[Danny Vesokie | Affiliated Financial Partners]

It is no rocket science that there is a housing affordability issue in the United States. Mortgage Rates are at historic high, home prices have gone up 50% to 200% since 2019, depending on the are, property taxes and homeowners Insurance skyrocketing and compound this with the worst inflation in the history of the U.S., a potential real estate market collapse is more likely than not. Many housing market analysts and economists are forecasting a housing bubble crash is definitely coming that is worse than the 2008 housing market and credit meltdown. Bankruptcies and foreclosures are expected to spiral out of control. Unemployment is expected to surge double digits. The auto industry and other key industries is already tumbling and many are in financial turmoil. The Federal Reserve Board needs to get abolished and the dollar needs to be backed by Gold and Silver to save the United States economy to avoid financial calamity. The Federal Reserve Board is the world’s biggest fraud and scam in the history of mankind. The Federal Reserve Board printing money 💰 🤑 💸 and distributing to members of the New World ORDER 🌎 is devastating the nation’s economy and setting the hard working honest folks backwards and creating a steel hurdle for Americans to afford not just to buy a house but not be able to meet the minimum cost of living. President Donald Trump and Elon Musk Department of Government Efficiency (DOGE) needs to stop the mass fraud and corruption that is costing the American taxpayers hundreds of trillions of dollars and get America 🇺🇸 back on track.

https://youtu.be/CgwvUrKw_W0?si=XZr3sotwAwacVGY8

[Michelle]

Principal and interest on a mortgage payment stays fixed over the course of 15 and 30 year fixed rate mortgage loans. Property taxes go up year after year. 70% of property taxes is used to pay the local public school system. Some townships have increased property taxes 40% or more in recent years. Some states are thinking of abolishing property taxes. Property taxes is talks among many whether they are constitutional or not. Look at the attached video clip:

https://youtu.be/yrNjUCmTURg?si=Y3ugTka2bNsErcuk

[Lisa Jones]

A new report from the Wall Street Journal found that US Home Sales in 2024 dropped to their lowest level in 30 years. Indicating a huge decline in homebuyer demand from the pandemic boom. This decline in buyer demand has resulted in a historic slowdown in housing activity. However, home prices across much of the housing market remain high, especially in states like New York, California, and Illinois. Home values are remaining high in these states because of a shortage of inventory. Meanwhile, home prices in housing markets across Texas and Florida have started to drop due to inventory spiking.

One of the interesting things about the reduce homebuyer demand – which was data derived from the National Association of Realtors – is the composition of people buying. In 2024, the median age of a homebuyer for 56 years old, the highest on record. These older homebuyers are wealthier and thus are paying higher prices than the average first-time buyer, which is dragging the median sales price up.

https://youtu.be/eWmy-zcNtDc?si=eMdYVSqlFiWN_clK

• This reply was modified 3 days, 22 hours ago by  Gustan Cho.

[Kay Anne]

GCA FORUMS Housing and Mortgage News – Weekend Edition

Saturday, February 15, 2025

GCA Forums Weekend News Edition will highlight the most impactful discussions defining the housing and mortgage sector. Below is the dissection of the most important matters:

Possibility Of Reduction Of Mortgage Rates

Mortgage rates might drop because of the new changes in the Federal Reserve policy and potential DOGE audits of the Federal Reserve Board. Should the Fed shift towards a more dovish policy to grow the economy, this will benefit our homebuyers because more home buyers can afford mortgages, making home purchases more affordable.

Affordability Of Purchasing A New House

It is still very expensive to purchase a new house, which is still a concern; however, if mortgage rates drop, this could ease some pressures. The balance between wage earnings and the price of houses determines a home’s affordability.

Interest Payment News From The Federal Reserve Board

One of the Fed’s most important responsibilities is implementing interest payments. If this is the case, housing demand will increase. If the economy is tightening, any signal of a rate hike could lead to disinterest in new mortgages.

Yield on the 10-Year U.S. Treasuries

10-year Treasuries directly impact mortgage rates. If inflation is a concern, yields can increase, translating to higher rates unless the Fed steps in. Yields will need to be calculated to guess the costs of mortgages in the future.

Home Prices Throughout the United States

Prices are expected to remain steady, especially with the economic tightening environment. In a few months, the demand and supply gap will determine how active the prices are if they are rising, stagnating, or hyperbolic falling.

DOGE’s Plans for Federal Agencies

Musk’s DOGE proposal has the potential to disrupt the current financing landscape of the Federal Reserve and the IRS and can result in DOGE being audited. If those audits find fraud or ineffectiveness, they can result in lending reforms that modify the stability of finance.

