By the Numbers
Housing Finance | Notes from Washington
This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors.
- In the scramble to finish a budget package, only a modest share of proposed funding addresses the tight supply of affordable housing—a plus for property prices at the affordable end of the market but a negative for aspiring homeowners
- Any game worth watching gets more interesting once you know the players, so we offer a list of the administration policymakers with the most clout on housing policy
In the scramble to finish a budget package, only a modest share of proposed funding addresses the tight supply of affordable housing—a plus for property prices at the affordable end of the market but a negative for aspiring homeowners
The White House on Thursday released a proposed $1.85 trillion budget package including $150 billion in housing funds. The administration’s initial $3.5 trillion proposed package envisioned more than $300 billion for housing, so the sector looks like it took its fair share of lumps. The proposed legislation includes $65 billion for public housing, $22 billion for rental vouchers, $10 billion for down payment assistance and $5 billion for a new FHA 20-year loan program. It also contains roughly $32 billion that will support new or renovated supply and another $15 billion for “community investments,” some of which should help support new supply indirectly by improving infrastructure in places where the lack of it has been a headwind to building. While these numbers help address the supply shortage, the focus on public housing and demand side help is surprising given the severity of the supply shortfall.
The allocation seems due in large part to the political clout of Sen. Chuck Schumer (D-NY), who has pushed for heavy funding of public housing generally and for the New York Public Housing Authority specifically. It also reflects the influence of Rep. Maxine Waters (D-CA), who has pushed for funding of rental vouchers. While several industry groups have been focused on housing supply, those groups have better traction with Republicans than Democrats. Supply programs also typically take years to show effects while demand programs get visible results much more quickly, which officials up for election next year like.
If this is where the final housing numbers land, then there is little reason to expect pricing at the affordable end of the market to ease any time soon. Rental vouchers should drive demand for smaller private multifamily properties and down payment assistance should drive demand for the more affordable end of the single-family market. More affordable supply may come out over time, but the timelines for building affordable housing are long.
Any game worth watching gets more interesting once you know the players, so we offer a list of the administration policymakers with the most clout on housing policy
The key voices around the table on housing policy—the stuff that shapes Fannie Mae, Freddie Mac, Ginnie Mae and the boundaries between these agencies and the private market—come from a few places in the administration. The White House has a view, the Treasury has a view, HUD has a view and, with it director now serving at the will of the president, the FHFA has a view. The people in the chairs of nominated for the chairs:
WHITE HOUSE
- Brian Deese, Assistant to the President for Economic Policy and Director of the National Economic Council
- Bharat Ramamurti, Deputy Diurector of the National Economic Council for Consumer Protection
- Erika Poethig, Special Assistant to the President for Housing and Urban Policy
- Jared Bernstein, Member of the Council of Economic Advisors
US TREASURY
- Joshua Frost, nominee for Assistant Secretary for Financial Markets
- Dini Ajmani, Deputy Assistant Secretary for Financial Markets
HOUSING AND URBAN DEVELOPMENT
- Julia Gordon, nominee for Assistant Secretary of Housing and Commissioner of the Federal Housing Administration
- Alanna McCargo, nominee for President of Ginnie Mae
FEDERAL HOUSING FINANCE AGENCY
- Sandra Thompson, Acting Director
This material is intended only for institutional investors and does not carry all of the independence and disclosure standards of retail debt research reports. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This message, including any attachments or links contained herein, is subject to important disclaimers, conditions, and disclosures regarding Electronic Communications, which you can find at https://portfolio-strategy.apsec.com/sancap-disclaimers-and-disclosures.
Important Disclaimers
Copyright © 2023 Santander US Capital Markets LLC and its affiliates (“SCM”). All rights reserved. SCM is a member of FINRA and SIPC. This material is intended for limited distribution to institutions only and is not publicly available. Any unauthorized use or disclosure is prohibited.
In making this material available, SCM (i) is not providing any advice to the recipient, including, without limitation, any advice as to investment, legal, accounting, tax and financial matters, (ii) is not acting as an advisor or fiduciary in respect of the recipient, (iii) is not making any predictions or projections and (iv) intends that any recipient to which SCM has provided this material is an “institutional investor” (as defined under applicable law and regulation, including FINRA Rule 4512 and that this material will not be disseminated, in whole or part, to any third party by the recipient.
The author of this material is an economist, desk strategist or trader. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM or any of its affiliates may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This material (i) has been prepared for information purposes only and does not constitute a solicitation or an offer to buy or sell any securities, related investments or other financial instruments, (ii) is neither research, a “research report” as commonly understood under the securities laws and regulations promulgated thereunder nor the product of a research department, (iii) or parts thereof may have been obtained from various sources, the reliability of which has not been verified and cannot be guaranteed by SCM, (iv) should not be reproduced or disclosed to any other person, without SCM’s prior consent and (v) is not intended for distribution in any jurisdiction in which its distribution would be prohibited.
In connection with this material, SCM (i) makes no representation or warranties as to the appropriateness or reliance for use in any transaction or as to the permissibility or legality of any financial instrument in any jurisdiction, (ii) believes the information in this material to be reliable, has not independently verified such information and makes no representation, express or implied, with regard to the accuracy or completeness of such information, (iii) accepts no responsibility or liability as to any reliance placed, or investment decision made, on the basis of such information by the recipient and (iv) does not undertake, and disclaims any duty to undertake, to update or to revise the information contained in this material.
Unless otherwise stated, the views, opinions, forecasts, valuations, or estimates contained in this material are those solely of the author, as of the date of publication of this material, and are subject to change without notice. The recipient of this material should make an independent evaluation of this information and make such other investigations as the recipient considers necessary (including obtaining independent financial advice), before transacting in any financial market or instrument discussed in or related to this material.
