Freddie Mac's Cindy Waldron talks housing affordability in the times of COVID-19

Power House

This week, Cindy Waldron, the vice president of research and analytics at Freddie Mac, joins the Housing News Podcast to discuss affordability and the trends Freddie sees in different areas of the country.

In this episode, Waldron explains how the nation’s lack of housing inventory is affecting low to moderate-income borrowers, as well as how COVID-19 will impact the homeownership dreams of Americans who may be struggling finically due to the pandemic.

During the interview, Waldron also addresses the unique affordability challenges facing American renters, who have disproportionally been impacted by the Coronavirus pandemic.

According to her, while many renters are struggling, the pandemic has also stimulated homeownership desires for Millennials, many of who have indicated plans to become first-time homebuyers.

“We are seeing [the pandemic] hit a lot of renters, but we are actually also seeing it stimulate some of these Millennials,” Waldron said. “A lot of [Millennials] were staying in place as interest rates remained low, but during COVID-19 we began to see them move to the next house as they wanted additional space.”

Waldron says while the desire for homeownership persists amongst renters and Millennials, factors like dwindling housing inventory and home price increases are impacting their likeliness for affordability.

“Our chief economist at Freddie Mac has predicted the 30-year fixed mortgage will be around 3% in 2021, so that's good news for affordability as these low rates will keep monthly payments down,” Waldron said. “However, house price growth, which was around 5% to 6% in 2020, has been more challenging as COVID-19 has led a lot of people to want more space, which is adding to demand. So, this is also adding pressure towards affordability and even the housing stock.”

“In 2021, we expect the rate per house price growth to be 2.6%, so that should help a little bit, but it's not growing as fast as the 5% to 6% [In 2020],” Waldron said. “That said, again, the housing shortage is going to be very challenging, and building new housing during COVID-19 is going to be hard.”

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