my call. you had an expert this morning about climate change. whether or not trust the democrats or republicans and who should you trust. my answer is neither party. pele are not understanding something. i believin scions. i believe in tse people who are going to graduate school, getting dr. degrees, researchers that are doing the science after what is going on with our climate. i understand peoplare saying maybe it is how things are. it ia natural process. but to be on his i'm going to believe in the science. i'm not going to believe in politicians that do not have any experiencend/or research on

the suect. i would rather go with what our environmentalists, researchers, what are doctorates doing t determine the infoation that need to dohat we need to do with the planet. it has nhing to do with politians but it has everything to do with people having the host: thank you all for watching this morning onannounr: washingl continues. >> lawrence eunice back this rning and he is the chief economist at the nationa association of realtors. he is here to talk about marke and interest rates. good morning, the last te you are on you talked about there being a housing shortage in this

country. what is e state of the u.s. housing industry? guest: good morning. thank you for having me. it is less of the case now given that buyers have received this from high mortgage rates and the fastest rise in mortgage rates in 40 years has led to fewer buying activity. bu we still have the inventory. the inventory of homes are still below 2019. 2019 pre-covid days. so we still do not have enough inventory even though when one looks at a specific market in austin, denver, nashville, they would say it has doubled but it is doubling from very low levels and that is technically correct but in reality the inventory is still short. host: are builders building the right type of house? when are homeowners -- looking for and is it the right type of home on the market?

guest: the inventory situation is that the builders are active on building apartments. apartment buildings are the highest ranking since the 19 80's. and the market is still rlly strong but given the robust activity the rent will diminish when this is coming off the market. single-family home construction i found there was a revival last year before the rise in mortgage rates. builders became cautious about single-family home construction and consequently single-family home construction currently in the recent months are below normal again. right n, it is a mixed picture. more apartment building but less of single-family constction. host: do u predict a glut of apartments? guest: the overall housingnit whether renting or owning i would stilclassify it as we are ill short on housing.

but of course there is a desire for people wanting to buy homes. and if they have a chance they want to exit the rental market. but the rental market i think it could get a little oversupplied. it takesime to build. on they start building an apartment it takes aut two years to complete. right now it is aive housing most of them have started so all the completion will be in 18 months or two years. host: banking, the banks across the united states and other countries do not need the headlines in the recent days. are there troubles to the mortgage-backed securities? guest: absolutely not mortgage-backed securities have government guarantee as the u.s. treasury is the biggest asset in the world the next level safest is the government guarantee of the federal mortgages. and most mortgages that are eventually sold and consequently

government guaranteed. the trouble with silicon valley bank and other regional banks is that the risk management. they purchase treasuries but they were of long duration while when the interest rate increased they had to pay their depositors 4% by getting a return on 3% and treasury. that is a mismatch in interest rate risk and it is not a sustainable is this model. host: what are you watching for as the story continues to unfold? guest: bieve it or not mortgage rates have come down because of the debacle related to some of theegional banks. signature: going under and others. anytime ere is a financial market panic people seek out they -- safe assets like j.p. morgan securities and consequently mortgage rates are literally at 7% and today it is at 6.5%. host: this ishe federal

reserve they havraised interest rat and they have said that they will continue to do so. what has been the impact on the market, t availability, price, etc.? guest: with the fed reserve raising rates they were a little late in controlling inflation. but once hgot ouof conol 9% inftion last yearhey were forced to raise rates aggressively and mortgage rates ot up from 3% up to 7% by the middle of november. that will kill off the buying market. people wantedo buy and people said $00 per mon mortgage i can handle about 3500 i mply cannot. so people were ford to drop out of the market based on the market and they are beginning to link them. but again we have a shortage of sting in the marketplace

coared to pre-covid. host: it went to a high of 7% and now it is at 5%? guest: 6.5%. because of the regional bank debacle situation. ani would predict mortgage rates could go a little lower for the reason that apartment building is robust and rent cannot increase at such a strong rate that it has been. with the increase of supply in rental units, the rent will come down and when the rent comes down, the overall price inflation will come down. we are all frustrated about egg prices but that is 1% of the budget. 30% of the budget goesnto housing and rent. so in ripped calls host: what happens with the homebuyers? caller: witinflation coming down, would not have to raise interest rates or maybe theris room to cut interest rates. with interest rates declining,

buyers who want to return to the market. are we going to have adequate supply to meet potential buyers? host: you say no? caller: the supply is not there. there is a government spending across. including infrastructure spending to s, we need to fix bridges but also build affordable housing so people can dedicate some of the government incentive or funding or tax revenue to build more.

were you looking to buy? are u no longer looking to buy it? and why? renters, 202-748-8001. we want to hear from you. what is it like for you trent? what is the cause? how much of your budget does it take? all others you can dial in 202-748-8002. what do you expect from the fed chr the next meeting with a decide whether or not to keep going on interest rates? caller: it will be interesting giving the regional banks, large banks and regular stress tests to do what happens to the ballot sheet if their interest rate rises. due to that many of the large banks were able to manage better

on the interest rate changes. if the regional banks, which are getting suffered, while that's at the balance sheet and tough call for the fed to raise interest rates which will cause additional stress on regional banks. host: i want to show our viewers and you with the federal reserve chair how to say earlier this month testifying before the house financial services committee. i spice -- ask about challenges facing fir-time minority homebuyers. [video clip] >> i would like to follow up on questions from representative normand because have a concern about housing costs related to equity and negative impact on minority communities. i think you said in your paper activity in the housing sector continu to weaken, rgely reflecting higher mortgage rates. as she mentioned, the rates are higherot only impacting

housing, but multifamily house a, and also becoming -- housing and also becoming more difficult for people in my district, 70% latino, touy their first home. the workforce entry-level housing as financing homes get harder and mortge rates rise the population of homebuyers are skewg towards older, wealthier and broader communities and in many cases it is our suburbs equityirms are buying out the housing. do you speak about the relationship between federal reserve interest rate hikes and housing equity and what needs to change here? >> we need to get inflation under control so that interest rates can come back down. in the meantime, they are high

because inflation a hurting all american constituents. it is our job under the law to get to restore price stability and keep maximum employment. >> is anything else congress can be dng? >> there are a lot of ways in which congress can support people in various ways. that is really in ur hands. host: can you answer that question? what can congress do? caller: one think 's a look at so of the mortgage products. u want to be sustaining meang you colle premium from the homebuyers, put it on the reserve so thathere is a default very wl be able to pay off the default. the reserve fund has rose so much because of the exceptionalllow default on mortgage holders and one of the think -- what other thing they

reduce mortgage is storage emium -- mortgage insurance premiums. popular fofirst-time buyers but that will begin to fade rougy 1000 dear -- save roughly 10 a year. they can evaluate is there room to go lower given the massive buildup in the reserve fund. the second emple is we need more supply. supplies and tax credits f the builders ty' trying to hire construction workers by returning lumbe is hard to build fordab housing. on way tmake the numbers work is through tax credit or dedicating spending bill to a dedicate to say we need to build bridges and housing. host: don in massachusetts, independent.

caller: thank you for taking my call. this is history repeating itself again. a bunch of gbalists, bill gates buying up all of the property you got bureaucrats that are not building by the erican people. thworld organizion who is saying you wilnot own property and you will be happ excuse me? ho: we are listeninto you. caller: in the famous words, you will own nothing and he will be happy. ile wall street is not reguted, which he a new glass-steagall servi reguting intertional bankers that hide their money in offsho accounts and basically are buying back their stocks, that is