How did Washington’s housing plans play out in 2025?

Transcript

Maiclaire Bolton Smith:

Welcome to Beyond the Buildings by Cotality. I am your host, may Claire Bolton Smith, and I'm just as curious as you are about everything that happens in the property industry. On this podcast, we satisfy our collective curiosity, explore questions from every angle and look beyond the obvious. With every conversation we illuminate what is possible. The struggle for a sustainable path to homeownership is a dominant political issue, and its forced Washington to respond to a housing market that is at a critical inflection point. 2025 may prove to be that tipping point. This year we saw major political bills and plenty of proposed solutions to the ongoing affordability crisis that has left millions of would-be home buyers on the sidelines. As we come to the end of the year, we're going to take a deep dive into the policy shaping where we live and how much we pay to be there. So to help us unpack the biggest housing news from 2025 that will influence the future of the housing market, we have principle of public policy and industry relations. Halbert back on the show today. Cha, welcome back to Beyond The Buildings.

Chay Halbert:

Hey Maiclaire, it's good to see you again. Really enjoy these talks that we have.

Erika Stanley:

Before we get too far into this episode, here's a friendly reminder about how to see what's coming up next in the property market. To make it easy, we curate the latest insight and analysis for you online, find us using the handle at Cotality on all our social media channels.

Maiclaire Bolton Smith:

Me too. And this one's so timely because of all these things that have erupted in the last couple of months. So let's just start. The first one is the 50 year mortgage. Now, I think when anybody thinks of mortgages, they think of a 30 year mortgage or maybe even a 15 year. But there is a recent announcement that came from the administration about affordability, and it really is pressuring people in this country. Lots of different ideas have been thrown around and President Trump said he's going to push for a 50 year mortgage, and that's drawn a lot of attention, a lot of criticism. Can you just talk about how this would work and what it would mean for homeowners, lenders, banks, everything?

Chay Halbert:

Sure. I mean, on its face, it does seem fairly straightforward If you're trying to get a lower monthly payment, if you just push out the time horizon you get there. But once you go beyond that surface level, it gets pretty thorny pretty quickly.

It's something where, again, you understand the buying that they're in, and you can certainly appreciate that they're trying to look for solutions. But really, when you unpack everything and you think about, first of all, what's someone going to end up paying in interest over the life of this kind of loan? It's going to be a lot. And sure, you may be able to get into that house sooner, but then you think about the backend of that kind of loan and it's just really, you're almost doubling the life of the loan. So you're almost doubling the amount of interest, even more than doubling the amount of interest that you're going to pay.

Maiclaire Bolton Smith:

But does the average homeowner know that or think about that? I don't know if people actually think of how much money they're paying in interest on a loan, and maybe they're just seeing that monthly payment go down and therefore this looks like a great idea.

Chay Halbert:

Yes, you can certainly understand that folks. It's like they want to buy a home, they want to get their life started. They're seeing that monthly payment is really the kind of first immediate barrier to doing that. But I mean, thankfully we have lots of disclosure in this country. There's lots of transparency. People are told upfront what they're going to be paying in interest over the life of a mortgage. And so once you see that big number at the end of it's like what you'd actually end up paying at the end of 50 years, it's a good thing that people will be given that information. They'll be given both the short-term and the long-term ramifications of what a 50 year mortgage means.

Maiclaire Bolton Smith:

And what about banks and lenders? What would this mean to them?

Chay Halbert:

Well, again, this goes back to that it seems simple to start, but you have a 50 year mortgage. You can't just assume that the current rates or maybe even future lower rates are going to be just copy and pasted onto a 50 year mortgage, right? It's banks have to think about, it's a little bit, but is this person going to live to 50 years? It's like what's going to happen towards the end of this loan? So there's risk there. It's not just, oh, delete the three and put the five and everything's going to be the same. Banks are going to price that risk accordingly. So the brute force approach of adding more years, I mean, yes, it will bring again that monthly payment down, but when you really dig into the numbers and it's like what's the rate you're going to be paying? How that gets compounded over time. Again, all of that goes into the math, and these are hard numbers. You can squeeze the balloon on one end, but it's going to come out on the other.

