The change in direction at the Federal Housing Finance Agency (FHFA) would be one of the most important things to happen in housing finance this year, according to experts at the Housing Finance Policy Center at the Urban Institute. "I’ll be watching to see if whatever changes are made will bring more private capital into the market," said Laurie Goodman, VP, Housing Finance Policy Center at the Urban Institute.
These experts will closely follow the actions of Mark Calabria, who was nominated by President Trump to lead the FHFA. "Though he would be in a uniquely powerful position" to do "something" about the government's role in the housing finance system, Jim Parrott, Non-resident Fellow at the Urban Institute said, "But we’ll be heading into an election year and possibly an increasingly weak housing market, so it will be interesting to see how that tension between ideology, politics, and economics plays out."
Some of the other questions that these researchers would be seeking answers to during the year include, the future of the government-sponsored enterprises (GSEs) as well as the actions being taken by the Federal Housing Administration (FHA) to mitigate risks related to the risk profile of its book of business.
That, apart from how the "various proposals and policies that are being introduced legislatively and administratively, will affect housing affordability," would be the key issues that the market will have its eye on in 2019, according to Alanna McCargo, VP, Housing Finance Policy Center at the Urban Institute.
Ed Golding, a Non-resident Fellow at the Urban Institute and former Head of the FHA, said that 2019 could well be the year when home price appreciation "comes back down to earth."
"They can’t continue to go up at 7 percent a year in an environment where interest rates and inflation rates are in the 2 percent range," Golding said. "The tax code increased the user cost of housing in some (upper-end) markets by as much as 30 percent but created little discernable change in house price momentum."
In 2018 the housing market showed early signs of a slowdown in home price growth, softening of the housing markets, and rising inventory in even the hottest markets, like San Francisco and Seattle, according to Bing Bai, Research Associate at the Urban Institute who said that he was interested in seeing the shifting trends in the housing and mortgage market. "Rising interest rates cut down the refinance volumes, and a slowdown in the purchase mortgage market would put further volume pressure on the mortgage industry," he said.
Senior housing would be another focus area that will be on their radar. "Not only are we about to have more senior renters (many on fixed incomes), but also fewer senior homeowners with any significant home equity (and some with large mortgages, especially compared with their incomes), more in need of structural modifications to be safe in their homes," said Ellen Seidman, non-resident Fellow at the Urban Institute.
Radhika Ojha, Five Star Institute