Will Trump's proposals improve housing affordability?

Summary

Marketplace Morning Report

Episode: Will Trump's proposals improve housing affordability?

Date: January 27, 2026
Host: David Brancaccio
Guests: Katherine Ann Edwards (Labor Economist), Jenny Schutz (Arnold Ventures Housing Expert), Kristen Schwab (Marketplace), plus commentary from finance experts
Theme: Examining the impact of Trump administration proposals and broader economic factors on U.S. housing affordability, with analysis on Federal Reserve independence, mortgage market interventions, and challenges in increasing supply.

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Overview

This episode centers on recent government and Federal Reserve moves aimed at addressing housing affordability in the U.S.—specifically, the Trump administration’s directive for Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities. Key economic thinkers analyze whether such interventions are effective, the underlying causes of the housing crisis, side effects of policy moves, and what structural issues persist.

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Key Discussion Points & Insights

1. Federal Reserve Decision and Independence

[01:01–03:10]

• Katherine Ann Edwards provides a primer for interpreting FED briefings, especially regarding changes in economic tone or projections—even subtle language shifts.
  • "You can look at like track changes in word and they'll cross out one word like concerned and replaced it with following. So looking for those type of even small changes [...] can trigger, you know, big cues about what is going on at the Fed and their thought process." (Katherine Ann Edwards, 01:25)
• Recent political pressure is highlighted as unprecedented, particularly with Trump suggesting the Fed should operate under presidential control.
  • "It's really unprecedented in the Fed's independent history to have so much pressure from a sitting president." (Katherine Ann Edwards, 02:54)
• Economic signals from the Fed are multidimensional, encompassing labor market health and economic outlooks, beyond just interest rates.

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2. AI Spending and Big Tech Earnings

[04:28–06:16]

• Kristen Schwab and finance experts discuss the scrutiny of Big Tech investments in AI:
  • Investors increasingly want "proof" beyond the hype, especially from companies where AI integration is less direct (e.g., Meta, Apple).
  • "Can they grow beyond social media and iPhones and build valuable AI features into their products?" (Kristen Schwab, 05:33)
  • AI is still early-stage—“This is still what I view [as the] third inning of a nine inning game in AI buildout.” (Dan Ives, 05:53)

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3. Housing Affordability—The Heart of the Episode

[06:28–09:27]

• Trump Administration’s Mortgage Intervention:
  Fannie Mae and Freddie Mac ordered to buy $200B in mortgage bonds, aimed at reducing borrowing costs.

  • Jenny Schutz explains housing costs reflect both incomes and outlays; current difficulties are due to high prices and high interest rates, compounded by insurance and property taxes.

• Impact Assessment of Mortgage Support

  • "Intervention by the GSEs can help at the edges. But that's not fundamentally going to change the price that most people are paying on their mortgage." (Jenny Schutz, 07:36)
  • Lower rates may enable refinancing, which ironically can discourage owners from selling, reducing available homes for new buyers.
  • "A lot of homeowners who are at lower than 3% mortgage interest rate [...] makes them very reluctant to sell their house and move someplace else. That limits the availability of homes that are open for first time home buyers." (Jenny Schutz, 08:05)

• Debate on Private Equity Housing Ownership

  • Only ~3% of residential housing is owned by private equity. When such homes go “off the market” as owned assets, they typically become rentals, not wholly removed from availability.
  • "[Private equity is] just making housing available for renter households and who on average have lower incomes than home buyers." (Jenny Schutz, 08:30)

• Long-Term Solution: Build More Housing

  • The only way to sustainably improve affordability is to significantly increase housing supply.
  • "The only long term way to improve affordability is to build enough homes so that the price of houses goes up roughly equivalent to the rate of inflation overall." (Jenny Schutz, 08:52)
  • Nonetheless, construction costs are rising thanks to tariffs and reliance on immigrant labor, challenging the bricks-and-mortar solution.

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4. Political Context: Trump Visits Iowa

[09:28–10:14]

• Trump is expected to address the high cost of living, with attention on whether his remarks will stay focused on policy substance.
• Iowa’s agricultural woes are mentioned in connection to Trump’s tariffs, farm aid, and bankruptcy trends.
  • "There have been numerous presidential presentations with this kind of advanced billing, and the question is, will the president keep that focus once at the podium?" (David Brancaccio, 09:28)

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Notable Quotes & Moments

• [01:25] Katherine Ann Edwards:
  "Looking for those type of even small changes to their basically their projections or their concerns or their beliefs about the economy. Those small things can trigger, you know, big cues about what is going on at the Fed and their thought process."

