For buyers, especially first-time buyers, today’s housing affordability crisis (driven by a host of market challenges, from rising mortgage rates to low inventory and lingering inflation) creates many barriers to entry for homeownership. Is there anything agents can actually do at the local level to move the needle and help their clients achieve their homeownership goals?
Four brokerage leaders recently gathered at RISMedia 38th Annual CEO & Leadership Exchange on a panel titled, “Affordability: Real Solutions for a Real Problem,” to say yes and share their tactics and long-term solutions for buyers facing today’s housing affordability problem.
The session, moderated by RISMedia Founder and CEO John Featherston, included panelists Keith Smith, co-owner, Yes Realty Partners, a Keller Williams Alliance Partner; Ennis Antoine, owner and CEO, EA Realty of Georgia; Katey McGrath, vice president, director of operations, Elfant Wissahickon Realtors®; and Ken Baris, CEO, Berkshire Hathaway HomeServices Jordan Baris Realty.
Here’s a glimpse into some of the questions and answers that provided attendees with some detailed takeaways to help their clients overcome the affordability challenge.
John Featherston: To set the stage, tell us why brokers should care about the housing affordability issue?
Keith Smith: I’m just going to kind of say the awkward thing to the room. Every single one of us makes a living either directly or indirectly from helping people buy and sell. And if we can’t help people buy and sell, we’re not going to be able to put our key in the door. We’re not going to be able to begin our business. Right now, first-time homebuyers can’t buy, and they’re 40? You have Boomers who will not be able to move on. So if we can’t help people do that, this isn’t just a certain entry point. It’s all the way across the board. I think maybe a little bit later we’ll talk about some possible solutions.
Katey McGrath: Obviously it’s good business. And what’s interesting too is at least in our market, the competition for that business is a lot less intense because it is a little bit more work and it’s not as dollar-productive. It’s absolutely more rewarding and more valuable to your communities, but not everybody gets up and says, “I want to sell lower-priced houses.” And so I love new agents getting into the business and focusing on affordability. We love training them up to pre-qualify renters because most of the time the renters don’t know they can buy a house. So it’s a great way to start your real estate business.
And in our company, we have a lot of things that sort of reinforce that culture of homeownership as the most impactful thing you can do in a community. We also create programs in-house that help leverage gift funds to just get people across the line, which I’ll talk about more, but we thread it through the entire “gestalt” of our organization.
John Featherston: What are some of the ground-level tactics that you’re using in your organization?
Katey McGrath: One of the things we do is we train up. If you get a call for a rental, find out if they are capable of qualifying for homeownership. We lean on our lenders. I rely on them and have a high level of expectation that they’re going to understand the down payment programs and the grant programs and the ability to stack them. We have a program called Building Equity where we crowdfund it. The partners of the company seeded it and now every agent in my company gives $5 to $50 every time they sell a house. We have a nice little fund, and we make a gift to anyone who buys a house for $250,000 or less in the city of Philadelphia. The only question we ask is, are you going to move into it?
We find that we can leverage that. If our lenders want to participate in the program and be on our website, they have to match that gift. We just want to keep the level of homeownership in Philadelphia as high as possible. And we also want people to consider other neighborhoods, other house sizes and conditions that maybe the people saving up for their dream homes are not looking at.
John Featherston: Ennis, how do you educate agents to help them find homes their buyers afford?
Ennis Antoine: When talking to my agents, I have to remind them first, you have to learn to stack resources. And what that means is, get involved in the city, the county and third-party companies like Georgia Dreams and ask them, “What programs do you have available to assist with down payment assistance?” In Atlanta, we have a program where the mayor wants to have 20,000 affordable homes built by 2030, so he has instructed his people to have this agency set aside funds to help buyers with down payment assistance; you have to live in our community for five years and it’s forgivable where you don’t have to pay back those funds. The goal is educating your agents on what funds are available and then once they’re educated, educate the buyers on what to expect and to set realistic expectations.
John Featherston: Are you seeing or anticipating any improvement in affordability issues from the ROAD to Housing Act?
Ennis Antoine: I chaired the FPC advisory committee (Federal Political Coordinators under NAR), and we worked on that bill for two years and got it passed. Now here’s the key, though. It is only an incentive. It’s going to take each one of us to inform our city councilmen and mayors on what’s available, and to pass these bills to say, “Hey, listen, how can we incentivize people to buy a home?” And then second, when it comes to housing supply, that’s going to take a while because we have an inventory shortage. It’s not going to happen overnight, but we have to be patient because it’s only a framework on what could happen if we partner with our city council and Realtor® organizations.
