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24 ASK THE ECONOMIST HEAR DIRECTLY FROM TODAY'S LEADING MARKET EXPERTS. At Freddie Mac, Leonard Kiefer is responsible for primary and secondary mortgage market analysis and research, macroeconomic analysis, and forecasting. Kiefer is also involved in the analysis of policy issues affecting the housing industry. Kiefer is a frequent speaker at professional and academic conferences around the country. Kiefer has also been quoted in the national media as an expert on the subject of housing economics. He is a member of the American Real Estate and Urban Economics Association and the American Economics Association. Kiefer joined Freddie Mac in 2009 as a Senior Economist. Kiefer spoke with DS News about some misconceptions surrounding the current housing market, and expressed optimism going into 2020. WHAT IS THE CURRENT OUTLOOK ON A POSSIBLE FUTURE RECESSION? e recession questions is at the top of housing economist's minds. e baseline forecast from the National Association for Business Economics remains "no recession," but they are getting more worried about the pace of growth. It's something we have been looking at, and we have been getting a lot of questions. We're trying to think about it and put our thoughts together—it has been at the top of my mind. My view is a little more optimistic than my peers. I think the U.S. economy is going to do alright. ere are some signs worth talking about, but in general, one thing that is a good sign for the U.S. economy is the housing market. For many of the previous recessions, the housing market has led the economy in a recession and has been pretty resilient, so that gives us some strength to weather manufacturing slowdowns and trade disputes, which may lead to a deceleration in overall growth. We can still have modest growth over the next couple of years, fueled by a housing market that is showing some signs of getting back on track after a slowdown in 2018 and into the early part of 2019. HOW SOLID HAS THE HOUSING MARKET'S RECOVERY BECOME IN RECENT YEARS? With economic data, there are always a couple sides to it. We've seen some strength in construction and home sales in recent months, but then you look at some absolute level at where those indicators are and there is some room for improvement. It depends on your perspective. I'm focused in the near-term on the trend, because it gives us a sense of where the economy might be headed and how housing might impact the broader economy. I'm feeling better about the statistics in the most recent couple of months relative to where they were in the early part of this year. ere is still room for improvement. In particular, the levels of homebuilding remain too low for what the U.S. economy needs, and that is constricting housing supply across the country. It's creating pent-up housing demand, which puts pressure on home prices and rents, and creates an affordability challenge. ere's definitely places where the housing market could be doing better, but I think the recent trend has been positive in terms of showing growth. HOW HAS THE INFLUX OF SINGLE-FAMILY RENTALS IMPACTED THE MARKET? It doesn't help in aggregate because it doesn't create new housing supply. If you're switching from owner to renter-occupied, that doesn't create a new unit. If it was a previously vacant home that you have rehabbed and done work on, that's adding new supply, but that story was several years ago. If you look at vacancy rates across the country in aggregate, they are very low now. ere are pockets of areas with very low "We can still have modest growth over the next couple of years, fueled by a housing market that is showing some signs of getting back on track after a slowdown in 2018 and into the early part of 2019." Leonard Kiefer Deputy Chief Economist, Freddie Mac

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