UBS’ John Lovallo on Trump’s teased housing reform plans

Leslie (Anchor) 00:00.190

joining us now here at post nine is john lovallo senior US home building and building products equity research analyst at UBS john any any thoughts on kind of what we could see from this this big new plan that could impact affordability

John Lovallo (Managing Director, Senior Equity Research Analyst) 00:15.070

thanks leslie yeah so i think there's a few things it could be short-term intermediate and then housing emergency in the short term we could utilize the GSE 's to subsidize mortgages to buy more MBS for their portfolio and to reduce G fees G fees can be sixty basis points on a

John Lovallo (Managing Director, Senior Equity Research Analyst) 00:30.550

loan right we could also reduce tariffs it's ninety three hundred dollars per home in tariffs twenty five hundred on lumber alone in the intermediate term i think what could happen is you could influence folks younger folks to get more involved in the trades that could be done

John Lovallo (Managing Director, Senior Equity Research Analyst) 00:45.150

through grants or through scholarships things that will you know help build the rebuild the the workforce if you will we could also start building on federal land which we the the government has sort of teased and cut down more lumber and then in a housing emergency i think this

John Lovallo (Managing Director, Senior Equity Research Analyst) 01:00.750

is the area where the feds could put more pressure on the states to kind of reduce restrictions on land requirements now the problem is is that a lot of this is decided at the local and municipal level and nimbyism is alive and well and so it's tough to get these things to

John Lovallo (Managing Director, Senior Equity Research Analyst) 01:16.270

actually work

Leslie (Anchor) 01:16.830

yeah i was going to say building on federal land i mean where would that be are those desirable places for people to live is their infrastructure is their running water is their electricity and some of the places that would even be possible with the idea of course of kind of

Leslie (Anchor) 01:30.430

expanding supply to drive down houses

John Lovallo (Managing Director, Senior Equity Research Analyst) 01:32.990

our housing prices that's a great point that's why it's more intermediary because no the infrastructure is not in place these are a lot of sort of in the southwest areas of the country where there's just nothing around so it would take a lot of time to kind of get that built and

John Lovallo (Managing Director, Senior Equity Research Analyst) 01:45.110

ready to work on

Leslie (Anchor) 01:46.710

now a lot of the discussion has kind of centered on what rates means for this space does bringing down rates as the president has pushed for improve affordability for housing or does it just drive housing back up because it's more affordable to get a a mortgage

John Lovallo (Managing Director, Senior Equity Research Analyst) 02:02.350

it's an interesting question i think it does in fact make housing more affordable in fact if you look very simplistically the national association of realtors affordability index anything over a hundred suggests that you know the median income earner could buy a medium home over

John Lovallo (Managing Director, Senior Equity Research Analyst) 02:16.910

the eighty percent you know eighty percent LTV if you were to put in today's mortgage rate versus the five percent that the builders are buying down to makes a huge difference you actually had a five percent it actually brings that back up to normalized levels where you know

John Lovallo (Managing Director, Senior Equity Research Analyst) 02:31.990

average levels over time so yes it does help with affordability