Willy Walker, CEO of Walker & Dunlop, underscored the necessity for transparency regarding the governance of Fannie Mae and Freddie Mac during his address at the annual Zelman Housing Summit. Members of the public and private sectors found common ground at the first-ever conference on the subject. Homebuilders, mortgage lenders, investors and financial analysts helped shape the debates surrounding multifamily housing, GSEs, labor and land use.
Walker also noted that interest rates are much lower now than he thought they would be. Only a few weeks ago, he didn’t believe this change was possible. He compared the governance of Fannie and Freddie to the mismanagement seen in WeWork, pointing out that they lack a strong board to steer their direction effectively.
“There’s nothing independent about the way that Fannie and Freddie are being managed from a board standpoint today.” – Willy Walker
Walker noted that Walker & Dunlop purchased Zelman’s company four years ago. This complementary acquisition strengthened their feet-on-the-street presence in the commercial real estate finance and advisory space. Further, he underscored that his company does business in a transparent and accountable governance framework.
“I’m a publicly traded company. I have a very rigorous board that has independent directors,” – Willy Walker
He expressed concern over the current state of Fannie and Freddie’s leadership, asking, “The question there would be, who takes the lead? Who’s got the pen that says this is the plan of action for Fannie and Freddie?”
Throughout his wonderful presentation, Walker underscored the disconnects that the commercial real estate market has faced over the last three years. He noted especially the effect of increasing interest rates. As he highlighted, multifamily housing has continued to benefit and keep an edge in this environment.
“If you’d said to me three weeks ago that we’d have a 4.01% on the 10-year today, I would not have taken that bet,” – Willy Walker
Looking ahead, Walker forecast where he expects future cuts in interest rates to occur. He stated, “So as much as I’m expecting us to see at least a 25 basis point cut, and then probably another 25 basis point cut, even if you take 50 basis points out of the short end of the curve, I don’t expect it’s going to impact the long end of the curve very much.”
Doug Yearley, CEO of Toll Brothers, emphasized a critical issue facing the housing market: labor shortages. He played up the lack of workers ready to build on land that’s already developed.
“You go to any of our home sites, and it’s [like] the United Nations.” – Doug Yearley
High housing costs, as Adrian Foley, CEO of Brookfield Residential, noted, is a major problem. Instead, he argued, the issue is not a housing crisis but a “land crisis.” He brought forward the idea of a “CHIPS Act for housing” to meet these needs.
The discussions at the Zelman Housing Summit highlighted the complex interplay between labor shortages, land availability, interest rates, and the future direction of GSEs. Walker stresses that clarity around governance structures is key. It provides clarity and certainty to important market participants such as Fannie Mae and Freddie Mac as they navigate these stormy seas.