Chapter 1: What proposals is Trump making to improve housing affordability?
If only there were a dial that turned counterclockwise, it would reduce the cost of housing in America. I'm David Brancaccio in Los Angeles. First, how to be a detective when watching the Federal Reserve briefing tomorrow. Catherine Ann Edwards is a Houston-based labor economist and host of the Optimist Economy podcast.
Interest rates are not going down tomorrow, but what will you be looking for, Catherine?
I will be looking for meeting minutes on how they update their beliefs from the last meeting. These are actually quite easy to follow. You can look at like track changes in Word and they'll cross out one word like concerned and replaced it with following.
So looking for those type of even small changes to their basically their projections or their concerns or their beliefs about the economy, those small things can trigger big cues about what is going on at the Fed and their thought process.
Yes, we should remind ourselves a lot of headlines are captured about what the Fed will hint about next.
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Chapter 2: How does the Federal Reserve impact housing affordability?
the future of interest rate changes, but there's also very rigorous information contained about where they think the labor market is, if we're going to find a job or if we're going to lose a job.
They have to process both an incredible amount of information, some of it coming in the form of just data. Here are the numbers. Here's how they look over time. They do a lot of data collection that's much more informal, like commentary from industry leaders, people in certain sectors.
And then they have to combine that with their overall projections of where they think the economy is going to go. That's hard to do even in the best or worst of times. when you are independent and people are leaving you alone.
What's happening right now is the microscope of political pressure that every move is seen as something for or against Trump because he has decided that the Fed should be under his control. It's really unprecedented in the Fed's independent history to have so much pressure from a sitting president.
Chapter 3: What challenges do homeowners face in the current housing market?
Always good to catch up with Catherine Ann Edwards. She's a labor economist, a Bloomberg Opinion columnist, and host of the Optimist Economy podcast. Thank you so much. Cheers. Those plane tickets add up, and American Airlines today forecast higher profits for the year. The stock is up more than 3% in pre-market trading now. GM profits up on SUV and truck sales, stock up 4.7%.
Tomorrow, we'll get quarterly updates from Apple, Meta, Tesla, Microsoft, the not-quite-as-magnificent 7. Here's Marketplace's Kristen Schwab.
Earnings calls are always about returns.
Chapter 4: How will Fannie Mae and Freddie Mac's actions affect mortgage rates?
But Rani Sadka, a finance professor at Boston College, says investors are increasingly taking a more scrutinized look at the Magnificent Seven because of the hundreds of billions of dollars the companies are spending on AI.
Is it justified? So is it overinvesting? Are they going to see some real cash return?
Companies need to move beyond hype and prove their worth. That's maybe easier for firms that make chips or sell cloud infrastructure. But Shai Balor, chief market strategist at Futurum Equities, says for companies like Meta and Apple... They kind of have to justify all their AI investment by making its own product more engaging.
Can they grow beyond social media and iPhones and build valuable AI features into their products? Investors might have to wait a bit longer for answers. Because despite all the talk about an AI bubble, Dan Ives, head of tech research at Wedbush, says the industry is in its early stages.
Chapter 5: What are the implications of banning private equity from buying homes?
This is still what I view as the third inning of a nine-inning game in AI build-out. I think investors are underestimating the scale and scope.
The Magnificent 7 and NVIDIA, which reports its fourth quarter earnings next month, are bellwethers for the AI boom.
So they are the gas in the market. But as it all plays out, the tech trade's spreading to other sectors.
Ives says investments in AI will keep growing as industries like finance and healthcare create their own products and adopt more of the technology. I'm Kristen Schwab for Marketplace.
White House has told the mortgage loan agencies Fannie Mae and Freddie Mac to buy about $200 billion in mortgage bonds in a bid to lower the cost of borrowing for a house or an apartment. Today here, a teachable moment on the swirling cauldron of factors that make shelter so hard to afford. Jenny Schutz leads the infrastructure portfolio for housing at the philanthropy Arnold Ventures.
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Chapter 6: What strategies can be employed to increase housing supply?
Good morning. Good morning. I wish the economy worked like plumbing, right? Turn the valve down, lower the pressure here by dropping interest rates. And law of physics, the cost of home loans would drop, housing would get more affordable. It's not how it works. Remind us why.
Housing affordability is really the intersection of two things. It's people's income, how much they can afford to spend on housing, and then the cost of housing. The problem that homeowners have at the moment is that housing prices are very high, interest rates are high, and we also have rising costs of insurance and property taxes.
Chapter 7: How do tariffs and labor issues affect construction costs?
So even if the president ordered Fannie Mae and Freddie Mac... to buy $200 billion in mortgage bonds. I mean, gauge the impact of that.
I mean, the mortgage markets are very large, and intervention by the GSEs can help at the edges, but that's not fundamentally going to change the price that most people are paying on their mortgage.
There's also, I think, an unintended consequence. You get mortgage rates lower... And that means existing homeowners are more likely to refinance into cheaper home loans, which sometimes makes them less likely to want to sell homes.
We have a lot of homeowners who are at lower than 3% mortgage interest rate, which makes them very reluctant to sell their house and move someplace else. That limits the availability of homes that are open for first-time homebuyers to get into the market.
All right. There's also the ban on private equity buying residential housing. I was just looking at a statistic. I think they own these days like only 3% of it.
Yeah, the other way to think about this is that when private equity buys particularly single-family homes in the suburbs, they're not taking housing off of the market altogether. They're just making housing available for renter households who on average have lower incomes than homebuyers.
So what can we do to make housing more affordable in America? Build more supply and demand?
Yeah, the only long-term way to improve affordability is to build enough homes so that the price of houses goes up roughly equivalent to the rate of inflation overall.
And then, of course, construction costs. That's not going down.
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