Erika Stanley:

Their proposed 50 year mortgage is being framed as an affordability solution. Our analysis shows the picture as more complicated and in many cases riskier. If we compare a $320,000 loan on a 30 year term versus a 50 year term, the monthly payment would be about $225 lower. But buyers would pay $335,000 more in interest and build $38,000 less in the first 10 years.

Maiclaire Bolton Smith:

Alright, the next topic, Chay, is something that's done in other countries. I've talked a lot on this podcast about how, I'm originally from Canada and I know that in Canada you can take your mortgage rate with you when you buy a new house. So that's one that's now being talked about. Portable loans. So the FHFA, the Federal Housing Finance Agency Director said he's looking at making Fannie Mae and Freddie Mac loans portable. So that would mean if somebody has a, I'll use myself as an example. My old house, we had a 2.75 interest rate. We sold that house, we bought a new house, and we've got a significantly higher interest rate now. But had this been in effect, I could have taken that 2.5% interest rate and applied it to my mortgage on this new house that I bought it when it happened. And that sounds like something that's really appealing, especially for a home buyer. But what does that open up to? Why don't we do it now? And there's got to be a reason why this hasn't been in effect. And what would it mean?

Chay Halbert:

Well, again, you appreciate the motive here, and it certainly could, again, using yourself as the example, it can work for some people, but you have to have the loan. So everybody that currently has a loan with an interest rate that they like, sure it's great for them, but if you don't, well, you're out in the cold. So there's lots of people who are still looking to buy a home. There are lots of people that are looking to start their family looking for a starter home. It's like you got to ask. It's like, well, what's the solution for them? It's like this doesn't help with them. And then to go to your question about why aren't we doing that here? Well, again, the mortgage market, it's a well-regulated market. There are lots of sharp eyeballs on it. And when it comes to loans of this size, the collateral, the house obviously a very important part of that loan. And so when you're changing the collateral, when you're changing the house, you've got to think it's like, well, again, you can't just copy and paste the loan that you have. It's like the loan that you got was based on the house that you bought at that time. If you're going to buy another house, you've got to redo all of that. You got to think about it. It's like, what's the appraisal? Where is it? Again, all of the details that go into producing a mortgage, they come back into play. And so unfortunately, again, copying, pasting, it's difficult. It would be really difficult in this kind of situation.

Maiclaire Bolton Smith:

Yeah. Do you think it'll actually happen?

Chay Halbert:

My gut would say no. Again, just the amount of what you would really have to do to get something like that to work. And then even then the number of scenarios that it would fit into and work. And again, you got to think about the secondary market, and you got to think about the folks that buy these loans that make the liquidity possible. They're going to want to really get into those details about how this program works, and they're going to have a lot of very pointed questions about exactly how to get this to work. And so you think about all those hurdles, it really seems like a kind of snowballs chance.

Maiclaire Bolton Smith:

Sure. Yeah. No, understand that. I think with a lot of these things it's like, oh, that sounds great, but it actually feasible when you actually put it into practice. Exactly. So the other one that's being talked about is the road to housing, which is one of the major bills on the Congress floor this year. That, and from what I understand of it is it's a piece of legislation that was far reaching. It included things like incentive for repair, increasing opportunity zones and solutions to unlock the housing supply, which we have talked about many times on this podcast is we just have such a lack of supply. Why was this bill the road to housing such an important bill?

Chay Halbert:

First of all, just as existence is a big deal, it's like Congress has not done a lot in the recent past to GOOSE housing to help with housing supply, to help with affordability. So just the fact that Congress is able to pass something, and I want to be clear, this is passed out of one chamber. So it did pass the Senate, and not to get too technical or inside baseball, but it was attached to the annual National Defense authorizing Bill, which is the policy bill for the Department of Defense.

Oh, interesting. Yeah. It's a quirk of the Senate that they're able to attach these kind of things to that particular bill. And the reason that they did it is that's a bill that does pass every year. It's like Congress is not in the habit of passing a lot of legislation for some time now, but it's called the NDAA that does pass every year. And so again, that passed out of the Senate side. And depending on when you're listening to this, the government has recently reopened. And so it'll go to the house and they will tinker around and it's like they'll have debates and they'll figure out what the final thing goes to. The president's desk for signature will end up looking like. So it's possible it doesn't make it, we'll see. But to get to maybe some of the substance of the bill, it's a lot.

