[Music] welcome everyone my guest today is lead analyst Logan Moto shami to talk about the DC housing market and whether we are seeing a big crash there which was widely reported over the weekend we'll also talk about a proposal to get rid of property taxes in Florida and a big drop in homebuilder confidence Logan welcome back to the podcast it is wonderful to be here and I just want to say thank you Darth Powell thank you Alex Jones thank you to all the inefficient fake housing experts on Twitter over the weekend I was sick with a flu food poisoning but I got up at like 3 o'cl in the morning and then I see Alex Jones talking about inventory in the DC market and how it's exploding and I'm like oh God did they do the snapshot thing again and they did and um the of course the talk is you know we we talked about this in the last podcast we did that you know jobless claims AR rising in in the DC Market where also continuing claims had been rising for several months but the doomers can't help themselves it's just like you know when you're a Doom porn addict you have to like jump on everything and exaggerate all the story so the story over the weekend was that uh there was a massive surge of inventory in context it would be like 15 times what normally would happen and uh the person that who I adore and love so much uh digitally enhanced the snapshot of Zillow so rule number one always and and I mean this with with every ounce of heart and blood and soul me you never ever ever listen to anybody who does a snapshot of Zillow Redfin or real.com on Twitter because they're they're actually cutting off part of it right well it's not even if it's true it's it's it's inefficient it's it's rookie ball you're not showing data it doesn't show anything right so what has happened over the years is that the doomers have taken snapshots and saying oh my God this is why I want live debate Sarah I want names and faces and forecasts and models and you get these men into a camera and they actually have to talk about things and show their forecast they don't have it right but then everyone gets to see that they're just fraudulent dubes Goofs but in this case it was a perfect setup for me I I like didn't want to spend my weekend doing this I'm like oh God okay this is what I'm going to have to do we have the live fresh data so I I the reason I say thank you is now people are coming to us because now the professionals are going to show you what it is and we showed the weekly listing data of DC area nothing going on there's like nothing abnormal uh in fact the national data on a year-over-year percentage is actually higher than the DC Market as far as new listings data that is very key to something like this is actually slightly negative year-over-year so they had a plausible Theory something we talked about last week the jobless claims there's going to be fires the the the whole the whole sector of DC there's G to be a lot of firing going on but they went ahead and lied about it the best part is that Community notes had to come in there and say yeah this this picture was digitally enhanced there's only like 33 homes available so thank you because now we get to showcase our work big boys are here now the professionals and once everyone got to see it they're like wow so I encourage everyone if you are a DC real estate agent or anybody go to read the tracker article you get to actually see we track everything live and I always tell this story to everyone uh when Mike Simonson tried to warn Leman brothers that new listings data all these things were breaking in housing and Leman Brothers ignored him when he went to Goldman Sachs Goldman Sachs saw it and go whoa oh boy we're shorting the housing market Leman went under Goldman made1 billion dollar survived and thrived so uh if you're a DC agent you really want to get versed with our data we track everything live fresh and it is new listings data active inventory price cut percentages then we have the historical data going back many years under you know you know you know if the if the inventory is growing or where it was normal and then you have some context instead of a snapshot the snapshot was fake too so um there's a way what what I'm going to do is I'm going to take the role of a Doomer right now and I'm going to teach you guys how to properly track this stuff if there was if there was a a big crash coming okay uh Le let's do this be be a Doomer all right I'm gonna be a Doomer oh America's broke we Hing prices are going to crash in DC and everyone's going to get fired first of all we ignore all those rookie people what we want to track is number one what's what's happening labor data so we need to see jobless claims tick up more continuing claims tick up more um firings if the firings was a valid premise to the inventory data the new listings data is first right we've always said this for the last few years new listings data will go vertical if there's a rush of sellers right in in 2008 to 2012 I think this thing was running at 250 to 400,000 week it's 30 to 90k nationally for the last few years so we don't see a rush of sellers but if we do have it here right because there's major job losses it's not like DC is going to be a big government job Hub anymore right so there's going to be people that say Hey listen this might not be the job market track it in the new listings data first okay we'll see it and if it ticks up then we go with that then we go with the active inventory right with the active inventory starts to pick up it starts to accelerate R from uh the previous years a historical context this is why we like to track the data from 2018 192 to give people an idea then the price cut percentages would actually increase right if we if there's not enough Demand right if you're taking the labor you're taking