They Tell Us No One Saw The Train Coming, So If Everyone Was Blind, No One Was Blind

A report from Fox 5 DC. “Housing markets in Washington, D.C. and other areas with high concentrations of government workers have already been impacted by the Trump administration’s new policies, according to Redfin agents. Return-to-office mandates for federal workers have led to an increase in home buyers, but ‘uncertainty’ about federal job cuts has discouraged others from buying or selling their homes, according to the report. Home prices in the nation’s capital were down 8.6% in January, compared to last year, selling for a median price of $560,000, according to Redfin data. ‘Since the inauguration, I’ve met with a few people, including one federal government employee, who are selling specifically because of anticipated return-to-office orders,’ said Jo Chavez, a Redfin Premier agent in Kansas City, Missouri. ‘I also spoke to a client who was looking to sell and upgrade to a larger home, but he canceled those plans because he’s worried about losing his job due to restructuring of government jobs.'”

From Fortune. “The Trump administration’s return-to-office mandate and layoffs are disrupting housing markets with big federal footprints, as workers search for closer commutes and struggle with job insecurity. Washington, D.C.-based Redfin agent Stuart Naranch said a couple he worked with to buy their dream home a few years ago are now thinking about putting their home up for sale as they seek to be closer to public transportation. ‘They both work for the government and want a more convenient commute because they’ll need to return to in-person work soon,’ Naranch said in that same report.”

“The federal government isn’t the only organization implementing return-to-work mandates. Corporate giants like Amazon, Microsoft, JPMorgan, and Dell are also bringing their employees back to the office. That has sparked widespread pushback from workers, and 1,200 JPMorgan employees signed a petition against the company’s five-day-a-week, in-office mandate. ‘Don’t waste time on it,’ CEO Jamie Dimon said during a company-wide meeting this week, Reuters reported. ‘I don’t care how many people sign that f—ing petition.’ For the four weeks that ended Feb. 9, new listings were up 7.4% from last year, the highest level since 2022, while pending sales were down 6%, according to Redfin. There are now five months of supply on the market, the most since early 2019 and up from 4.4 months a year earlier.”

From USA Today. “The termination notice came just before Valentine’s Day, and Elena Moseyko’s heart was shattered as she broke down crying in front of her two young children. She has bills to pay – a mortgage, preschool tuition, a car payment – and a scared family. ‘I feel so angry now at the administration because I traumatized my kids,’ she said. ‘I wish I would’ve never joined the federal government.’ USA TODAY spoke to federal workers fired from the departments of Education, Veterans Affairs, Agriculture and Transportation who said they were shocked, angry and emotionally distraught by the terminations. They were scrambling over the weekend to figure out how to file for unemployment benefits and reviewing their budgets to adjust to a new financial reality.”

The Union Tribune in California. “Jewish Family Service of San Diego will shut down a regional migrant shelter it ran for more than six years and lay off 115 employees due to “changes in federal funding and policy” by the Trump administration. The organization said in a statement that its transition shelter — which provided medical screenings, food, case management, legal support and travel coordination — has received no new migrants since Inauguration Day, when the Trump administration ended use of the CBP One app. That app had allowed migrants to schedule asylum interviews at ports of entry and be released into the U.S. while awaiting updates on their asylum claims. The organization also said it has not received any of the $22 million it was awarded last year by the Federal Emergency Management Agency’s Shelter and Services Program. The nonprofit, which will now focus its immigrant-relief efforts on providing pro bono legal services, announced the layoffs in a required filing submitted Monday to the state Employment Development Department.”

“Tax documents show Jewish Family Service of San Diego received $47.9 million in government grants in the fiscal year ending in June 2023, the most recent filing available. It got about $20.4 million in other contributions that year. Most recently, the organization was awarded $22 million last September from FEMA’s Shelter and Services Program. In the same round of funding, FEMA also awarded $21.6 million to Catholic Charities, Diocese of San Diego, which also provides transition shelter services to migrants. Jewish Family Service said this week that it has still not received any of the FEMA money, which is typically paid out as reimbursements for expenditures.”

