Logan Mohtashami on the 2021 housing forecast
Today’s HousingWire Daily episode features an interview with HousingWire Lead Analyst Logan Mohtashami. In this episode, Mohtashami takes a deeper look at topics covered in HousingWire’s economist Q&A series on the top 2021 housing forecasts. Mohtashami discusses housing demand in the years 2020-2024, mortgage rate projections for 2021 and why he believes new home sales can’t compete with the existing market as it did decades ago.
Here is a small preview of today’s interview with Mohtashami, lightly edited for length and clarity:
HousingWire: You recently wrapped HousingWire’s economist Q&A series on the top housing forecasts for 2021. I’d like to talk a little more in-depth with you on some of the questions asked in the Q&A. Let’s start with the first topic you touched on, which is the significance of housing demand in the years 2020-2024. According to you, they will largely be driven by the right demographics. Can you expand upon what those demographics are?
Logan Mohtashami: If economics is demographics, the U.S. housing market has its five-year sweet spot period. As you know, ages 27-33 are now the biggest age group in America, and there’s over 32 million Americans in that age. I call them replacement buyers; people don’t buy homes like they buy iPhones every year. This doesn’t necessarily mean that 32 million people in that group will buy homes in one year or in this five-year period, but they’re there.
Since they are a household formation and demographic patch, I’ve always talked about how people rent, date, mate, get married and 3 ½ years after marriage, they have kids. The housing forecast in the years 2020-2024, based on our demographics, we’ll have the best replacement buyer profile. If you get anybody moving up, moving down, cash buyers, when you put that all together, it’s very difficult to have existing home sales actually come under 4 million. We did that for one month, even with a COVID crisis. You just have a high level of replacement buyers, and mortgage rates, of course, are at the lowest levels ever.
These two factors will give you steady replacement demand during this five-year period. The only concern for the 2021 housing forecast is always, as I’ve stressed, if real home prices take off in an unhealthy way, and we’re seeing that currently right now.
HousingWire Daily examines the most compelling articles reported from the HousingWire newsroom. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward. Hosted by the HW team and produced by Alcynna Lloyd and Victoria Wickham.