In November 2019, we hosted 120 key stakeholders in the housing industry for a deep dive event focused on driving attainability for middle income households – those who make roughly $50K-$125K per year.
In table-based think tanks of six to eight people, we addressed 15 questions related to PLACE, PRODUCT and PRODUCTION (or process) – the three big buckets that need to be tackled to make homes more attainable without sacrificing the quality of our homes and our lives.
Here’s a question from the PRODUCT segment of our agenda.
How can we better educate lenders to enable more dynamic underwriting resulting in more diversity in housing options?
We asked 22 thought leaders, including housing developers and regional builders; experts in quality management and lean building, marketing and off-site construction; manufacturers; academics and a technology provider. Here’s what they had to say:
1: Builders should take the lead, first.
We don’t want the banks to get too loose underwriting. We want them to keep it pretty disciplined and go back to the builders who are taking the capital risk, the equity risk innovation. Certainly, they need capital to do it, but there’s the issue of comparable products in the marketplace — things like eight packs, 12 packs, 20 units per acre of single family density. Builders have to get comfortable taking that risk as the equity owner versus the lender getting too aggressive.
2: Follow successes of private investors.
We’re only 11 years removed from what we all experienced in 2008; we don’t think that banks are too crazy about taking more risk. The only way that will change is if private investors and other funds out there take the first step and the banks realize it’s a profitable undertaking.
3: Learn from other financial mechanisms.
Traditional lenders can learn from new fintech companies like Unison, which acts as a co-investor, giving home buyers money for a down payment in exchange for a share in the home’s future appreciation.
Read More Think Tank Recaps:
INSIGHTS ON ATTAINABILITY + PRODUCTION: LABOR
INSIGHTS ON ATTAINABILITY + PLACE: ZONING
INSIGHTS ON ATTAINABILITY + PRODUCT: HOME AS A SERVICE
INSIGHTS ON ATTAINABILITY + PRODUCTION: DIGITIZATION