Kevin Warsh as Federal Reserve Chair: What This Means for the Deed Market

Donald Trump has decided: Kevin Warsh should take the key position on the Federal Reserve’s governing board.

It’s no secret that Trump wants lower interest rates. Will Warsh deliver? And will this stimulate deed transfers in a market that’s been frustrating hopeful sellers and buyers alike?

Let’s check into this now.

Warsh Was on the Board During the 2008 Housing Crash.

Most news reports on the Warsh nomination say two things. Warsh is experienced, and Warsh is likely to deliver for Trump in the months leading up to the midterm elections of November 2026.

Given Warsh’s previous experience on the Fed’s board, Warsh is likely to be confirmed by Congress. That said, not all Congressmembers are keen to vote Warsh into the post. Warsh had a position with the Fed when mortgages collapsed and banks got bailouts. He was seen as a key player in that saga.

But after the crisis, Warsh expressed critical views of some of the Fed’s actions—mainly the money printing.

Fast-forward to 2025. Why is Warsh the Trump pick? For one thing, Warsh has recently expressed the opinion that the Fed should lean into cutting the federal funds rate. That will make money easier to borrow, and Trump’s a fan. For another thing, Warsh is an insider whose familiar face will presumably calm financial institutions. There are other things, too. As recently noted in The Wall Street Journal:

It didn’t hurt that his father-in-law, Estée Lauder heir Ronald Lauder, is a major Republican donor and longtime Trump acquaintance.

In any case, midterm election time is drawing near. The White House is projecting an interest in the housing market and how it looks to the typical frustrated voter. Lowering interest rates seems to be the administration’s answer to economic jitters of all kinds.

Expect Warsh to Press for a Change in Money Policy—But to What Effect?

Our current Fed chair, Jerome Powell, is due to step out of the chair post in May. Warsh will then step into the lead position. And he’s expected to call for a changed course. 

Warsh suggests that the Fed’s current approach misunderstands the economy. Warsh also thinks it’s possible to cut interest rates without fanning the flames of inflation. He believes inflation results from too much government spending and too much money printing.

Put the money printing on pause, Warsh says, and “you have created space to lower interest rates.”

And that’s the key difference between Jerome Powell and Kevin Warsh.

• Powell has seemed comfortable with money printing to buy U.S. treasury bills for the purpose of preventing a full-blown crisis in the markets.

• In contrast, Warsh believes money-printing creates a sphere of continual inflation. Warsh would prefer to wait for a crisis to happen before starting up the money printer to solve it.

Here’s the rub. Either way, we get the devaluation of the dollar. It’s mainly a difference in timing. So, we can expect inflation to continue. Home prices may fluctuate some, but the general direction will be upward.

Can the Fed at Least Get Mortgage Rates Down to an Attractive Level?

Warsh has talked about the value of getting mortgage rates down. When the Fed lowers the interest rates for banks, indirect effects ripple out to mortgage rates—or at least that effect is generally expected.

Back when Warsh was at the Fed, he was an interest-rate “hawk” who did not like rate cuts. But these days, Warsh has spoken up for cutting rates substantially. The case for cutting more? Doing so would fend off a housing recession, and help first-time buyers get deeds.

But there’s no guarantee that lower bank interest rates will result in lower mortgage rates.

Sometimes rate cuts backfire. Cutting rates during times of elevated inflation can increase U.S. bond yields. In that situation, mortgage interest rates will tend to rise with the Treasury yields. As an economist with the National Association of REALTORS®, Jake Krimmel, comments on Fed policy: “An explicit focus on cutting its policy rate to lower longer-term rates could backfire.”

But lowering borrowing rates for banks is the method at the Fed’s disposal. It’s like the saying goes: If your only tool is a hammer, every problem can look like a nail.

We have to hope for the best here, because the chances of real estate getting cheap by itself are slim to nil. And it’s hard to understand what, if anything, the current White House would do to help struggling deed seekers. (No, a 50-year mortgage will not fix an affordability crisis. We break down the debate on 50-year mortgages here).

Next Up: A Fed Policy Faceoff

In Kevin Warsh’s view, the U.S. Federal Reserve can apply rate decisions to lower 30-year, fixed mortgage rates by a lot. In turn, according to Warsh, the Fed could really rev up the U.S. real estate market. Deed transfers will go gangbusters with Warsh as chair, you might think.

At the same time, the current Fed chair, Jerome Powell, says creating affordability isn’t that straightforward. It’s mainly about supply and demand. And the Fed does not control that.

Powell will remain on the board after the end of his term as chair. Clearly, the board will have substantial differences of opinion. Kevin Warsh can’t simply call the shots. If we were facing a full-blown financial breakdown, the Fed chair might understandably take strong control. That’s not the case today. Something close to consensus among the entire board will be needed in reaching rate decisions.

But back to the question of reaching deeds. What actually could make homeownership more accessible to everyone? Converting existing buildings into housing, and zoning so deed holders can offer more units, are both good, space-efficient tactics. The Fed can’t zone. As we’ve previously said, rezoning neighborhoods is a task controlled by local governments.

“We’re Gonna Keep Those Prices Up.”

In January, Donald Trump dismissed the idea of actually making policy to ease real estate inflation and help hopeful home buyers. “People that own their homes, we’re going to keep them wealthy,” Trump said.

We’re gonna keep those prices up. We’re not gonna destroy the value of their homes so that somebody that didn’t work very hard can buy a home.

That seems to imply that owners of valuable homes worked to get into that position. And that the have-nots haven’t worked hard.

To quote the Gershwin brothers: It ain’t necessarily so.