The Sept. 4, 2024 episode of the Walker Webcast featured a timely discussion on interest rates, commercial real estate, and housing with special guest Priscilla Almodovar, president and CEO of Fannie Mae. Host Willy Walker began by discussing Almodovar’s impressive resume which included experience at White & Case LLP, New York State Housing Finance Agency, JPMorgan Chase and Enterprise Community Partners.
Walker then asked the question: “Why is it so difficult to build affordable housing?” To which Almodovar acknowledged that we are currently in an unprecedented time of unaffordability due to high costs involved in land acquisition and financing while keeping rent affordable for today’s households.
Another issue discussed was the disconnect between the large amount of capital available for affordable housing at a federal level (thanks to programs like Fannie Mae and Freddie Mac) versus local requirements. According to Almodovar this requires coordination between multiple levels of government who all have different needs.
Almodovar also addressed concerns about Fannie Mae’s stability as it has been under conservatorship since 2008 following the financial crisis. She explained that today’s Fannie Mae is very different from before with significant liquidity development through buying loans instead of retaining them in an investment portfolio. Additionally they now have stricter lending standards including their popular plain-vanilla product -the 30-year fixed-rate mortgage- making up $3.6 trillion dollars worth their single-family guaranty book business.
Regarding future mortgage rates ,Fannie May economists predict two rate cuts this year but home mortgage rates will likely remain around six percent until late into fourth quarter or even early next year according to Almoodvar . There remains a disconnect between buyers who want homes but only one-fifth think its good time buy while sellers believe its great time sell given higher prices .
When asked about multifamily investments ,Almoodvar acknowledged that lending volumes were down in 2023 but this was also the case for overall market. She added that they are on track with their usual 20% share of existing markets and competition from non-traditional lenders is a good thing as it gives sponsors more options.
Finally, Walker asked Almodovar about her goals during her time at Fannie Mae to which she replied changing the perception of struggling associated with agency and continuing to support their mission of making homeownership and affordable rental housing accessible in US . They are using technology to help serve more people including those in gig economy by looking at cash flows instead. Another goal is providing access to credit for those who may not have been seen by traditional systems.
For those who missed it, replays can be found on YouTube , Spotify or Apple through Walker Webcast channels where you can also subscribe for invites, replays and articles about new episodes every week.