John Featherston: Ken, why is it critical to approach the affordability issue as far as you can see? And is it relevant to the specific markets that you’re now serving?
Ken Baris: Affordability is relative. Somebody who says “I can’t afford” is maybe a kid who grew up in a town, can’t afford to be in the town now, but they may be able to afford in another community. It’s being able to understand the benefits people can get. So for instance, Bank of America’s community reinvestment program with a grant of $17,500. We have a mortgage partnership, and we make sure anyone who will qualify for that is going to get that grant and use Bank of America because it’s good sense for the clients.
And if you are really astute about the business, you have people who are tenants—they don’t know they can afford to purchase. You can train people to purchase. You can help people improve their credit: Higher credit score, lower interest rate. You can train people to do things like say, “I will fall in like with four properties. I will not fall in love with one.” Because if you fall in like with four and we make four lower offers, we actually can turn you into a buyer and something more affordable by being willing to present offers. So we inspire a team to do the work and take the time and good things happen for clients.
We use foyersavings.com. A very interesting website; it has three things. Number one, it gives you an ability to save money at an okay interest rate or a good interest rate so that your money builds. Number two, it gives a modest down payment assistance with $600 credit of the first $10,000 you have, you get 6% additional in interest back. That’s not huge, but it’s something.
And three, it shows programs from all over—banks, lenders, community program—that provide grants. You may not know all the programs in your own market that are available. Foyer goes after these programs and makes them available to people that use the site. So it’s just being aware of these things, using your method of communication to get the information out, inspiring people to understand what they can do. If you don’t buy somewhere, you’re going to make somebody else wealthier.
John Featherston: A follow up to that, because you’re going into a lot of the nuances that help new buyers enter the marketplace. Have you made a concerted effort within your firm to make this type of training and education a competitive differentiator in your organization?
Ken Baris: Hugely. I find units to be sexy, not just high prices. And if you have salespeople that are in more affordable communities and they’re trained for these programs, they do better. Another thing that we’ll do is we’ll send out emails of successful buyers. “John thought he was going to rent. We let him know that we thought he could purchase, and the good news for John is we were right. You might be in the same position. Let’s get together.” And that’s the kind of communication we’re doing. I can’t change somebody’s income, but I could help them learn how to save more, how to improve their credit and how to get down payment assistance. $17,500 can make somebody from not a buyer to a buyer. And it’s a gift. It’s not a loan.
John Featherston: How are you and your agents getting past the current rhetoric that we hear among young people when they say they’re never going to be able to buy a home?
Katey McGrath: One of the biggest myths is that you think you need 20% down. And so it’s education, education, education, myth busting, destigmatizing these programs. It’s super important for young people in your community, but also make sure that your agents feel that way. And it’s great because like I said, the younger agents eat it up and it keeps them busy early in their career.
Ennis Antoine: I put pen to paper. So as far as paying $2,000 a month in rent, I’m saying, let’s talk about this for a second. A landlord just received $24,000 from you for one year. You say I’m staying there for three or four years. Then you have nothing to show for it. Whereas if you bought a home or a condominium, you pay this amount each month, you would have a tax write off and within four or five years, you’ll see a 4% or 5% increase in the value of the property. You can sell that property, walk away with cash, get the tax write off on your tax returns. And so if it was me, I would buy and invest and start to build wealth.
And if you build wealth, you can get a larger home and pay less money. So the key here is you’re a smart person. Let’s make a smart decision. Let’s buy.
Keith Smith: I want to pivot a little bit. We’re talking about how we can make a difference. Just last year through a land trust we put together 40 permanent affordable new construction units. I’m in Charlottesville with the second-highest cost of living in the state of Virginia, the second-highest cost of housing in Virginia. But we were able to do 40 of them. And the way we did this is what I call the four pillars: The local government, the private sector folks—developers, builders, real estate agents, the nonprofits and the people all of us serve. You got to get them into a room. You’ve got to get them all to go into the conversation. We put buyers and sellers together. We negotiate deals together. We put people together that maybe do not want to talk to one another, but they talk to people that get to the end result. And how you put those four pillars together is you show up to the meetings and you do what we all do every day very well, which is negotiate and put people together.
