Question: How has housing impacted MBS?
Todd Abraham: In a nutshell, there's just not enough supply relative to demand. If you think about from a longer-term perspective, you'd expect U.S. household formations to roughly correlate with housing supply or housing stock. As there's more household formations, you would expect more building of houses. And a couple examples would be, let's go back to the financial crisis. During that period, you had a building boom, you had lax underwriting standards and builders were building at a rapid clip, but it far exceeded household formations. At the peak, you built on an annualized basis approximately 2 million homes, but household formations were only around 1 million. You saw a correction in that market where housing prices declined because you had too much supply relative to demand. Fast-forward to the pandemic, housing demand exploded, but you didn't have enough supply to meet that demand and housing prices have gone up rapidly. We simply need more supply of housing and with this mismatch, as we've had, housing prices have gone up dramatically and we've had the recent increases in federal funds and the 30-year mortgage rate have made houses really unaffordable at some of the lowest affordability of a generation. So, in a nutshell, we really need to have more supply relative to demand, but it takes time to ramp up developments and housing completions.