As deputy chief economist for First American Financial Corporation, a leading provider of title insurance, settlement services and risk solutions for real estate transactions, Odeta Kushi prepares analysis, commentary and forecasts on trends in the real estate and mortgage markets.

Kushi conducts research around demographic trends, millennials and homeownership. She also monitors and analyzes quarterly surveys and economic data related to the housing industry. Her research has been published in leading business and industry trade publications, such as Business Insider, HousingWire and Inman News.

Kushi graduated from Northeastern University with a master’s degree in Applied Economics, specializing in microeconomics and applied econometric methods, and she earned a bachelor’s degree in Economics from St. John Fisher College, in both cases earning the title of Summa Cum Laude. While originally from Albania, she now lives and works in the Washington, D.C. area.

1. Some believe the country is headed towards a recession while others believe there will be a bounce back in the next few quarters. What are your thoughts?

Data shows that the U.S. economy hit bottom in the second quarter, so GDP growth in the third quarter will benefit from a low base, but concerns remain about the sustainability of the recovery beyond that. Challenges in the economy and the labor market are expected to persist for some time, especially as we’ve seen an increase in the number of permanent job losses increase. The increase in permanent job losses points to longer-term unemployment and prolonged economic recovery.

2. Relative to the housing market, mortgage volumes are at near record levels. Do you expect there to be a continued boom, a flattening, or a decline in mortgage volume in the next year?

The housing market rebound has been driven by continued demographic demand, low mortgage rates, and a labor market decline that has so far left would-be home buyers largely unscathed, and instead hit younger, lower wage renters. The boost in purchase applications is largely a result of a delayed spring home-buying season combined with the aforementioned factors.

However, localized affordability demand shocks should be expected if the pace of the labor market recovery slows. The housing market has displayed immunity to the economic impacts of the coronavirus so far, but as with the virus itself, we are not sure if immunity lasts forever.

3. Are there any vulnerable aspects of the U.S. economy that have been exposed during this pandemic?

While the residential real estate market has proven resilient in the face of economic uncertainty, the same cannot be said of all commercial segments, specifically retail. The retail sector has been the hardest hit during this services-driven recession, prompting mass closures and even causing some national retailers to file for bankruptcy. The decline in retail preceded the pandemic, as the growth of e-commerce put downward pressure on the sector, but the pandemic is adding fuel to an already slow-burning fire.

4. Since the start of Covid, there has been a share of homeowners claiming forbearance. Does this mean we can except a flood of foreclosures?

Forbearance does not equal foreclosure and focusing on mortgage delinquency rates alone ignores the dual trigger responsible for foreclosure – economic hardship and lack of equity. Even if a homeowner faces an income shock, with enough equity, a homeowner has the option of selling the home, or those with stable incomes can tap into their equity through a refinance to help weather the economic shock. Today, the household debt-to-income ratio is at a four-decade low and household equity near a three-decade high. While some foreclosures are still likely to happen, high household income can negate the second of the two triggers necessary for a foreclosure.

5. Considering first-time homeowners are key to the mortgage industry’s health, what are your thoughts on shifting homeowner demographics and how the industry is adopting to those trends?

Millennials are the largest generational group we’ve ever seen – they are tech-savvy, racially and ethnically diverse, and more educated than their generational predecessors. With the bulk of the millennials turning 30 this year and aging into their prime-home buying years, home-buying demand will be driven by this generation for the foreseeable future. Millennials expect greater efficiency and convenience in their home-buying experience, and the industry is responding by investing in financial technology to streamline the efficiency of the mortgage process. Similarly, the majority of millennials begin their home search online and need ways to visualize a home, even before they step through the front door. The industry has adapted well in creating technologies such as virtual walkthroughs, 3-D mapping and drone surveys.

Entering 2020, we were anticipating a demographic tailwind to demand as millennials begin to age into their prime home-buying years, making the decision to settle down and start a family. These lifestyle changes persist, and the shelter-in-place orders have even accelerated the pre-pandemic trend of millennial migration to lower density suburbs, as households are in search of more space. Builders are responding, as evidenced by the growth of single-family construction in more suburban and exurban communities.