John Featherston: Why isn’t the real estate community playing a more pivotal role than every one of the communities, perhaps the most critical role as far as supporting homeownership?
Katey McGrath: I think everybody in this room is a connector. It’s what we love about what we do. And I think that our credibility and our expertise can help save money in these instances. The earlier we get involved in these conversations, the less mistakes the people with good intentions are going to make to make things more expensive. But also, the credibility that we have as a community member, right? So people are coming to us to buy houses, people are coming to us for education, people are coming to us to build generational wealth for their family. And then we can go to city council, we can go to the state reps, we can go to the zoning meetings and add all of that to just sort of be both sides of the issue.
Housing is bipartisan, so if you can get people together, you have that credibility, everything just becomes more productive and less expensive.
John Featherston: Getting people together over the issue of housing is a common denominator all of us can agree on. When Ennis said, local teachers, first responders, police, essential services, can’t afford to live in the community they’re serving, that is not a unique problem. That’s a problem that permeates around the nation. So the solutions have to be done locally.
Ennis Antoine: That’s correct. So I remind everyone, it doesn’t matter what company you work for, there is a percentage in every company where you deal with first-time homebuyers. It doesn’t have to be your main part of your business, but it should be a part of your business because to whom much is given, much is required. And we must always lead by example because the goal here is homeownership. What can we do? It’s all an education process. In every office, there are agents who are very passionate about their community. Support them, enhance them, show up when they need some help.
They will find a surgeon to have vibrant communities. We need a mixture of people in the community who are willing to work together, live together because we call it a village. And as real estate professionals, we are the fiber of the community. We are the voice of real estate and private property rights do matter.
Ken Baris: Something interesting we did some years ago, we listed 300 brand new two-family homes in Newark, New Jersey. And they were beautiful. The challenge was getting people in. So we had the builder prearrange financing, and we had them buy down the rate. And so it was a much lower interest rate, which lowered the payments. And then we also had the builder give a brand-new computer to every purchaser for one of the units because many of them were going to have kids and they would not have money left over for a new computer. And we thought that was very important. And then when certain buyers were tight, we then created a program where they were giving 5% toward closing costs, and if you get people to pay money toward closing costs, you also make it more affordable.
Keith Smith: “Connected” was the right word. I’ve been in this space for 15 years, and I would hear from elected officials, “Well, I don’t understand what the developer is saying.” The developer’s saying, “I don’t understand what the elected official is saying.” And then the nonprofits don’t understand anybody, and the poor folks that we’re trying to serve are left out there in the dark. Being a connector, that is the perfect word. That’s what we do. We connect and are able to put those four pillars together and put a developer and an elected official who really wants to do the right thing, together. The seller doesn’t trust the buyer; the buyer doesn’t trust the seller. We connect and we put people together and just get that conversation rolling. That’s how you do 40 new construction units in the second-highest cost-of-living area in the state of Virginia and everybody walks away smiling. I didn’t do anything really genius. I just put people in the room and said, start talking.
John Featherston: If you could do one thing to help move this affordability issue forward, what would you do?
Ennis Antoine: The one thing I would do is educate my colleagues and challenge them to get involved. It’s easy to write a check, but it’s amazing what happens when you show up. As a leader, when we show up, our people will follow. So as leaders, show up.
Ken Baris: I think just doing a better job of educating consumers because there’s a lot of buyers that don’t know their buyers. Not everyone will be able to afford. They’ve never always been able to, but there’s many more out there.
Katey McGrath: I’m going to go a little more philosophical. Just remember how important homeownership is to every metric in the community. It reduces crime. It increases education rates. It can lower the temperature in a zip code. It extends life expectancy, but most importantly, it builds generational wealth and creates health outcomes in that community that lift everybody up. And if you internalize that, you’re going to be happier when you go to work. You’re going to have more patience to deal with the hard clients that you’re not going to make a lot of money on and just feel great at the end of the day.
Keith Smith: Invest the one asset you can’t make more of, which is your time. Show up and over time, you’ll make a difference. And of those affordable housing units, every single key I handed to somebody, they were in tears. They never thought they were going to get into the homeownership game. It’s not about the check. It’s about the tears, and it makes a difference.
VIDEO: RISMedia caught up with Ennis Antoine after the “Affordability: Real Solutions for a Real Problem” panel.
