- Law School Enrollment Surging – A Reliable Indicator Of Rapid Economic Deterioration
- Consumers Think The Economy Is Breaking Quickly
- Trade War Saber-Rattling Is Tanking The Economy
Before you judge me, hold on a second! The economy is weakening rapidly, and layoffs are surging as the US pushes trade wars against all our long-term allies. Then I thought about one of my dad’s favorite sayings from a Shakespeare play: “First, Let’s Kill All The Lawyers,” with an obligatory follow-up explanation that provides the opposite meaning. Law firms are my appraisal firm’s biggest clients, and Manhattan has the highest density of lawyers per capita in the US. Since the housing market is expected to benefit from the formerly unexpected economic downturn (lower interest rates) in a twisted way, I thought it would be interesting to explore this.
The surge in the share of consumers thinking business conditions are getting bad is incredible, which made me look to the legal profession as another potential indicator of economic weakness.
Law School Applications Soar In 2025
And the preliminary numbers are in…law school applications are surging.
According to the Law School Admissions Council, applications are up 20.2% year over year and up 25.4% from two years ago. Why? Because it’s been harder for college graduates to get a job this year and in economic downturns, college enrollment tends to rise. Given the expected impact of AI on the legal profession, the surge in applications seems even higher than typical.
A Quick Note On Shakespeare
Every summer my wife and several other couples attend an event called Shakespeare On The Sound.” It’s sort of a summer stock rendition that presents a different play every year. We spread out blankets and beach chairs on the lawn with minimal stage props and lighting. I find myself getting transported into the play, hanging on by my fingernails for the storyline. Plus, it’s fun to hang out with friends. When I was a young teenager, I was fortunate to go to Stratford-upon-Avon on a foreign study trip in the early 1970s and see Richard III (I think?). I enjoyed it, but as an older adult, I get more out of it.
The actual quote from over 400 years ago is “The first thing we do is, let’s kill all the lawyers.” taken from Henry VI, Part II. According to LitHub, the quote is not meant to disparage lawyers but present their importance to society: “that society could not exist in a state of fairness and peace without the protectiveness of both the law and its staunch guardians.”
but I digress…
Law School Enrollment Is An Economic Indicator
Here’s a series of interesting takes on this economic indicator on X/Twitter…
Falling Mortgage Rates And Falling Stock Markets As A Tell
Mortgage rates have been trending lower for the past two months.
The stock market has fallen into correction territory (at least 10% from the recent high)
Final Thoughts
Applications to law schools tend to rise just as the economy begins to tank. Why do we care? I believe it’s a tangible indicator that provides confirmation that mortgage rates are trending lower as current trade policy breaks the economy with broad uncertainty – our uncertainty has uncertainty. When economic conditions weaken, mortgage rates fall. I do believe that the Fed is not going to cut rates anytime soon. Instead, I see this development as raising the probability that mortgage rates will continue to come down in the near term on their own, given how broad the spreads are between the ten-year treasury and the 30-year, as the current economic policy seems to be damaging the US economy. In a weird, twisted way, assuming there is no massive job loss from a deep recession, the decline in mortgage rates is probably good for the housing market, pushing sales higher and bringing more listing inventory into the market.
Legally speaking, of course.
The Actual Final Thought – Stock sell offs happen. Of course they do. It’s the speed of the economic downturn that is concerning. It’s enough to fill your hat.
Monday Mailboxes, Etc. – Sharing reader feedback on Housing Notes.
March 14, 2025: Rental Is Mental But Hurts Like Dental
- Thanks for the trenchant overview of the Rocket Redfin merger. As for Berkshire Hathaway HomeServices, there is no shingle out to attract suitors, according to those in the corner offices. Your thoughts on it were on target in my view.
- So I really do think that foreclosures might be higher than what we know, because they are not on MLS. My biggest fear is that Wall Street will scoop these up like they did last time, and not put them on the open market.
March 10, 2025: Boomers Are #Winning In The Affordability Crisis
- I believe we have been in a recession since 2023. The prior administration attempted to borrow their way out of the recession by printing $3.5 trillion in the past two years. They wildly pumped money into the hands of everyone including the millions of undocumented people. This kept spending at record levels with an increase of 9.8% in 2022 (resulting in 8.0% inflation), 6.6% in 2023 and 5.2% in 2024.
Did you miss the previous Housing Notes?
Housing Notes Reads
- Manhattan Apartment Rents Jump to Record as Bidding Wars Spread [Bloomberg]
- The great American real estate brokerage [1000watt]
- Compass reportedly near a deal to acquire HomeServices [Real Estate News]
- Exclusive | Compass in Talks to Buy Warren Buffett’s Real-Estate Brokerage Unit [WSJ]
- HomeServices of America is not for sale, CEO says [Real Estate News]