the workers that would buy the homes if there's not enough to that the price cut percentages have to increase none of that was happening the last few weeks but if it's going to occur that's how you would track it and you have the data to back it up right that's how a proper Doomer should have done it not say oh my God there's a surge of inventory everyone's leaving no it doesn't it's a wrong time of the year I mean inventor is at the seasonal low point right now we're we're about to see the seasonal increase even if there was no jobs lost we're going to see the seasonal increase we need to see a deviation from the Norms of the seasonal increase to make anything big out of it so track US how we track the DC Market it'll be a more prolific and efficient way to see what's going on real time remember we are Fresh weekly data we do not wait months for the reports to come out we want to see something that's going to come out later in the sales data this way everyone kind of has a heads up I I love the tracker this week so you know for those who aren't familiar the housing wire tracker housing market tracker every Saturday that Logan puts out with all those um data points this week he included not just the National Data like normal but but went into the DC data I thought it was in incredible because I was seeing it everywhere it wasn't just Doom people you had you had major Outlets talking about DC you know people are very insure and and I think that's true I mean obviously there is a lot of change happening but we are not seeing a housing market crisis there yet you have Alex Jones talking about it you got an issue okay so it's just not the it's just not the thing so so they they had the labor story right they just went with the inventory think so early so so let's let's just use the premise there's going to be a job market crash in the DC market and we're going to see a surgery inventory let the data get you there first right because if it happens you can't hide it right that's that's why we always challenge people to see their models and their forecast to see if any of them and most people don't this just make believe Mickey Mouse garbage out there right so um in this case especially over the next three months uh we'll see the normal seasonal increase we'll see the normal new listings increase we'll see the price cut percentages every now we want to see is there anything different about this period in time and one of the charts I try to show is that in 2018 actually we saw a very sharp vertical increase in uh active inventory back then we're so far from that level in 2018 than we are right now but when the seasonal in inventory does increase let's see if there's anything deviating from the nor that makes sense that's how data is supposed to be there's no bull or bear or anything that's just how we read the data because you can't do a hypothetical Theory and then assume something's happening which it isn't but you can look for the future to see okay this is it this is a legit case right so track the new listings active inventory price cut percentages right the pending contracts sta we can do that for every zip code every area in that in that area and we're already getting people legitimately like really smart people are saying Hey listen I got to find out this come to us we're the show right we're the real deal not them not some gimmick snapshot you know digitally enhanced the other thing that you track um that you can see with Alto data is the percentage of uh price Cuts right and as you always say like a normal Market you have about onethird of houses taking a price cut from where they were listed before they're sold and that can be because you know sellers are trying to get everything they can they might be inflating greedy s s are greed sellers are greedy so there's always someone who always overpriced their house this is this is how it's worked about a third is normal so you know I think the last National thing that I saw it's it's sometimes it's it's 31 sometimes it's 34% if we look at that specific Market we'll be able to tell pretty quick if if it's having that but you'd have to have a whole bunch of listings and then people not coming in to buy I mean we'll be we'll be able to see it we'll be able to see it first and we'll be able to Showcase it right and we're not going to digitally enhance any chart or we're not going to do a snapshot we like to show long historical trends of active and put numbers into it and context and everything it it really was I it really was a blessing because it really showed how like how a professional does it for than how a prolific doomsday group of people in America do but let's let's not forget I think that doomsday group got like 10 million views on that oh my God bless his heart Darth Powell got I think like 12 million views so I loved it and and I'm sitting there literally challenge does any grifter want to take me on on the explosion of inventory anyone I alleng every any American man to come on right now on spaces and take me out zip nothing not a word do you know what the pit of Hell is it's it's Twitter it's X to to shut every man down in that thing to challenge any man to say come on and I want to see your forecast and models I want to see your data nobody wanted anything they know what's gonna happen I say let me see it they're like uh we faked it I know you faked it Community knows told you like so they know what they're doing listen I people have to understand this has anybody seen saxs realy like their YouTube page it's literally a documentary of Doom they got the Doomsday music and everything Doom porn cells like these things get like two 300,000 views right Darth Powell got like 12 million it sells it's not like economics done right it's not supposed to be that way right it's not supposed