Priscilla Almodovar, the CEO of Fannie Mae, recently spoke to MarketWatch about the current state of the housing market, highlighting that home prices are at their highest point in two decades. “The real estate market is incredibly out of reach for consumers right now,” she noted. “We are closely monitoring and tracking all trends, and this situation is unprecedented.”
At 57, Almodovar brings 20 years of experience in real estate policy to the table, earning her a spot on MarketWatch’s list of the “50 Most Influential People in the Market.” A native of Brooklyn, she managed the New York State Housing Finance Agency during the 2007 subprime crisis, a time when the circumstances faced by homebuyers were drastically different compared to today. Currently, the demand for homes far exceeds what’s available, despite high mortgage rates, rising homeowners insurance costs, and escalating home prices. Consumers remain eager to buy.
“Home prices are at a 20-year high,” Almodovar stated emphatically.
She went on to clarify that mortgage rates are unlikely to return to pre-pandemic levels anytime soon. During the pandemic, rates hovered around 3%, and she asserted, “We may never see rates like that again in our lifetime.”
Even for those who can afford to buy, housing options are limited. Many existing homeowners are hesitant to sell due to fears of higher interest costs, creating what is known as the “lock-in effect,” which has significant repercussions for the real estate market. A report from the Federal Housing Finance Agency released in March noted that home sales in the fourth quarter of 2023 dropped by 57% compared to the same period last year.
Almodovar stressed that reducing home purchase costs requires collaboration among federal, state, and local government officials. She mentioned that experts agree the solution lies in addressing supply issues, proposing an increase in new construction while preserving existing homes.
She also pointed out that many challenges related to increasing housing supply lie within the control of local governments. For instance, issues surrounding zoning and the “not-in-my-backyard” (NIMBY) movement must be resolved at the local level.
With high interest rates and soaring home prices stalling the housing market, economists at Fannie Mae predict that only 4 million existing homes will change hands in the U.S. in 2024, the lowest number since 1995.