Economic Changes in Fannie Mae and Freddie Mac

Privatization of these government-sponsored entities could shift the entire mortgage market. Most economic policies that flow from such actions can alter how mortgages are pooled into securities and how they are funded, which would change their terms, pricing, and accessibility.

Possible Collapse in Real Estate and Finance

Concerns are starting to sprout regarding a crash that might surpass the one in 2008. Inflation, high consumer debt, and rising unemployment will build the fire. Such a profound decrease in the housing market would be catastrophic for the economy.

Blowing Inflation Balloons

Purchasing power continues to suffer because of inflation, as does the economy’s stability. Soaring inflation could make life difficult by raising interest rates, which in turn would affect the housing market.

Differences in Unemployment Rate and CPI

Soaring unemployment levels could kill housing demand, while the Consumer Purchase Index (CPI) reveals the changing inflation that affects the purchasing confidence of homes.

Moving Back to a Gold and Silver Standard

If currency is backed by gold and silver, the impact on the financial sphere would be powerful. The economy might stabilize, but there would be a grave concern about housing market instability during the shift.

Effect of Illegals’ Deportation

Housing demand in metropolitan areas, where undocumented migrants make up a large portion of the renting consumers, would greatly decrease if the estimated 11 million migrants were deported. As a result, rents could decline, and vacancies could go up.

The Competition Between Single-Family Home Inventory and Demand

Inventory levels and demand control market movements. Prices are high due to low inventory in several areas. However, any increases in inventory paired with lower demand could cause prices to fall.

The Risk of DOGE’s Auditing Plans for the Housing Finance System

These plans might impose further regulation on housing finance, affecting lenders’ practices and resulting in changes to the mortgage market.

Several economic, demographic, and regulatory issues are shaping the housing and mortgage markets today. These trends are equally important for stakeholders considering the purchase of homes and financing such homes in today’s economy. As we track these updates, we welcome any assertions or feedback from you as we continue to report on news related to housing and mortgages.

[Kay Anne]

Analyze the potential impact of Fannie Mae and Freddie Mac privatization on homebuyers.

[Gustan Cho]

The effects on homebuyers could be profound with Fannie Mae’s and Freddie Mac’s privatization. Let’s delve into the possible effects:

Changes in Mortgage Availability

Lending Access:

• With privatization, lenders with broad access to credit could shift toward profitability.
• This may result in tighter lending standards, making it tougher for lower-credit-score home buyers and first-time buyers to obtain mortgages.

New Competitors:

• Conversely, greater mobility may lead to new players in the mortgage market.
• This could increase the number of innovative mortgage products in the market.

Mortgage Rates

Payable Index Shifts:

• Privatization may lead to higher mortgage rates for the first few years, as private companies tend to set higher requirements to attract investors than government-backed entities.

Sales Principles:

• In the long term, increased competition among private lenders would stabilize or even decline rates, depending on the market condition and demand for mortgage-backed securities.

Risk Assessment and Underwriting Standards

Tighter Underwriting:

• Some borrowers may struggle to qualify for loans, as private companies may employ tighter underwriting standards.
• Such a shift would disproportionately impact low-income and minority homebuyers.

Risk-Based Pricing:

• This privatization aspect could lead to risk-based pricing, implying that borrowers with lower scores will pay through the nose at much higher rates, making homeownership an unattainable dream for such individuals.

Affordability of Housing

Home Prices:

• Lowered accessibility to credit means demand for homes will see a negative shift, which may help stabilize or even reduce home prices.
• That said, if the rates significantly jump, affordability will worsen.

Down Payment Requirements:

• Privatization could increase the obligatory down payment, which may be a hurdle for novice buyers looking to purchase a house.

Consumer Protection:

Regulatory Gaps:

• Private firms may not be subject to the same scrutiny as government-sponsored enterprises, which greatly increases the chances of predatory lending practices.

Borrower Support Programs:

• Government support programs cannot assist low-income buyers with down payment assistance or special loans, so they will not be available.

Market Security

Volatility Risk:

• These companies tend to be more vulnerable to market changes, which can lead to a downturn in the housing market during an economic recession.

Investor Behavior:

• Private investors’ interest in the mortgage market may lead to greater volatility, which could affect the overall stability of the housing market.

Effects Over Time

Product Advancements:

• Privatization may result in innovation in mortgage products, aiding some of the market.

Rise in Overall Homeownership:

• Competition brings better products and rates, which increases homeownership, especially when private companies serve neglected markets.