to so myself a few others pilgrims in an Unholy land right we don't dancing with the devil in the pale Moonlight we don't mind getting them in front of everyone showing their forecast and models but you have to have a certain personality to want to engage them and then bring them into the light and like all demons and devils and Orcs and goblins when the light shines on them and the Lord looks at them and goes no my child you shall not enter this is the world of math facts and data not them you have such a dramatic take on these things I love it you imagine these whole worlds going on yeah that's that's what makes it interesting okay so that story very big story but not we had a whole bunch happen over the weekend so next topic is property taxes and uh Governor Florida Governor Ronda sentis um a good friend of President Trump I think uh at least uh you know when they're not uh fighting each other um and you know property taxes is a huge issue in Florida and he proposed getting rid of it so let's talk about that so oddly enough uh a Texas homeowner came to me like hey Logan can they get rid of taxes here property taxes in Texas why should I want to know where my money is going I'm paying more in property taxes I got to find out what's going on here where's my money going and I was like oh boy what happened and then again I don't follow a lot of people on Twitter so I just I I don't know everything and then I see that you know Ron is talking about getting rid of property taxes so you and I have talked about this about the Florida markets um how do you make Florida cheaper right um the migration to Florida slowed a lot last year but what happened is what is housing housing is a total cost principal interest taxes and insurance insurance is exploding some people can't even get it what if you take the taxes away out of it right so that in a sense for homeowners the cost of living in Florida goes down for home buyers the cost of living goes down I don't know how you're going to fund everything you know police firemen schools you know everything uh but um you can see what's happening it's starting to to get to the politicians in Florida that this is an issue and Florida has relied not just on tourism but you know people moving there it's it's a difficult problem that's just one of the uh solutions that he's bringing up I you need a 60% majority to get that approved uh but I think the interesting aspect is does if that happens in Florida what's Texas going to do these are two these are two these are two red States and Texas is going if Florida does it why can't we do it right so um I don't want to get into the state budget discussion that's not my wheelhouse or you know how everything's going to get funded but uh the reason uh they're not they're not they don't have state income tax or anything is they get so much of the property tax so it it it we'll we'll see how that works out but um I think that was the first shot into trying to make housing more affordable in Florida because Insurance are going up remember with Florida situation first is prices prices escalate out of control then rates then the insurance issue and then taxes added onto it so the only thing you can do here withdraw the taxes rates haven't come down prices haven't crashed in Florida in any big way in that light so um we'll see but I mean you you you could if if if if Ron is talking about that now then you know there's things going on in the background about maybe the concern of the insurance issue uh hitting uh Florida so as a Texas homeowner who who pays a lot in property taxes I'm very interested in this conversation I know that um at least in Texas you know sales tax is a big way that that the state makes money but the property taxes is how we pay for schools and fire and police and all that kind of stuff so it is a a really interesting discussion you got to figure out where that money could come from somewhere but to your point it's interesting that someone's raising it I think it it that story has gone viral on our site because people are super interested it's like oh I mean you know who wouldn't want to pay less property taxes if you could find another way to pay for the services that you want right I think this might be an eventual headache for Abbott if somehow Ron gets to pass that because y you can't have a red State like Florida do that and then all of a sudden you know um uh and and I know Abbott is very proud of his his you know his budget and everything like that so time will tell on this but at least you know it's it's it's something to think about now going out in the next few years like I said everything's going to get more interesting these next four years so we've already seen it it's you know still February 2025 and there's a lot lot of drama going out there it's only February I can't believe it that's crazy okay the and we have another thing to talk about which is homeb Builder confidence yes and of course the wild card for 2025 when we wrote that article in December was about you know the builders have a supply and demand problem and it really is going to impact their margins if rates stay elevated it becomes more of an issue for them in 2025 now we brought this up in April of 2024 we talked about this that is construction labor at risk well mortgage rates were getting towards 7 and a half% we actually had not a lot of people know this still but we actually had a negative residential construction worker month when rates were that high Builder confidence was falling then mortgage rates went down to 6% and then everything was solved and you know things got better then rates went up again the the situation now is that total units we're talking about housing starts those things are being completed and it's rolling over okay so for a long time we had housing