#MBACREF23: Multifamily Leadership Perspectives

(MBA 2023 Chair Matt Rocco interviews Federal Housing Finance Agency Director Sandra Thompson)

SAN DIEGO–Senior government executives visited the MBA Commercial/Multifamily Finance Convention & Expo 2023 to discuss their successes and challenges, including how to increase the national supply of affordable housing.

“Housing is the platform on which we build our daily lives,” said Julia Gordon, HUD Assistant Secretary for Housing and Federal Housing Commissioner. “It’s a basic human need and should be considered a basic human right. So, why are we here? We face an acute and pervasive housing supply shortage and an aging housing stock. The problems of that are exacerbated by climate change and the fact that people are still recovering from the health and financial effects of COVID-19. Now layered on top of that is a rapidly changing housing finance market with increasing interest rates and borrowing costs.”

Gordon noted the discussion about supply and affordability challenges is no longer limited to the very lowest-income families. “We’re talking about people earning 80 percent of area median income,” she said. “Half of the rents in the country are unaffordable by traditional measures. You and HUD/FHA are here, together, at the epicenter of this challenge. FHA is excited to have you involved in the FHA program because whether you are doing all market rate or market rate and affordable, you are contributing to our goals and to the Biden-Harris Administration’s goals to increase the housing supply and help support affordability for America’s families.” 

FHA published a Request for Information Tuesday in the Federal Register that seeks public comments on how to enhance its Single-Family 203(k) Rehabilitation Mortgage Insurance Program. “Hopefully, that will help many more vacant properties be put back into use and build the community,” Gordon said. She encouraged all interested parties to submit comments by the April 17 deadline.

Federal Housing Finance Agency Director Sandra Thompson said FHFA also wants to focus on workforce housing supply issues this year for families earning between 60 and 80 percent of the area median income. “What can be done to provide affordable rental properties for those people?,” she said. “If someone works in Washington, D.C., they should not have to live in West Virginia to be able to afford housing. We’ll be leaning in on that one.”

Thompson noted she always looks to the industry and other stakeholders for good ideas. “When we implement policies, we try to get as much stakeholder input as possible,” she said. “So we will ask the Enterprises to work with the people that will be affected by these policies.”

Michele Evans, Executive Vice President and Head of Multifamily with Fannie Mae Multifamily, Washington, D.C., said her Enterprise’s priorities for 2023 include serving the market first and foremost. “We need to be in the market providing liquidity and a counter-cyclical buffer,” she said. “Our second priority is managing our book of business. Given the current environment with inflation and the risk of a recession, we need to ensure we are thinking about emerging risks and how to manage through them.”

It’s also important that Fannie Mae Multifamily remain a resilient organization, Evans noted. “We are fully staffed, ready to address the market and excited,” she said.

Kevin Palmer, Senior Vice President and Head of Freddie Mac Multifamily, McLean, Va., noted the country just wrapped up a volatile 2022 and went through a pandemic that created some fairly extreme affordability issues. “Although we’re not in a technical economic recession, I think we are in a housing recession, we’re in an affordability crisis and we’re also seeing softening in the overall market,” he said.

Palmer noted multifamily property prices dropped in fourth-quarter 2022. “Fortunately we’ve seen rents soften, which helps out a little bit, but we’re going into 2023 with an affordability crisis combined with a softening market,” he said. “So as we think about our plans and goals, we need to ensure we are leaning in in an appropriate way to help support affordable housing, but doing it in the context of the risk we are now in.”

The Enterprises have managed through numerous economic cycles in the past, Palmer said. “I think especially during turbulent times, the counter-cyclical role the GSEs play is critical,” he said.