DS News

28 ASK THE ECONOMIST HEAR DIRECTLY FROM TODAY'S LEADING MARKET EXPERTS. Molly Boesel has more than 20 years' experience in mortgage market analysis, model development, and risk analysis in the housing finance industry. As a Principal Economist in the Office of the Chief Economist at CoreLogic she is responsible for analyzing and forecasting housing and mortgage market trends. She previously worked at both Fannie Mae and Freddie Mac where she focused on market forecasts and risk management. DS News spoke to Boesel on trends impacting the investment and rental market, including the ongoing trade war and the QM patch. HOW HAS THE INFLUX OF SINGLE-FAMILY RENTALS IMPACTED THE MARKET? e stock of single- family rentals grew during the foreclosure crisis as investors turned foreclosed homes into rentals. While there has been an influx of single-family rentals, demand for these rentals has also been high. Some of the demand has come from households displaced by foreclosure and some has come from millennial households who are looking for a single-family home but are not ready to buy. Just as the market has a low supply of for-sale housing, some markets also have a low supply of for-rent housing, which has driven rents up. To help alleviate the rental supply shortage, new types of housing such as single-family built-for-rent, could fill the gap. DO RECENT INDICATORS SUCH AS THE INVERSION OF THE YIELD CURVE AND THE FED'S LOWERING INTEREST RATES SIGNAL A RECESSION ON THE HORIZON? AND WHAT WOULD A RECESSION MEAN FOR HOUSING? e U.S. is currently in the longest economic expansion recorded. While economic expansions eventually end, indicators such as an inverted yield curve or monetary easing don't always signal an impending recession. Consumers are still confident and they are still spending money. Unemployment is low, and the economy continues to grow. Whenever a recession would hit, housing will be in good shape to weather a downturn. Unlike the last recession, homeowners are in a good position. Eight-plus years of increasing home prices have resulted in record amounts of home equity. Unlike the mid-2000s, owners aren't tapping into this equity. Delinquencies are near record-low levels. Also unlike the mid-2000s there is a shortage of for-sale housing. HOW IS THE TRADE WAR AND TARIFFS IMPACTING HOUSING? We keep hearing about a shortage of for-sale housing, particularly at the lower- price points. Newly constructed homes help ease that shortage. However, tariffs imposed on steel and aluminum increased the cost of building materials, increasing the cost of new construction. WHAT FACTORS ARE KEEPING FIRST-TIME BUYERS OUT OF THE MARKET? Our research tells us that millennials, particularly the oldest ones, have a desire to become homeowners. Older millennials (those aged 30–38) are actively engaged in homebuying, with the majority of them either already purchasing homes or expecting to do so in the next year. Younger millennials are primarily renters, though roughly a quarter of the younger millennials have already purchased a home. So, the demand is there, but there are barriers to owning for these households. For those not interested in buying, most cite affordability as the primary reason—they say they can't afford a home, they can't find a home where they want to live, or they can't come up with a downpayment. ARE THERE ANY SHIFTING REGULATORY FACTORS TO LOOK OUT FOR IN THE NEAR FUTURE? We are keeping our eye on the expiration of the QM patch—the temporary category under which loans eligible for purchase by the GSEs qualify While there has been an influx of single-family rentals, demand for these rentals has also been high. Some of the demand has come from households displaced by foreclosure and some has come from millennial households who are looking for a single- family home but are not ready to buy. Molly Boesel Principal Economist, CoreLogic

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