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» VISIT US ONLINE @ DSNEWS.COM 25 vacancy rates, but in aggregate, the oversupply of vacant housing that we had, around 2 million by our estimates in 2009 and 2010, has swung the opposite direction. It is now a deficit. e tenure switching from owner to renter doesn't help in aggregate if you don't have a vacant supply to work with. What you're doing is just switching owner to renter, that doesn't create any more housing units. e number of housing units available is low relative to what our population needs. We've done a lot of research on that, and it is a major issue. Unfortunately, because housing markets move slowly, and investment and construction take time, this is a story that is going to stay with us for a few years. WHAT ARE THE TRENDS SURROUNDING NATURAL DISASTER PREPAREDNESS? One way natural disasters have impacted things is the construction market struggling to create new units and natural disasters creating demand for labor-intensive remodeling services. It puts more pressure on the housing market in terms of their ability to create new supply. For example, in Houston, where you have a strong housing market, damage from storms means a lot of units need to be rebuilt. e labor devoted to that can't be devoted to building new units. Over time, the incidence of these disasters has increased, both in their dollar size and in number. at is creating more pressure. e construction industry is also facing a shortage of workers, and as they face more and more retirements it will put more pressure on the market. WHAT OTHER PRESSURES ARE BEING PUT ON THE MARKET? We have seen a surge in first-time homebuyers. It's not so surprising given the demographics of the U.S. population. We have a large generation of millennials we hear so much about all the time. ere's a reason we hear so much about them: they are large in number, and so far have not had the typical housing life cycle. ey haven't formed households at the rates of previous generations. We did some research over the last couple years suggesting that we are having about 1.6 million missing households. Part of that is sociological, but a lot of it is housing costs. at is due to the fact that supply has not kept up with demands, so those first-time buyers really get stifled. According to our analysis, the homeownership for 25- to 34-years- olds declined about eight percentage points between Gen Xers and millennials. Of that decline, about four percentage points is due to higher housing costs, including home prices and rents. at affordability challenge is really hitting those young adults, but even despite that, they are forming households, starting to become homeowners, and starting to move the housing market in a big way over the next three to four years. We're really at the front end of a wave on this, and it's not cresting yet. We are about two to three years out from the maximum impact of that group. What are some common misconceptions you encounter about the housing market? One of the things that is tricky is differentiating the effect of a generational impact and things at points of time in their life. Millennials and Gen Xers may have behaved similarly in their 20s and 30s. Even though the oldest millennials are close to 40, they are still young people in the minds of some people, so we really have to start thinking about Gen Z. ey are a totally new generation, and I think are going to be quite different than millennials. It's hard to distinguish if this is an age effect or a business effect, so a lot of the myths are tied up in conflating these things. WHAT DOES YOUR DAY-TO-DAY AT FREDDIE MAC LOOK LIKE? I'm fortunate to have a lot of smart colleagues and a great team. I manage a number of economists on my team, and I report to my chief economist. I typically check in with them and see what they're working on. at's one of the best parts of my job, hearing what other smart people are doing. Day-to-day, we start off figuring out what's been going on overseas overnight. We see if the treasury markets have moved. We talk with the team to run some models and do some data analysis. Some of that is graphing, charting. For example, running scenarios if a recession does hit. "at's one of the best parts of my job, hearing what other smart people are doing."

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