Down but not out: Creating positive impact in any market climate

No amount of video calls, social media posts or other two dimensional interaction can replace what it is like to be around housing finance people in person. If there was ever an industry that thrived on being “people people,” housing finance is it. 

This was going through my mind as I sat next to a founder of a large mortgage lender at an industry event in Washington, D.C. recently. He had just said something that really blew me away, considering we’re now in the midst of one of the most perplexing markets we’ve seen in recent years. I’ll paraphrase a bit, but he said that it will be table stakes to manage a business well to navigate the next two years of expected reduced volume (pretty obvious, right?), but since there is no longer crushing demand (driven by refinances and low rates) perhaps now is the time to look at housing more holistically. Meaning, we can make progress on solutions for shelter, for sustainable renting that creates a path to homeownership, and then ultimately to expanding homeownership itself. In other words, we should use the extra time we have to increase our focus on helping people wherever they are in the housing journey.

Proptech seems to get this way of thinking. There are multiple companies working on helping renters benefit from their rental payments in the form of rewards or savings toward a downpayment. Startups are even helping people make their first home purchase through a shared stake in an investment property or by becoming an AirBnB host, using the equity and rent to eventually fund their own primary home. 

This idea of taking people from where they are and propelling them to the next step has been very evident at proptech conferences this past fall. This way of solutioning (is that a word?) is contagious in a good way because it challenges us to try to make the impossible possible. Despite the drastic pull back in investment capital, some of these ideas are going to transform the system.

And yet even with record amounts of investment into the space, housing affordability remains a major concern. As impactful as rising mortgage rates are, we are facing an even bigger issue. We are short on housing supply, and the cost of building new homes means that new supply isn’t very affordable either. Homeowners are hanging on to their homes longer, married to their sub 3% rates perhaps. And the largest generation in history hits prime home buying and family starting age next year.

A lack of housing supply affects everyone including renters, homebuyers, and even business owners who need local workers. There are also correlations between lack of supply and the rising rate of homelessness, further complicating solutions for basic shelter. Housing affordability can no longer be ignored regardless of the political landscape.

So here it is, this opportunity to expand our focus to not only homeownership, but to the whole housing journey. “The whole housing journey?” you say. That sounds daunting. Well, I agree, and the only way I can think to tackle it is to be fiercely people-focused. I’m a product guy, so that is not always a natural approach. Coming up with a product idea to get passionate about and then hoping it will positively impact people has been the norm in the past. However, the longer I am in this industry (a safer way of saying, the older I get) the more I want to flip that around. I want to positively impact people SO I will look for whatever product idea will accomplish that. 

At Clear Capital, I recently started this process by writing what we call our Positive Impact Strategy. It is a three-year roadmap of initiatives that we believe will have a positive impact on people. Since we are in the real estate valuation and appraisal space, of course this means we are laser focused on reducing bias, empowering homeowners with data, strengthening our local communities, increasing diversity in the profession and ensuring the innovation of modern technology that can flexibly support affordable construction techniques. We can’t wait to share this with you soon.

We all know that words are not enough, but they are a starting point if intentional action follows. In this current market climate, opportunity for action appears readily available. I’m seeing greater collaboration than ever before between innovators, investors, housing advocates and policy makers. In addition, regulators like the FHFA are asking for feedback on how fintech can better enable the housing journey. The willingness of competitors to partner up is not just about market consolidation in difficult times, but a desire to tackle large problems faster together. 

Being out on the road speaking with housing finance participants has been inspiring, because even in difficult times, more and more attention is being paid to helping people where they are in their housing journey. There is more than enough talent, investment, ideas and “people people” to make a positive impact. And now we have more time, too, so I’m excited to see the progress we can make despite the headwinds.

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