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    What Privatization of Fannie Mae and Freddie Mac Means

    Fannie Mae and Freddie Mac were bailed out by the government during the housing crisis nearly 17 years ago. The Trump administration is considering letting them go private again.Fannie Mae and Freddie Mac, two giant mortgage finance firms, have been controlled by the federal government for nearly 17 years, but a long-dormant idea of making them private businesses is starting to make the rounds in Washington again.Scott Turner, the secretary of Housing and Urban Development, said in an interview this week that coordinating the effort to privatize the two firms would be his priority. One of President Trump’s backers, the hedge fund investor William A. Ackman, is calling on the president to quickly move forward on the privatization.But Fannie and Freddie underpin the nation’s $12 trillion mortgage market, so they need to be handled with care. Scott Bessent, the Treasury secretary, said last month that any plan for ending the so-called conservatorship of the two firms “should be carefully designed and executed.”The last time Mr. Trump was president, a number of his advisers took steps toward coming up with a plan for releasing Fannie Mae and Freddie Mac from government control. In the end, the first Trump administration took no action, and the Biden administration put the issue on the back burner.Here is a quick primer on why Fannie and Freddie are so critical to the mortgage market and some of the issues likely to come up in the debate over how to end the conservatorship.What do Fannie and Freddie do?“No conservatorship should be indefinite,” Scott Bessent, the Treasury secretary, wrote in a response to questions before his confirmation.Haiyun Jiang for The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Existing-Home Sales in 2024 Were Slowest in Decades Amid High Mortgage Rates

    The market perked up late in the year when interest rates eased, but affordability challenges yielded the fewest transactions since 1995.High interest rates kept U.S. home sales in a deep freeze for much of last year. It could be a while before the market experiences much of a thaw.Americans bought just over four million previously owned homes last year, the National Association of Realtors said on Friday. That was the fewest since 1995 and far below the annual pace of roughly five million that was typical before the coronavirus pandemic.Sales picked up a bit toward the end of the year, rising 9.3 percent in December from a year earlier. That increase probably reflected the dip in mortgage rates in the summer and early fall — to about 6 percent on average for a 30-year fixed-rate mortgage — which made homes more affordable for buyers.But mortgage rates have since rebounded to about 7 percent, and most forecasters don’t expect them to come down much in the next few months. That makes a significant increase in home sales unlikely this year, said Charlie Dougherty, an economist at Wells Fargo.“You saw sales beginning to perk up a little bit, but it’s still sluggish,” he said. “I don’t think it’s indicative of a really forceful or energetic recovery that’s going to be coming.”Home prices soared during the pandemic, as Americans sought more space and rock-bottom interest rates made it easy to borrow. Real-estate agents told of frenetic bidding wars as buyers competed for available homes.That frenzy suddenly stopped when the rapid increase in inflation led the Federal Reserve to raise interest rates to their highest level in decades. Interest rates on a 30-year fixed-rate mortgage jumped, from below 3 percent in late 2021 to nearly 8 percent two years later.The combination of high prices and high interest rates made homes unaffordable for many seeking to buy. And owners, many of whom had either bought their homes or refinanced their mortgages when rates were low, had little incentive to sell. That kept inventories low and prices high.There are hints that the housing market might gradually be returning to normal, as life events — new jobs, new babies, marriages, divorces — force owners to sell, and as buyers adjust to higher borrowing costs. Inventories have edged up, and surveys show more owners plan to sell.But unless mortgage rates fall, that normalization process is likely to be slow, Mr. Dougherty said.“I think it’s probably safe to say that home sales have found a floor,” he said. But, he added, “if you look at the overall level, it’s still very, very weak.” More

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    Fannie and Freddie, the Big Mortgage Backers, Face Climate Risks

