give everyone a perspective, new listings data in 2021, 2022, 2023, and 2024 have been raging between 30 to 90,000, right? It’s very seasonal. In 2008 to 2011, this thing was running at 250 to 400,000 per week, right? So we give everyone the new listings data before, because if you’re waiting for old sales data and price data, that’s like three months old. It’s too slow.
Active inventory, new listings data, then price cut percentages. So when I tour the country, I realized something, nobody knows that one-third of all homes have price cuts. This is like a surprise to everyone, so we have the price cut percentage data. So what happened last year is that when mortgage rates were going to 8%, everybody thought home prices are going to crash again. Literally, the price cut percentage data was down 4% year over year, and the active inventory didn’t even really grow that much.
So we have the data to show you when markets change, so active inventory, new listings, data, a price cut percentages. We also track the ten-year yield mortgage rates, and how it is the impact purchase application. Why? Because majority of people, primary resident home buyers, so we look out 30 to 90 days on home buying out there, and then we also want to take all the economic data that’s coming out and see how that relationship works. So active inventory, new listings data, price cuts, ten-year yield, purchase application data, and the economic data, there we go.
And this way, everyone is on the same page on the freshest data, and nobody can miss anything out, because when that data turns negative, eventually, the sales data gets negative. When it goes positive, guess what? It’s going to go positive, but it’s fresh and it’s weekly. We don’t believe in waiting for old, existing home sales or Case-Shiller data. That’s not going to work.

Dave:
All right, great. Well, Logan, thank you so much for joining us. Your insights are always appreciated. If you want to learn more about Logan or the tracker that he just mentioned, you can check out the links in the show notes, which we’ll put there. Logan, it’s always great to have you. Hopefully, we can have you again on sometime soon.

Logan:
Definitely. Sounds good.

Dave:
On The Market was created by me, Dave Meyer and Kailyn Bennett. The show is produced by Kailyn Bennett with editing by Exodus Media. Copywriting is by Calico Content, and we want to extend a big thank you to everyone at BiggerPockets for making this show possible.