• [02:54] Katherine Ann Edwards:
  "It's really unprecedented in the Fed's independent history to have so much pressure from a sitting president."

• [07:36] Jenny Schutz:
  "Intervention by the GSEs can help at the edges. But that's not fundamentally going to change the price that most people are paying on their mortgage."

• [08:05] Jenny Schutz:
  "We have a lot of homeowners who are at lower than 3% mortgage interest rate, which makes them very reluctant to sell their house and move someplace else."

• [08:52] Jenny Schutz:
  "The only long term way to improve affordability is to build enough homes so that the price of houses goes up roughly equivalent to the rate of inflation overall."

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Timeline of Important Segments

• 01:01–03:10
  Explainer on how to read Fed signals and what “political pressure” might mean for decisions.
• 04:51–06:16
  Breakdown of investor focus on AI spending and earnings outlook for Big Tech.
• 06:28–09:27
  Deep dive on housing policy: Analysis of Trump administration’s mortgage intervention, affordability challenges, and the essential need for new construction.
• 09:28–10:14
  Brief report on Trump’s upcoming Iowa visit and its context within the cost-of-living debate.

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Conclusion

The episode underscores there is no silver bullet for housing affordability—short-term government interventions may shave off mortgage costs at the margin, but don’t address core supply-and-demand dynamics. Experts argue for long-term construction strategies and warn against oversimplified fixes. While the Trump administration's mortgage bond purchase is headline-driving, real progress on affordability will require deeper structural change and cross-cutting policy action.

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For those seeking a quick but thorough analysis of America’s housing challenge, this episode provides clear-eyed expert commentary, direct questioning, and grounds the debate in both economic fundamentals and the news cycle, all delivered in a concise and approachable style.

Transcript

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[David Brancaccio]

If only there were a dial that turned counterclockwise would reduce the cost of housing in America. I'm David Brancaccio in Los Angeles. First, how to be a detective when watching the Federal Reserve briefing tomorrow. Katherine Ann Edwards is a Houston based labor economist and host of the Optimist Economy podcast. Interest rates are not going down tomorrow, but what will you be looking for?

[Katherine Ann Edwards]

Katherine I will be looking for meeting minutes on how they update their beliefs from the last meeting. These are actually quite easy to follow. You can look at like track changes in word and they'll cross out one word like concerned and replaced it with following. So looking for those type of even small changes to their basically their projections or their concerns or their beliefs about the economy. Those small things can trigger, you know, big cues about what is going on at the Fed and their thought process.

[David Brancaccio]

Yes, we should remind ourselves a lot of headlines are captured about what the Fed will hint about the future of interest rate changes. But there's also very rigorous information contained about, you know, where they think the labor market is, if we're going to find a job or if we're going to lose a job.

[Katherine Ann Edwards]

They have to process both an incredible amount of information, some of it coming in the form of just data. Here are the numbers. Here's how they look over time. They do a lot of data collection that's much more informal, like commentary from industry, industry leaders, people in certain sectors. And then they have to combine that with their, you know, overall projections of where they think the economy is going to go. That's hard to do even in the best or worst of times when you are independent and people are leaving you alone. What's happening right now is the microscope of political pressure, that every move is seen as something for or against Trump because he has decided that the Fed should be under his control. It's really unprecedented in the Fed's independent history to have so much pressure from a sitting president.

[David Brancaccio]

Always good to catch up with Katherine Ann Edwards. She's a labor economist, a Bloomberg opinion columnist, and host of the Optimist Economy podcast. Thank you so much.

[Katherine Ann Edwards]

Cheers.

[Kristen Schwab]

Foreign.

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[David Brancaccio]

Those plane tickets add up and American Airlines today forecast higher profits for the year. The stock is up more than 3% in pre market trading. Now GM profits up on SUV and truck sales stock up 4.7%. Tomorrow we'll get quarterly updates from Apple, Meta, Tesla, Microsoft. The not quite as Magnificent Seven. Here's Marketplace's Kristen Schwab.

[Kristen Schwab]

Earnings calls are always about returns, but Ronnie Sadka, a finance professor at Boston College, says investors are increasingly taking a more scrutinized look at the Magnificent Seven because of the hundreds of billions of dollars the companies are spending on AI.

[David Brancaccio]

Is it justified? So is it over investing? Are they going to see some real cash?

[Kristen Schwab]

Companies need to move beyond hype and prove their worth. That's maybe easier for firms that make chips or sell cloud infrastructure, but Shai Bel, chief market strategist at Futurum equities, says for companies like Meta and Apple.

[David Brancaccio]

They kind of have to justify all.

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Their AI investment by making its own product more engaging.