    Fannie Mae and Freddie Mac know increasing floods and wildfires are a problem. Dealing with them, however, would require trade-offs.As sea levels rise and natural disasters become more intense, homes in low-lying coastal areas or tinder-dry mountains are starting to lose value.That’s a problem for the finances of Fannie Mae and Freddie Mac, the government-sponsored enterprises that back half of the nation’s outstanding mortgages — and keep the residential real estate market liquid by buying mortgages from banks and repackaging them into securities.In the first year of the Biden administration, financial regulators seemed to recognize the risk, identifying the mortgage market as one of the main channels through which climate change could destabilize the financial system.Since then, reports have been published, comments gathered and summits held. But when it comes to insulating the two enterprises and borrowers from climate-related catastrophe, the Federal Housing Finance Agency — which regulates Fannie and Freddie — has issued only vague guidance.“It came out and I thought, where’s the rest of it?” said Carlos Martín, director of the Remodeling Futures Program at the Harvard Joint Center for Housing Studies.The issue comes with risk for taxpayers as well, since the federal government took Fannie and Freddie into conservatorship in 2008 after the financial crisis. Fannie and Freddie have reserve capital buffers, but large losses could force the government to intervene.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    What Walter Mosley’s Fictional Hero Teaches Us About Race and Real Estate

    About a third of the way through “Farewell, Amethystine,” the latest novel in the author Walter Mosley’s series about a private investigator named Ezekiel (Easy) Rawlins, Easy sets out for a late-night meeting with a gun and a hunch.The book is on a narrative precipice in which our gumshoe has knocked on enough doors and been told enough lies that both he and the reader understand that the simple missing-person case presented in Chapter 2 is about to become violent.But before it goes down, Easy pauses the action to make a weird declaration: He doesn’t need this job. He makes more than enough money renting real estate.Easy is a Black World War II veteran who fled the Jim Crow South for a better life in Los Angeles. In “Devil in a Blue Dress,” the 1990 classic that started both the series and Mosley’s career, Easy takes his first case so he can pay his mortgage and uses a windfall to add a rental property. The ups and downs of real estate continue as a recurring theme and story engine, especially in the early books, where the remedy for some tax lien or underwater mortgage is often to solve whatever mystery is driving the plot.Now, two decades of buying and holding later, Easy is flush. As he explains in “Farewell, Amethystine,” his 12 buildings have a total of 101 rental units that a friend manages for a 0.8 percent fee. Subtract that commission along with mortgage payments and general upkeep, and his take-home is $26,000 a year in 1970 (the year the novel takes place), which, adjusted for inflation, would be about $217,000 today.“I wasn’t rich,” Easy says. “But I sure didn’t need to be going out among the hammerhands and scalawags in the middle of the night.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Mortgage Rates Fell, Then Rose. What Comes Next?

    Many would-be home buyers are still hoping for mortgage rates to come down as the Federal Reserve cuts interest rates. How much they will fall is unclear.Rafael Corrales, a real estate agent in Miami, recently showed houses to a young couple hoping to move from a rental into a home. They had been lured to the market after hearing that mortgage rates had come down.But when the couple went to get approved for a home loan, they found that the borrowing costs had ticked up once again.“They were very confused,” said Mr. Corrales, 49, an agent for Redfin. It pushed them back onto the sidelines of the housing market, and they’re now staying put in the hope that rates will fall again.Mortgage rates fell steadily from this spring through September, as economic data slowed and as investors began to expect a steady string of interest rate cuts from the Federal Reserve. But the rate on a 30-year mortgage has reversed course and climbed sharply over the past month to 6.79 percent nationally, from about 6.1 percent at the start of October.The move has come as a shock to some home buyers, who had waited many months for Fed officials to begin lowering borrowing costs, hoping that they would bring relief to the mortgage market.The logic was fairly simple. When the Fed lowers its benchmark interest rates, the downward shifts tend to trickle through financial markets to lower other interest rates. While the biggest impact is on short-term rates, the effect can extend to 10-year Treasury notes, which mortgages closely track. And the Fed is, in fact, adjusting policy. Officials cut interest rates for the first time in four years in September, and they followed with a quarter-point rate cut on Thursday.

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    U.S. average 30-year fixed-rate mortgage
    Source: Freddie MacBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump Blames Immigrant Surge for Housing Crisis. Most Economists Disagree.