It's really a kitchen sink bill, and it includes a lot of, frankly, small things, things that are on the margins, but it's a lot of pieces. And so again, the fact that a bill like this exists, it's great. It's got a lot of bipartisan support. I believe it passed a unanimously, or I think it was, or maybe it was definitely overwhelmingly passed out of its committee on the Senate side. So a lot of folks support this on both sides of the aisle, and we'll see what happens as they kind of finish negotiating. Again, it's attached to a defense bill, so it's kind of an arcane rule that allows it to be included, but it was also included because it's viewed as non-controversial or it's viewed as something that broadly helps and that a lot of members on both sides of the aisle will agree broadly helps. And so that's why it's even a part of this defense bill and so we'll see. But again, it's a lot of small pieces. Any one of them probably really doesn't move the needle that much, but in concert, I think it actually can certainly do a lot of good. And so it'll be interesting to see where it goes from here.

Maiclaire Bolton Smith:

We will be watching for sure. I guess the next one, Chay, is building more housing. So we just alluded to this, and we talk about this a lot, how there is this demand and this need to have a greater supply of housing. So one of the things we've heard about constantly over the last years, I mean even back to the Biden administration, is that we need more supply. We need more housing. Has there been any headway on actually incentivizing any new builds in the past year?

Chay Halbert:

Here and there? I will say, again, we go back to the conversation about 50 year, the conversation about assumable and portable, the road to housing, all these things I keep talking about, oh, well, these are things on the margin, or it's a little bit here. It's a little bit there. Frankly, it's tough for the federal government to really put its finger on the scale when it comes to it's creating more supply. And at the end of the day, money talks and it's hard to get money out of Congress when it comes to this administration. And when it comes to, it's like who's in power right now? They look really circumspect when it comes to spending a lot of money. And it would take a lot of money, a lot of federal funding to really incentivize supply in a way that would really address the supply crisis that we're in. And so if you take that off the table, if you take spending a lot of money off the table, what are you left with?

You are left with things that are on the margin. You are left with kind of smaller bits and pieces here and there. And again, I will say it is encouraging that they are trying to do some things on supply. They're trying to do things with opportunity zones, or it's like Litech, which is the low-income housing tax credit, which helps build multifamily units for folks really across the country. And so those are things that are certainly getting looked at. And again, it's positive, but unless you're going to put a lot of money in a pot and then distribute it to all 50 states because this is an all 50 state problem, you are going to be looking at things that are on the margin and any single one of them doesn't move the needle too much.

Maiclaire Bolton Smith:

Sure. Wow. Well, that comes back to what you've said about things being in concert, that the more things together, the more impact that they could make.

Chay Halbert:

Absolutely.

Maiclaire Bolton Smith:

Okay, moving on, light touch density. So zoning is talked about all the time, but it's one type of zoning that's gaining more and more attention is this concept of missing middle. It's not a new idea, but it is an important one. So first of all, could you define what missing middle housing is and whether it's actually gaining traction politically?

Chay Halbert:

Sure. So you drive around your neighborhood and you see neighborhoods that are single family homes. It's like one family lives in the home. You drive around and you see apartment buildings where it's hundreds of homes, it's hundreds of apartments. But you got to think about, there's also a middle in there, right? So lighter, it's like lighter density than an apartment building, but more density than a single family home. So duplexes, quadplexes, smaller apartment buildings you look at, I'm sure anybody can kind of drive around where they live and they can find small lots of land where it's like, gosh, you could put a smaller apartment building there. Or you could put four homes there. You could put a row of town homes there. So that's when you hear missing middle, that's often what they're referring to.

Maiclaire Bolton Smith:

Got it. Now, is it something gaining traction about this becoming more important in the zoning realm?

Chay Halbert:

Yeah, and I think it's really encouraging. For quite a long time, you had a lot of folks who were very concerned about gentrification. They were concerned about people getting pushed out. They were concerned about too much going in too fast. And in a lot of ways you understand those concerns. And it's like where people live, it matters to them and their communities matter to them. And people are very antsy about big changes happening to their communities. So you understand a lot of that pushback that happens when folks start to talk about building more homes. But the reality is, is that you need more homes to bring down the cost of homes. It is pretty simple supply and demand. And so this lighter touch, this missing middle, it does really seem like kind of a nice compromise when you think about, well, we need to build more homes. Maybe we don't need to bring in massive buildings or tear down a bunch of stuff and put something wholesale new in. We can find infill. We can find smaller lots. Again, if I'm looking at an empty lot, I'd much rather have two or four homes there, then none. If that's something that works in that community, it's definitely being looked at. And I think a lot of the kind of strident opposition to building anything or putting anything in, I think that's really starting to thaw again because people just, they look around at home prices, they look around at their local rents and they realize that something's got to happen. And so again, it's encouraging that this missing middle, and again, any kind of warmth to any kind of development, I think is, it's a good trip. Sure, sure.