permits rising and the total completed units were just going nowhere it just it takes forever to close everything well they're being closed now permits and total completions falling together not a good thing on top of that the tariffs came in so when you look at the Builder confidence they're saying we're concerned about tariffs because guess what if it's a margin story tariffs make things more expensive so that hits the margin aspect that means you're going to have less money to pay down for mortgage rates if rates stay elevated so the Builder future looking six months we always say the way to track the builders and housing starts in economic Cycles is look at the six month it literally collapsed I mean it was at 66 two months ago and it's now down to 46 so the whole Builder index is falling uh apart so before the whole tariff thing came part of the discussion um there was already issues because again the builders are not they are not the marchad dimes so in this environment are they really going to be issuing a lot of permits no they're going to be trying to manage what Supply they have left so it it's not shocking that the Builder's confidence fell it's really not I also think you know we have a very um volatile or uncertain uh number of things happening even if you think about the DC firings you know they want to they called for for 50% of the HUD staff to be cut um it's unclear if that's actually going to it's unclear what what the original announcement is what the first actions are what the eventual actions will be I think tff is a great point about this but if you're a builder you can't really just you know cross your fingers and hope that that those tariffs aren't going to affect you at some point even even if there wasn't any tariff discussion the builders had issues because rates are elevated again rat getting down to 6% changes this but we go back to Neil kosar's how do you balance an economy with 6% mortgage rates because if people are having sex having kids buying homes household formations that's inflationary there's more stuff being bought so uh as Kevin hasset the White House economic councils we like to create higher labor Supply and lower aggregate demand so it's it's this is for somebody like myself it's a very very interesting year there's a lot of things going on um and you could see why the White House wants lower mortgage rates like who wants to deal with this like we we we we we made this a talking point in November in December like who wants to deal with the builders going into recession and laying off workers right so um we'll see how this goes just just add this to another crazy week of of things happening but between the DC Market you know the property taxes and now the builders there's a lot going on that's housing related out there and we are here to track everything because that's what we do so this raises something that we've talked about a couple of times on here I'm going to keep asking you because obviously it's like does this mean that we have to go into a recession to get mortgage rates where they're where everybody wants them to be the White House and everybody in our industry definitely we need we need lower rates so I mean does that mean you have to have a recession first you you you don't need see the thing is that it really depends on what people want if people want like sub 5% mortgage rates you you're going to need you're going to need a recession but for me it's I can't forecast below 5.75 until a bunch of things happens but I could start to get down toward the low sixes without the labor market breaking and that means that the FED funds rate now here's a good this is a good thing for everyone we had a 2% lower move in mortgage rates from 8% down to 6% with no rate cuts and that was last over over a year okay in 2023 we had 8% mortgage rates in 2024 we had near 6% mortgage rates but we had no rate Cuts then the rate Cuts happened and mortgage rates started to go up why because the economic data started to get better right the market was anticipating more economic weakness that all stopped right so the whole that's why we created the Gandalf line hoor line all that St so but if mortgage If the Fed funds rate Falls another 1% getting to that lower base of 6% mortgage rates becomes easier and easier um so you don't necessarily need to have the labor market break but we're kind of far still from cutting four times so uh well I know Waller talked about you know we could still have four rate Cuts this year but just kind of 65 75% of where the 10year yield and mortgage rates are fed policy and then we just move off the economic data inflation expectations growth everything in that manner um mortgage spreads have gotten better this year on a year-over-year basis so that helps out here uh but it doesn't it's it's so frustrating because it's not we're not that far off from a level to where we don't have to talk about this as much but getting that last 1% lower you know I thought would be a little bit more problematic it's becoming very very sticky in this situation we get there we just can't be able to hold it but with another 1% of the FED funds rate now you you got to have the the the Federal Reserve on board on something like that that's a whole different story but you can have rates near 6% without the labor market breaking but I think a lot of people just wanted rates fast this is why everybody wants a recession and nobody believed the jobs data and everything but in this context now it's a it's it's a little bit different oh boy okay well Logan so glad that you are here to walk us through all this things because I think things are happening at a you know got a lot of velocity right now so very happy to have your analysis thank you for being on and we'll talk to you again soon pleasure [Music]