[Kristen Schwab]

Can they grow beyond social media and iPhones and build valuable AI features into their products. Investors might have to wait a bit longer for answers because despite all the talk about an AI bubble, Dan Ives, head of tech research at Wedbush, says the industry is in its early stages.

[David Brancaccio]

This is still what I view. Third inning of a nine inning game in AI buildout. I think investors are underestimating the scale and scope.

[Kristen Schwab]

The Magnificent Seven and Nvidia, which reports its fourth quarter earnings next month, are bellwethers for the AI boom.

[David Brancaccio]

So they are the gas in the market. But as it all plays out, the tech trade spreading to other sectors.

[Kristen Schwab]

I've says investments in AI will keep growing as industries like finance and health care create their own products and adopt more of the technology. Technology. I'm Kristen Schwab for Marketplace.

[David Brancaccio]

White House has told the mortgage loan agencies Fannie Mae and Freddie Mac to buy about $200 billion in mortgage bonds in a bid to lower the cost of borrowing for a house or an apartment. Today. Here a teachable moment on the swirling cauldron of factors that make shelter so hard to afford. Jenny Schutz leads the infrastructure portfolio for housing at the philanthropy Arnold Ventures. Good morning.

[Jenny Schutz]

Good morning.

[David Brancaccio]

I wish the economy worked like plumbing, right? Turn the valve down. Lower the pressure here by dropping interest rates. And law of physics, the cost of home loans would drop. Housing would get more affordable. It's not how it works. Remind us why.

[Jenny Schutz]

Housing affordability is really the intersection of two things. It's people's income, how much they can afford to spend on housing, and then the cost of housing. The problem that homeowners have at the moment is that housing prices are very high and interest rates are high. And we also have rising costs of insurance and property taxes.

[David Brancaccio]

So even if the president ordered Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, I mean, gauge the impact of that.

[Jenny Schutz]

I mean, the mortgage markets are very large and intervention by the GSEs can help at the edges. But that's not fundamentally going to change the price that most people are paying on their mortgage.

[David Brancaccio]

There's also, I think, an unintended consequence. You get mortgage rates lower and that means existing homeowners are more likely to refinance into cheaper home loans, which sometimes makes them less likely to want to sell.

[Jenny Schutz]

We have a lot of homeowners who are at lower than 3% mortgage interest rate, which makes them very reluctant to sell their house and move someplace else. That limits the availability of homes that are open for first time home buyers to get into the market.

[David Brancaccio]

All right, there's also the ban on private equity buying residential housing. I was just looking at a statistic I think they own these days, like only 3% of it.

[Jenny Schutz]

Yeah. The other way to think about this is that when private equity buys particularly single family homes in the suburbs, they're not taking housing off of the market altogether. They're just making housing available for renter households and who on average have lower incomes than home buyers.

[David Brancaccio]

So what can we do to make housing more affordable in America? Build more supply and demand.

[Jenny Schutz]

Yeah. The only long term way to improve affordability is to build enough homes so that the price of houses goes up roughly equivalent to the rate of inflation overall.

[David Brancaccio]

And then, of course, construction costs, that's not going down.

[Jenny Schutz]

Right. I mean, we import a lot of our construction materials, so tariffs are going to make that more expensive. The construction workforce depends really heavily on immigrant labor. All of this makes it more expensive on the bricks and mortar side to build homes.

[David Brancaccio]

Jenny Schutz leads the infrastructure portfolio for housing at the philanthropy Arnold Ventures. Thank you for the briefing.

[Jenny Schutz]

Thanks, David.

[David Brancaccio]

President Trump goes to Iowa today to talk about ways to address the high cost of living. There have been numerous presidential presentations with this kind of advanced billing, and the question is, will the president keep that focus once at the podium? Iowa's economy is rooted in farming, which has been in a tough spot given Trump tariffs, which hit Iowa's soybean farmers hard when China retaliated for many months. China is buying again and the administration has a $12 billion aid package for farmers. Last year, there were the most farm bankruptcies in Iowa in the last five years. In Los Angeles, I'm David Brancaccio. This is the Marketplace Morning Report. We're from APM American Public Media.

[Kristen Schwab]

I'm Rima Reyes. And this week on this Is Uncomfortable, fellow podcaster and host of Scamfluencers, Sarah Haggie joins me to sort out your work drama. We answer your questions about scammy bosses, managing workplace friendships and coworkers who push boundaries a little too far. I'm going to stay at your place for a bit while I'm breaking up. And obviously I'll need a key. And that is how you get a squatter. Listen to this is uncomfortable on your favorite podcast.

[Katherine Ann Edwards]

APPLAUSE.