Erika Stanley:

It's that time again, Cotality just dropped new numbers about what's happening in the housing market. Here's what you need to know. Housing affordability is top of mind for everyone, including the current administration. This November, there was a proposal to extend mortgage terms to 50 years in a statement from the Federal Housing Finance Agency that the administration is actively evaluating portable mortgages, which would let people move with their mortgage rate. But these aren't the only solutions, and the core issue remains homeowners are staying put the FHFA estimates that 1.7 million home sales didn't happen between 2022 and 2024 as owners held on to the historically low rates. In our recent blog, the Seller's Paradox, we looked at how this lock-in effect is reshaping the housing market and how solutions like mortgage portability and gentle density could help restore market movement and buy our confidence. And that's the sip. See you next time.

Maiclaire Bolton Smith:

Okay. And Chay, you know, can't talk to me without talking about natural disasters, so this sounds like a good place to leave today. So natural disasters, however you want to look at them, they've been accelerating both in terms of severity and frequency, and it's really beginning to highlight the fragility of the US property ecosystem for everyone, homeowners, insurers, policymakers. But at the same time, there's been quite a few changes to government aid really with some of the catastrophic storms that have happened in the last couple of years. So let's talk about what these changes are, what they mean for the future of resilient housing.

Chay Halbert:

Yeah, I mean, you can see a real tension, a real push and pull that's happening in real time right now because as you say, the frequency and severity, that's only going in one direction and that's up, which is bad. And there's another motivating force. There's another force that's happening in federal government to start to push this responsibility to the states to de-emphasize the federal government's role when it comes to natural disasters. Interesting. In a lot of ways that kind of feels counterintuitive, right? You would think as this problem becomes wider spread, as it becomes bigger, as it becomes worse, you start to think about like, well, any given state's ability to handle this, it's really starting to eclipse any given state's ability to handle a natural disaster, especially in places where they're seeing new natural disasters. You're seeing the spread of wildfire to places where a wildfire didn't happen before.

You're seeing flooding happening in places where flooding didn't happen before. So it's really becoming much more of a national problem, and at least the current trend in the federal government is going the other way of going from a national solution to one that's a state-based solution. Now, we're still early days in this kind of transition, and even the transition itself, it isn't totally clear. There's been some kind of back and forth and a little bit of inconsistency when it comes to, it's like who gets aid, who doesn't get aid when they get it, when they don't get it? Again, the frequency and severity, it's only going in one direction. And even if it holds its course, it's still a big problem. And it's getting to the point where it's even an affordability problem and it's becoming something that's making home ownership. It's really digging into the affordability of home ownership. So it really ties into everything that we've been talking about, and it really shows you how connected all these things really are.

Maiclaire Bolton Smith:

And I mean, that statement right there sounds like a great place for us to end today, is all of this is so interconnected, and we will be watching as the next year unfolds to see where we go with policy. And I know we will have you back next year on Beyond the Buildings by Cotality. Thanks for joining me today, Jay.

Chay Halbert:

Thanks Maiclaire, it's great talking with you

Maiclaire Bolton Smith:

All, and thank you for listening. I hope you've enjoyed our latest episode. Please remember to leave us a review and let us know your thoughts and subscribe wherever you get your podcast to be notified when new episodes are released. And thanks to the team for helping bring this podcast to life producer Jesse Devons, editor and sound engineer, Romania Roman, our facts guru, Erica Stanley and social media duo, Sarah Buck and Mikala Brooks. Tune in next time for another conversation that illuminates the ideas that will define the future.

Erika Stanley:

You still there? Well, thanks for sticking around. Are you curious to know a little bit more about our guest today? Chay Halbert holds the position of principal public policy and industry relations at Cotality. He develops and manages relationship building efforts between the company and policymakers at the local, state, and federal level.

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