From CNBC. “Fannie Mae and Freddie Mac — the two giant mortgage finance firms controlled by the federal government for nearly 17 years — could be sold off into the private sector. During President Donald Trump’s first term, the White House attempted to release the Federal National Mortgage Association, known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, known as Freddie Mac, into the private market. While Trump hasn’t talked about the idea to sell off the government’s shares into the private market, the topic is bubbling up now in Trump’s second term. It could lead to higher mortgage rates and risk for investors, experts warn.”

“‘It really ultimately depends on what President Trump wants to do or not do,’ said Mark Zandi, chief economist at Moody’s Analytics. If ‘based on the economics of it all, there should be no chance that they get released administratively,’ Zandi said. ‘It doesn’t make any economic sense.’ ‘A release is a lose-lose for taxpayers, homebuyers, the housing market, the economy, everybody is worse off than the status quo.’ Zandi said. ‘What problem are we trying to fix?'”

From USA Today. “One of the Trump White House’s key policy reforms may be something that touches the lives of millions of Americans – but few know about. The administration will likely attempt to unshackle Fannie Mae and Freddie Mac, the mortgage guarantors, from their current position as wards of the state, analysts believe. Housing finance observers see it as an opportunity to fundamentally remake a system that hasn’t been able to purge systemic racism embedded in its processes, and to close the gap on serving historically marginalized communities. Keeping the focus on historically underserved communities in the mortgage market is an apt way to observe Black History Month, said Michael Neal, a senior fellow in the Housing Finance Policy Center of the Washington, DC-based Urban Institute thinks. ‘Allowing everyone the same opportunity to build wealth, especially through housing, is an important goal,’ he said. ‘Certainly that brings up the need for more housing, but also highlights the importance of ensuring that everyone can access a sustainable mortgage.'”

Yahoo Finance. “Borrowers who got home loans through government-backed programs are increasingly falling behind on their payments, a potentially worrying signal for how lower-income Americans are faring in today’s economy. Delinquency rates on Federal Housing Administration and Veterans Affairs loans reached 11.03% and 4.7%, respectively, at the end of last year, according to the Mortgage Bankers Association, breaching pre-pandemic levels. ‘While the Fed is cutting rates, and that’s helped lift asset prices a little bit, those on the lower-income household side are not feeling any benefit,’ said James Knightley, chief international economist at ING. ‘Their borrowing costs are not going down. If anything, they’ve been going up, and we still have sticky inflation that’s eating into spending power.'”

“The reasons consumers fall behind on their mortgages vary. About a quarter of FHA borrowers who were seriously delinquent — meaning they were more than three months behind on their payments — cited loss of income, followed by 19% who blamed excessive debt. Private mortgage lending to subprime borrowers all but dried up after the financial crisis, and FHA loans provide the closest proxy today. Even in the best economic times, delinquency rates on these loans are typically several times higher than on conventional loans. What starts as a stressor for less well-off borrowers can often spread, particularly if the job market weakens generally. In a recent report, ICE said FHA and VA loan delinquencies ‘are likely to serve as canaries in the coal mine’ for broader mortgage payment trends during this economic cycle.”

“Right now, exactly when a borrower got their loan also matters. Those who purchased in 2021 or earlier, when mortgage rates were near all-time lows and home prices hadn’t yet hockey-sticked higher, have much lower debt-to-income ratios and healthier equity positions than those who bought in 2022 or 2023, said Andy Walden, vice president of enterprise research strategy at ICE Mortgage Technology. Given how much harder it’s become to afford a home, recent borrowers are going delinquent early in their loans at higher rates than those who bought a few years earlier, even though underwriting standards haven’t changed. Higher prices and mortgage rates also mean they build equity at a slower pace. ‘It is a very different borrower profile,’ said Walden. ‘It was kind of expected that this would happen in this FHA section first because those are the borrowers that are typically impacted first when the broader economy changes. I think you’ll see a gradual rise in delinquencies outside of that.'”

