Meanwhile, in the political arena, January’s surge continued yesterday. The AP dished a story headlined, “Trump says he wants government to buy $200B in mortgage bonds in a push to bring down mortgage rates.” The Democrats asked for the affordability fight; here it comes.
The housing affordability crisis didn’t appear because of bad vibes. It started during the pandemic, when builders were forced to sit on their hands, realtors treated open houses like biohazard zones, and half the country was “working” from bed in yoga pants. Then Biden-era green mandates piled on like extra kale nobody ordered, inflation turned every home price into a ransom note, and those magic 3% rates locked in owners tighter than grandma clutching her last Werther’s Original.
Yesterday, President Trump issued a post declaring that he will instruct Fannie and Freddie to use an existing war chest of about $200 billion in reserves (a rainy-day fund he wisely refused to burn off during Trump 1.0) to buy up mortgage bonds, a complicated financial move that experts say will help lower residential mortgage rates. The extent of the potential reduction is hotly debated. One Redfin economist quoted for the story estimated the move could shave 0.25 to 0.5 points off 30-year mortgage rates. Every little bit helps, one supposes.
Current average 30-year rates have already fallen to around 6.15%, with rates for 15-year mortgages down to 5.45%. If the 30-year rate drops into the 5’s, it will cross a psychological threshold and probably spur new buying activity. Builders are already commonly buying down customers’ mortgage rates as incentives, and so between the mortgage bond buyback and builder incentives, buyer rates could conceivably drop to the low 5’s. One more push and rates in the 4’s become possible, encouraging rate-locked owners to buy.
This news piles on yesterday’s announcement of a ban on hedge-fund vampires buying up residential properties. When enforced, it will increase the supply of homes, especially starter homes, which will lower prices. Starter homes might actually become available for, gasp, starters instead of being turned into rental portfolios for guys named Chadwell Gerard Bostley IV who summer in the Hamptons.
In other words, over two days, Trump announced plans to pressure both mortgage rates and housing prices.
This all feels suspiciously like the payoff from that mysterious post-Christmas Mar-a-Lago housing powwow that briefly flickered across the news cycle before vanishing like a bad Tinder date. No leaks, no warnings or photos, just a steady series of announcements. It’s classic Trump: untelegraphed action. Surprise!
The bottom line is that the Administration is throwing haymakers at the housing crisis faster than a heavyweight trying to beat the bell. Will all these housing tweaks work? Who knows; we are paddling along in uncharted waters at midnight. But —for the first time in years— it finally feels like someone’s actually trying to fix the boat instead of complaining that it’s leaking.
Put Homeless Americans into the Homes of the Democrats and in the UN facility and evict the UN Period