CHM Blog

Not a recession, just the wrong layoffs

While the perpetual saying in real estate is “location, location, location,” increasingly the more telling variable is occupation, occupation, occupation.

According to Realtor.com’s Allaire Conte, a new report from John Burns Research & Consulting, authored by John Macke, identifies a quiet but consequential shift in the job market — one with direct consequences for housing. Most major metros are still adding jobs, but the growth is tilting toward lower-wage fields like education and healthcare. Meanwhile, the sectors that actually drive homebuying — tech, finance, and professional services — are contracting. And that distinction matters enormously.

Here's why. A household today needs roughly $120,000 in annual income to afford a median-priced home. The typical American household earns about 46% less than that. Which means the buyer pool was already thin. Now? It's getting thinner.

"These job losses directly shrink the pool of qualified buyers," Macke writes. When high earners lose jobs, they don't just stop buying homes — they stop qualifying for mortgages entirely at current prices and rates.

Realtor.com senior economist Joel Berner puts it plainly: a decline in high-end employment leads to softness in the for-sale market, showing up as low or negative price growth. You don't need a recession. You just need to lose the wrong jobs.

Austin is the starkest example. A tech hiring slowdown colliding with a construction boom created a double shock — demand weakening just as supply flooded the market. Median asking rents are down 7.2% year over year. Listing prices have dropped 5.7%. Denver tells a similar story, with rents off 5.9% and listing prices slipping 1.6%.

The Bay Area is more complicated. Rents are still rising slightly in San Francisco (up 1.6%) and San Jose (up 2.2%), but listing prices are falling — down 4% in San Francisco, nearly 1% in San Jose. High-income renters are holding their ground. High-income buyers are not.

Charlotte stands apart. The city is still adding professional services jobs at a strong pace, and the numbers reflect it. Active listings jumped 36.5% year over year — second highest in the country — yet prices still rose 2.1%. More supply, but enough qualified demand to absorb it. Macke calls it a "rare bright spot," and the data backs him up.

On the rental side, October marked the 27th consecutive month of monthly rent declines nationally, with median asking rents down 1.7% year over year. Yet renter demand hasn't collapsed. The reason, Macke suggests, is that the jobs being created are renter-wage jobs, not buyer-wage jobs. The market isn't shrinking — it's sorting.

Conte maintains that the cooling now underway isn't your typical recession story. It's quieter and more surgical than that. The economy isn't broadly failing. It's just failing the people the housing market depends on most.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Lower

Mortgage rates are moving lower today. The MBS market worsened by -4 bps last week. This was not enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

These are the three things that have the greatest ability to impact rates this week. 1) Geopolitical, 2) Inflation and 3) The Fed.

1) Geopolitical: Hopiem had a very large impact on rates last week and we start off this week the same way as market hedging towards a deal with Iran.

2) Inflation: The Fed's key measure of Inflation, Core PCE will hit on Thursday and is expected to increase 0.3% on a MOM basis and to 3.3% on a YOY basis. The higher this number is, the worse it is for rates and vice-versa.

3) The Fed: Now that new Fed Chair Warsh has been installed, he is rolling up his sleeves and getting to work. We will have plenty of talking Fed's this week, and the bond market will continue to focus on handicapping when the new regime will start to hike.

This Week's Potential Volatility: High

This morning markets are seeing a big boost on geopolitical hopes. Volatility has started high with potential to stay that way all week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.