During the height of the pandemic, the nation’s central bank, the Federal Reserve (aka The Fed), started a new round of bond purchases that swelled its portfolio of mortgage-backed securities to $2.7 trillion from $1.4 trillion it held in February 2020.
That created ultra-low mortgage rates which heavily stimulated home buying and refinancing activity in America.
To combat inflation, the Fed is now planning to let its holdings shrink as securities get paid off, writes Neil Irwin in his recent Axios post called “The Fed's $2.7 trillion mortgage problem.” The problem is that “[e]xtracting itself from this market risks crashing the housing industry and creating intense political blowback for incurring financial losses.”
Irwin writes that the Fed’s pandemic actions to loosen up capital unseized a market and fueled a housing boom, but the opposite reaction could lose U.S. taxpayers billions and be bad for housing.
Since housing is 15% of the U.S. economy, these decisions will have major implications.
Upzoned Host Abby Kinney asks her podcast guests, Strong Towns President Charles Marohn and Andrew Ganahl, an infill developer in Kansas City who used to work for the U.S. Treasury, to put it into perspective on this edition of the podcast.
Additional Show Notes“The Fed's $2.7 trillion mortgage problem,” by Neil Irwin, Axios (May 2022).
Abby Kinney (Twitter)
Charles Marohn (Twitter)
Theme Music by Kemet the Phantom.
Is the American Dream out of Reach for Most People?
How To Build Better Places Through Small-Scale Development
Fire Departments Can Help Make Streets Safer, and Here’s How
Why Cities Need To Become More Family Friendly
What Los Angeles Can Learn From Paris’ Olympic Village
Indianapolis Empowers People and Drives Change Through Tactical Urbanism
How To Handle Small-Scale Development Finance: Insights From Kansas City
You Don’t Actually Want To Abolish Property Taxes, and Here’s Why
Why New York City’s Traffic Congestion Plan Crashed and Burned
Faith in Action: How Religious Institutions Can Help Solve the Housing Crisis
The Dollar Difference: Why Rural Poverty Benefits Dollar Stores More Than Urban
How To Successfully Navigate the World of Incremental Development
Doug Barrick: Building a Strong Town as a Member of Local Government
Is the Non Profit Sector a Mess of 'Misconduct, Greed and Corruption'?
An Inside Look at the Strong Towns National Gathering
From Bike Lovers to Zoning Experts: The Voices of Strong Towns
Cincinnati Pledges $200K in Funding for Popular Bikeshare Service
Department of Justice Opens Criminal Investigation Into “Housing Cartel”
Inside the Notorious Gridlock of Colorado's I-70
“Redesigning” Cincinnati With the Connected Communities Plan
Create your
podcast in
minutes
It is Free
Social Dallas Podcast
Change Church Podcast
Giving Done Right
Nonprofits Are Messy: Lessons in Leadership | Fundraising | Board Development | Communications
Digital Islamic Reminder