    The former president often implies that deportations will bring down housing costs. Reality is more complicated.Former President Donald J. Trump and his running mate, Senator JD Vance, regularly blame America’s housing affordability crisis on a recent surge in immigration. They point to their plans for mass deportations of undocumented workers as part of the solution.But most economists do not believe that immigrants have been a major driver of the recent run-up in housing prices. Rents and home costs started to surge in 2020 and 2021, before the flow of newcomers began to pick up in 2022 and 2023.And while immigrants could have kept housing demand elevated in some markets, past studies suggest that they are a small part of the overall story. Even the economist whose paper Mr. Vance had cited as evidence said in an interview that she thought that immigration’s recent impact on housing costs had been minuscule.In fact, a number of economists and housing industry experts said that one of the solutions Mr. Trump was proposing — large-scale deportations — could actually backfire and make the housing crisis worse.That’s because immigrants do not simply add to the demand for housing: They are an important part of the work force that supplies it. Foreign-born workers make up a quarter of the construction labor force, and they are especially concentrated in trades like plastering, hanging drywall and roofing.Across many booming housing markets, particularly in the South, the recent flow of migrants has helped residential builders meet demand for both skilled trades and relatively unskilled laborers, industry groups say and job market data suggest.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    How Inflation and High Interest Rates Have Changed the Economy

    As inflation cools and the Federal Reserve cuts rates, an era of economic upheaval is coming to a close, but not without lingering marks.People with jobs have started showing up at homeless shelters in Atlanta. Families who can’t cover their grocery bills are pushing up demand at a Boston food bank. A dearth of available houses is plaguing Sacramento. Yet reports of recent raises abound, and a partly retired homeowner near Pittsburgh is happy about his savings.America’s bout of painfully high inflation — and the period of high interest rates meant to cure it — is finally drawing toward a close. Price increases are nearly back to a normal pace, so much so that the Federal Reserve voted on Wednesday to lower borrowing costs for the first time in more than four years.But even as the nation’s tumultuous pandemic economic era begins to approach its end, the period is destined to leave lingering marks.There are many things to celebrate about the current moment. Inflation has so far cooled without a major economic pullback, a development few economists thought possible. Consumers are still spending at a solid clip. Years of strong job growth and solid wage gains have lifted up many workers, and a run-up in stock prices is padding retirement accounts.The Greater Boston Food Bank has delivered more than 100 million pounds of food every year since 2020, up from less than 70 million in 2019.Sophie Park for The New York TimesYet the past several years have also brought serious and lasting challenges. Prices remain sharply elevated compared with their prepandemic levels, and many families are still struggling to adjust. Some have seen their wages fall behind costs. For others, pay gains have kept pace with inflation, but the memory of cheaper egg and rent prices endures, leaving an ongoing sense of sticker shock. And across the country, housing affordability has tanked, a trend that could take time and even policy changes to reverse.Grocery Inflation Jumped, Then CooledGrocery inflation was even more rapid than overall price increases in 2022, though it has recently calmed notably.

    Source: Bureau of Labor Statistics Consumer Price IndexBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Harris Economic Plan Focuses on Prices, a Key Vulnerability

    Vice President Kamala Harris has been balancing the challenges of defending “Bidenomics” and charting her own course on the economy.As Vice President Kamala Harris unveiled her economic plans in recent weeks, former President Donald J. Trump has accused her of being a Marxist, a communist and a socialist.When they meet on Tuesday night for their only scheduled presidential debate, Ms. Harris will have the opportunity to rebut those claims and confront Mr. Trump about his record of managing the U.S. economy.She will also lay out her vision, which has been challenging as she tries to defend “Bidenomics” and demonstrate that she has a plan to chart a new course amid widespread economic discontent among many Americans who are struggling with high prices and other affordability issues.In a compressed presidential campaign, Ms. Harris indicated that she would continue many of President Biden’s policies, which aim to raise taxes on companies and punish them for price gouging, while also trying to strike a more business-friendly tone. In some cases, such as her embrace of ending taxation of tips, the vice president has even shown a willingness to adopt the policies put forward by Mr. Trump.How Ms. Harris would ultimately govern if elected will depend largely on the makeup of Congress, but her initial suite of proposals — from taxes to trade to child care — suggests that she would take the economy in a vastly different direction than her Republican opponent.Cost of LivingPerhaps Ms. Harris’s biggest political vulnerability is the run-up in prices that occurred during the Biden administration. Mr. Trump has repeatedly blamed the vice president for causing inflation to surge after the coronavirus pandemic, a phenomenon that stemmed from a mix of factors such as supply chain issues, Russia’s invasion of Ukraine and repeated bursts of fiscal stimulus to keep families and businesses afloat. The higher cost of goods initially hurt Mr. Biden when he was running against Mr. Trump, and Ms. Harris is now facing many of the same concerns from Americans who are feeling negative about a relatively strong economy.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More