Homebuyers face a tricky situation with Fannie and Freddie Mac’s privatization. On the one hand, there could be positive competition and product improvements. Still, on the other hand, it could lead to negative product pricing, tight credit conditions, and discrimination against certain groups. These issues highlight the importance for policymakers to take steps to ensure that the privatization process does not hinder homeownership or make housing costs more difficult to manage.

[Kay Anne]

How might the privatization affect the availability of government-backed loans?

[Gustan Cho]

Your possibility of getting a government loan may significantly change with the privatization of Fannie Mae and Freddie Mac. This is what these changes may mean for you:

Government-Backed Loan Programs Offered Will Be Decreased

Cost-Driven Shift:

When profit becomes the focus, privatized companies or organizations will cut down on government-backed programs such as loans provided under FHA and VA for low and moderate-income individuals.

Decrease in Riskier Loans:

• A private company lacking a profit incentive may decrease its willingness to lend money subsidized by government programs.

Changes in Loan Terms and Conditions

Stricter Pricing:

• Government-backed loans will have tougher underwriting criteria, which will lower the availability of loans to some borrowers.

Increased Costs:

• A decrease in the affordability of paying is inevitable when private players decide to underwrite government-insured loans at excessively high fees or interest rates on top of them.

Removal of Certain Programs:

• Programs tailored to assist specific groups, such as economically challenged families, may be reduced or completely removed.

Competition And Its Effect On The Market

Advancement in Competition:

• Privatization could bring about competition amongst private lenders, which may lead to growth in product innovation.
• On the contrary, it implies that government-subsidized loans may become more unappealing.

Diversity in Funding:

• If the availability of government-sponsored loans is reduced, private lenders could become the alternative for many borrowers, thus changing how loans are offered and priced.

Stability In The Market And Investor Confidence

Impression Of The Investor:

• Investors’ attitudes might not be positive towards the commencement of privatization, considering it could render government-subsidized loans unappealing.

Market Fluctuation:

• The pivot from subsidized loans would enhance market fluctuations, particularly during economic slumps and when substandard lenders are likely to restrict borrowing.

Towards a Policy for Housing in the Long Run

Shifts In Housing Policy:

• These shifts may result in re-assessing the policy governing housing and the extent to which government-assisted affordable housing is available, with the possibility of less aid to low-income borrowers.

Possibility of Creating New Programs:

• At the same time, it could allow the government to advance new policies aimed at homeownership without relying on conventional government-sponsored loans.

Privatizing government-sponsored entities (GSEs) might restrict the availability of subsidized loans, making financing less affordable for many. Increased costs, stricter lending criteria, and potential changes in housing policies could pose challenges to first-time home buyers and people from low socio-economic backgrounds. There are several challenges for decision-makers to ensure the housing market is sustainable and accessible when privatization occurs.

[Kay Anne]

How would this affect the overall housing market’s stability?

[Gustan Cho]

Privatizing Fannie Mae and Freddie Mac will likely result in major stability changes in the housing market. Here is a breakdown of the possible consequences:

Increased Market Volatility

Profit-Driven Lenders:

• The likelihood of market volatility increases because private companies may choose to increase their profit margins at the cost of broadening their lending options, which may prove detrimental in the future.
• During a recession, the withdrawn funds will likely exceed the lending amounts, further driving up the volatility levels.

Fluctuating Access to Credit:

• During times of uncertainty, credit availability is likely to become drastically sensitive to the general economic state, which denotes a sudden requirement for decreased lending standards.
• If such conditions persist, it becomes likely that home prices and sales will fall.

Risk of Higher Interest Rates

Cost of Borrowing:

• Further privatization can lead to increased demand, which will cause a sudden spike in mortgage rates.
• This renders homes unaffordable, which further increases the cost of borrowing.
• The high supply and low demand lead to periodic instability within the housing market.

Impact on Affordability:

• Increased housing rates lead to a rapid reduction in housing demand, increasing the supply of homes and drastically lowering prices.

Reduction In Home Ownership Shifts

Associated Problems:

• Increased fees and more rigorous lending standards may pose significant challenges to the segment of low-income families and first-time buyers, leading to decreased homeownership rates and greater dependence on rentals.

Long-Term Effects:

• Economically, lower home ownership can translate into decreased spending and less investment at the community level, leading to greater housing instability.

Change in Housing Supply

Investment Issues:

• If private lenders are less willing to finance new developments due to perceived risks, this could slow the rate at which new housing is constructed or even stop it altogether, worsening the cost problem.

Inventory Aggravation:

• Less lending translates into fewer homes being built, creating inventory shortages.
• Consequently, housing prices go up, further aggravating the instability.

