The Urban Land Institute Housing Opportunity Conference, held in Atlanta, Georgia, brings together housing professionals in the private and public sectors. At the conference Raphael Bostic—the president of the Federal Reserve Bank of Atlanta—fielded questions from Dennis Shea, executive director of the J. Ronald Terwilliger Center for Housing Policy.
Bostic has previously served on the board of Freddie Mac and as an assistant secretary of policy development and research at the Department of Housing and Urban Development (HUD).
The first half of the conversation focused more on macroeconomy and inflation—but housing is a key factor there. Shea noted that inflation has trickled back up after months of decline, and Bostic identified housing as a “main culprit” in current inflation rates.
Unlike many other products and services, housing costs have not come down to pre-pandemic levels, Bostic elaborated. “Its stickiness has put something of a floor on how low inflation can go,” he said.
However, Bostic also noted that inflation price indices and housing reports from entities such as Zillow and Redfin are telling different stories, with the latter showing housing prices coming down much more. “It’s a puzzle that we’re trying to fully unpack and understand, but it is something we’ll have to watch,” said Bostic.
Bostic described current interest rates as “restrictive,” but said this is where they should be to bring inflation down to the Fed’s target of 2%. “We need to stay where we are,” was his assessment.
Later, the conversation turned more specifically to housing policy and affordability.
“Every place I go to, I hear people complaining about how it’s difficult to find affordable housing,” Bostic said. Shea mentioned the existing gap between demand and supply, and Bostic framed another mismatch: the costs to build a home can exceed the incomes of people who live in the area of its construction. “Affordability is a ratio. It’s cost and income,” he said.
The conversation also turned to how the existing housing quality—with many units approaching obsolescence—is an issue. Bostic’s self-described “pie in the sky” solution for these problems would be to focus, in tandem, on building up the construction trade workforce with an initiative to rehab homes of declining quality.
Shea then raised the impact of rising insurance costs on both home affordability and inflation.
“The five year storm is happening every year,” Bostic noted when describing escalating weather disasters. “What it means is insurance companies are facing totally different math around coverage. And they’re actually paying the money so they respond pretty quickly.”
Bostic said that communities and financial institutions should take a more proactive approach to recognizing risk and vulnerability to weather events, including resilience/contingency plans. He then added that another driver of insurance costs in at least some markets is high legal fees, citing recent Florida tort reform aimed at lowering insurance costs.
“The statistic they told me is that, for insurance companies in Florida, half of their spend was in legal fees. That math also doesn’t work,” said Bostic.
During the audience Q&A section, the first questioner asked Bostic about his outlook on the Trump administration’s proposed immigration policy and tariffs; economists and builders have expressed concerns this could drive up home-building, and thus home-buying, costs.
Bostick acknowledged those concerns, such as an immigration crackdown cutting into the construction industry’s workforce, but largely stressed that the exact policies are still up in the air. Costs will depend on which tariffs for which products are actually implemented, for instance.
“All of this at this point is notional and as we learn more, the true contours of this will come into focus,” he said.
For the full conversation, click here.
