Fireside Chat, Interview
Fannie Mae’s Priscilla Almodovar on strengthening the US housing system
- The housing market is projected to soften over the next couple of years as it seeks balance, with mortgage rates expected to decline from an October peak of 8% to the low to high fives or sixes by the end of the year and into 2025.
- Home price appreciation is forecast to remain positive this year at approximately 3%, a decrease from last year's 7%, driven by a supply shortage, while falling rates and new builder supply are anticipated to eventually "thaw" the market, though a specific timeline is uncertain.
- Strong demand for starter homes is expected to be driven by the millennial generation, while baby boomers are likely to remain in current homes due to rate lock-in effects; a December survey indicates consumers are returning to the market in anticipation of falling rates.
- By the end of the decade, 90% of new homeowners in the country are projected to be people of color, with Latinos comprising 70% of that demographic group.
- To assist credit-invisible consumers, plans include leveraging unstructured bank statement data to count rental payments toward credit eligibility, with a current pilot program reported to have assisted over 350,000 renters, resulting in credit score improvements of 30 to 35 points for those with existing scores.
- The organization intends to test whether a 20% down payment is strictly necessary by exploring alternatives such as the 3% down payment model found in the Home Ready program.
- Efforts to demonstrate the impact of mortgage-backed securities will continue with European investors through the development of a "mission index" covering specific census tracks and income levels.
- Strategies to enhance homeowner financial resiliency involve testing solutions for borrowers with loan-to-value ratios of 90% to 97% and low reserves to help them maintain homes during life events such as illness or temporary job loss.
- Leadership demographics are expected to shift rapidly as the Latino population grows from 9% in 1990 to over 20%, with Gen Z and younger generations driving expectations for diverse leadership representation beyond the current single Latina CEO in Fortune 500 companies.