Housing Affordability Impact

Shifts in Prices:

• Changes to privatization may push rates up and make lending stricter, increasing home prices.
• If affordability continues to be a problem, there will be instability due to changing prices depending on market demand.

The health of the housing market:

• Persistent affordability issues tend to cause investors to lack confidence, resulting in stagnation, which is the overall threat to the housing market.

Regulatory and Policy Implications

Increased Need for Monitoring:

• Privatization has its advantages.
• However, greater regulatory scrutiny is required to avert market abuse and ensure equitable lending practices that protect market equilibrium.

Potential Initiatives for New Schemes:

• To curb the supply of affordable housing, new programs might be necessary to soften the market and, if done correctly, provide stability to those in need.

Economic Ripple Effects

Greater Market Economic Effect:

• The housing market plays a pivotal role in directly interacting with the economy.
• Disruptions in housing can lead to broader economic issues, including job losses in the construction and real estate sectors.

Consumer Sentiment:

• A fluctuating housing market lowers consumer confidence, affecting spending habits and slowing economic growth.

With the privatization of Fannie Mae and Freddie Mac, risks to housing market stability are magnified. Market volatility, expensive capital, and stringent lending standards can harm housing and the economy. Policymakers must deal with these likely effects to sustain and maintain a viable housing market.

[Kay Anne]

How could government intervention support affordable housing?

[Gustan Cho]

Intervening and altering government policy can support the creation of affordable housing in numerous ways. Here are a few:

• Costs: Includes funding, scholarships, and grants
• Subsidies and Grants: Providing financial aid to low-income families for down payments and closing costs ensures families spend money, making home ownership easier.
• Tax Credits: Developers who build affordable housing should be given tax credits, which can motivate them to build more low-income units.

Loans and mortgages with low-interest payments

• Government-Backed Loans: Expanding eligibility for FHA, VA, and USDA loans makes them low-interest paying options for first buyers and low-income families.
• Interest Rate Reductions: Mortgages are made affordable for certain people or regions by offering them lower interest rates.

Legislation that regulates the allocation and use of land and zoning

• Inclusionary Zoning: New developments must set aside some new units for low-income units. This is a great way to ensure that communities aren’t one-sided.
• Streamlined Permitting Processes: Eliminating red tape for developers can help build low-income units faster, ultimately bringing affordable units to market more quickly.
• Housing and community development: Public housing
• Investment in Public Housing: Funding these projects results in stable and affordable housing for low-income residents.

Community Development Programs

Supporting well-planned community land trusts and cooperatives can greatly enhance local capacity to create and maintain affordable housing.

Rent Control and Stabilization

• Implementing Rent Control: Policies like rent control can help keep housing costs within reach for most tenants and minimize displacement in gentrifying areas.
• Rent subsidies: Financial assistance programs can enable low-income residents to pay rent without financial burden.

Housing Trust Funds

• Establishing Housing Trust Funds: Establishing dedicated funding for affordable housing initiatives facilitates the development and preservation of affordable housing.

Education and Outreach

• Homebuyer Education Programs: Making educational materials available to prospective homebuyers can help them make informed decisions regarding financing and become educated buyers.
• Outreach to Underserved Communities: Outreach activities with a specific focus will ensure that underserved populations know the support services and resources available.

Partnerships with Nonprofits and Private Sector

• Collaboration with Nonprofits: Including nonprofit organizations may increase the development of affordable housing units, as they provide much-needed additional funding.
• Engaging the Private Sector: Encouraging affordable housing in the primary housing market can be achieved by subsidizing private developers who meet the criteria of providing low-cost units within their developments.

Policy Reform and Advocacy

• Advocating for Policy Changes: Participating in policy reforms at the municipal and state levels, as well as with Congress, can tackle systemic issues that hinder affordable housing, like discriminatory practices and tight zoning restrictions.
• Monitoring and Enforcement: Protecting the rights of susceptible groups by ensuring anti-discrimination and fairness regulations are followed can give them better access to housing options.

Government support can be critical in providing affordable housing by blending in. Buying support with policy changes and collaboration. This can address the housing affordability problem while creating a more open housing market for all.

[Angela]

Home builders are dropping prices across the US Housing Market, particularly in Florida, where some builders are cutting prices on houses as much as $65,000. In this home building community in Parrish, FL, the builder is doing big price cuts on houses. That’s because of a huge excess supply of homes for sale, with data on Reventure App showing a massive surge in Listings.

https://youtu.be/N9JP47OMGcI?si=wO_4jWh8aUMAUs2X

• This reply was modified 2 days, 9 hours ago by  Sapna Sharma.