During a recent interview with MarketWatch, Priscilla Almodovar, the president of Fannie Mae, a semi-official housing finance agency, highlighted a concerning trend in the real estate market. “Right now, the housing market is incredibly out of reach for consumers. We are monitoring all trends, and this is an unprecedented situation,” she stated.
At 57 years old, Almodovar brings two decades of experience in real estate policy to the table, having recently been named one of MarketWatch’s “50 Most Influential People in the Market.” A native of Brooklyn, she managed the New York State Housing Finance Agency during the financial crisis triggered by the subprime mortgage crisis in 2007. The current housing situation is starkly different, with demand for home purchases far outstripping supply. Even with mortgage rates remaining high, skyrocketing home insurance costs, and continually rising home prices, people are still eager to buy.
Almodovar emphasized, “Home prices are at their highest point in 20 years.”
She also expressed skepticism about a return to pre-pandemic mortgage rates, which hovered around 3%. “We might never see those rates again in our lifetime,” she warned.
The report indicates that even when consumers can afford to buy, their options in the market are limited. Existing homeowners often hesitate to sell, fearing higher interest costs associated with new mortgages—an effect termed the “lock-in effect”—which significantly impacts the real estate landscape. A March report from the Federal Housing Finance Agency revealed a staggering 57% decrease in home sales in the fourth quarter of 2023 compared to the same period in 2022.
Almodovar asserted that reducing home-buying costs requires collaboration among federal, state, and local government officials. Regarding solutions for the housing market, she pointed out a consensus among experts on the need to focus on supply, which includes constructing new homes while retaining existing ones.
She also noted that many issues hindering increased housing supply are within local government control. For instance, challenges such as zoning laws and the “not-in-my-backyard” (NIMBY) movement must be addressed at the local level.
With high interest rates and elevated home prices stalling transactions, Fannie Mae’s economists predict that only about 4 million existing homes will be sold in the U.S. in 2024, marking the lowest number since 1995.
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