Portland Press-Herald. “Kelsey Lawry knew finding a starter home in Maine’s competitive real estate market would be tough, but she didn’t think it would be nearly impossible. Lawry, 28, and her fiance, Zach Martins, 29, have been looking for a house for the better part of a year. Their list of must-haves is not long: at least two bedrooms, a bathtub, a dry basement and a one-quarter acre of land. ‘I think I set my expectations low, and I needed to set them even lower,’ she said. She knew anything in their budget — $300,000 to $350,000 — likely wouldn’t be their dream house. ‘But I didn’t realize that $300,000 was going to get a house that had a sunken-in roof and a mold issue with a wet basement that has a lawn that floods every rainstorm,’ she said.”

“The small, affordable house highly sought after by young, first-time homebuyers is becoming increasingly difficult to find in Maine. They’re the houses that for previous generations were ubiquitous and synonymous with the American Dream. They’re often no-frills ranches, mini-capes or bungalows, somewhere around or below 1,400 square feet with two to three bedrooms and one, maybe one-and-a-half bathrooms. Once upon a time, that kind of house in Maine was below $200,000. It was the first step in a natural progression. Real estate agents in Greater Portland now use the term ‘$500,000 starter home’ without batting an eye.”

“The 1950s saw the advent of the ‘mini cape,’ which popped up in large developments by the hundreds. These houses were between 1,000 and 1,200 square feet, generally with two bedrooms and a bathroom. ‘They could be built fast and they could be built cheap,’ Scott Hanson, an architectural historian said, adding that parts of South Portland still have neighborhoods of several hundred such houses. Around that time, starter homes cost between $7,000 and $12,000, according to Realtor.com, or about $89,000 to $155,000 if adjusted for inflation. In Maine, the median sale price exceeded $400,000 for the first time last year. In Cumberland County, the median has come close to $600,000. On Feb. 3, there were only 15 single-family homes at or below $350,000 in Cumberland County on real estate listing site Zillow. None were in Portland. One of the homes, going for $325,000 in Scarborough, needed a full rehab, according to the listing.”

From Mises.org. “It’s probably unfair to liken the 1998 Peter Berg dark comedy Very Bad Things to the activities of the US Federal Reserve, but the central bank does share the traits of incompetence and disastrous results with the bumbling wedding party in the film. When one considers the legacy of the Fed since its inception in 1913, it may be that nothing comes close to the damage the Fed has done to people’s lives. And there’s clearly nothing funny about it. One would think monetary economics is an arcane art beyond man’s comprehension, and the best we can do is what we’re doing: Hire smart guys to take educated guesses about what needs to be done. Yet, its mystery is purely man-made.”

“The economists who were blindsided by the 2008 crisis were neck-deep in charts, aggregates, and bad theory they believe in to this day. They tell us no one saw the train coming, so if everyone was blind, no one was blind. They insist the train wreck was just an unfortunate reminder that economics is hard stuff. Better to leave it to the experts at the Fed where high IQs run rampant. Did the Fed inflate prior to the 2008-2009 financial meltdown? Like mad. Perhaps at Paul Krugman’s suggestion, Alan Greenspan created a monster housing bubble to replace the dot-com bubble. Did it inflate in response to the bust? Bernanke spiked the monetary base. Were investors calling for even more monetary pumping? The ones calling for QE3 were. And there are countless nervous others hovering around the panic button ready to join them.”

“In economics, all voluntary exchanges are win-win agreements at the time of the transaction. Both sides to the trade believe they’re improving their lot, otherwise they wouldn’t agree to make it. When politicians take to making exchanges for our benefit, however, we’re almost always on the losing side. Someone must be winning, but in the end it’s not clear who.”