Inclusion & Innovation: Changing the Real Estate Landscape
December 15, 2021
By Michael Morris
Affordable housing plays a key role in creating successful communities. In the final installment of our three-part webinar series, Diversity, Equity, and Inclusion (“DEI”) in Commercial Real Estate, EisnerAmper, Mosser Capital, and StepStone got together to advance the conversation about inclusion and innovation in real estate.
On December 01, we hosted “Part III: Inclusion & Innovation—Changing the CRE Landscape,” with the following industry leaders on our panel:
- Christopher Yip, Partner and Managing Director, RET Ventures
- Jim Farris, CEO, Mosser Capital
- Alex Lofton, Co-founder and President, Landed
- Michelle Boyd, Housing Lab Director, Terner Housing Innovation Labs
As the moderator of this panel, I’ve provided a recap of our discussion below that explored strategies for improving housing inclusion through innovation, policy, and capital solutions.
The panel discussed policies that are currently under consideration at the federal level to increase housing affordability and inclusion. For the first time in a generation, housing is a priority at the federal policy level, which reflects the housing challenges the U.S is facing. There are a couple of innovative programs in the current Build Back Better bill:
- An innovative new structure housing investment fund based on the program, Capital Magnet Fund
- A first-generation home purchase down payment assistance program
- Funding for a pilot program that the HUD (Housing and Urban Development) department can run to help solve the issue around the inability for borrowers to find mortgages for small value properties
- A planning grant for zoning reform, which is the first time the federal government has tried to influence zoning practices on a local level
- A large national effort around reforming the appraisal process
Innovation and Technology
Advancing these policies are not possible without technology and business partners. While there is a housing affordability crisis, there is also tension between prioritizing affordability and sustainability. Therefore, technology is needed to address both of those concerns as new housing is built. The panel outlined several positive programs and solutions from their respective firms to improve housing inclusion:
Flexible payment products for rent
Focusing on alternative screening and underwriting methods beyond the traditional credit check and background check
New construction methods of using technology and engineering solutions to bring down the cost of new housing
An “Adopt a Block” program geared toward engaging or helping to solve problems with other owners in the area
In one example, Mosser Capital teams up with a local nonprofit group, Urban Alchemy, to provide a shared security program both with the of San Francisco and the owners that can contribute capital.
With the placement of technology in real estate – particularly in the home buying process or renter technologies – there is a risk that it makes the current system more efficient in inequitably distributing wealth within real estate. However, this creates an opportunity for entrepreneurs who can be even more innovative and diligent to find solutions that can reach the lower income end of the market. The “who” behind the organizations, the companies, and the innovations is just as important as “what” the innovation is.
In the last 30 years, household wealth has quadrupled; however, in the lower 50%, it has dropped significantly. The relationship of wealth change and home ownership change tracks almost one-for-one. This disparity is key to realizing that addressing this challenge requires finding a way to match capital that is looking to invest in residential real estate. There are now other ways to invest in residential strategy through shared equity, by pairing and co-investing with home buyers, and allowing them to stair-step in ownership while providing capital that is helping. It is an opportunity for both parties to build wealth by scaling a shared equity down payment investment in a home.
The panel unanimously agreed that these topics are being addressed in some capacity by our federal and local governments, investment groups, operators, and the technology community. Exploring the problems the real estate sector faces in the process of improving housing inclusion is a vital part of making sustainable progress for all.
Watch the on-demand recording of our DEI webinar series, Part II: “Diversity in Commercial Real Estate—from the Perspective of Executives Who Are Women and People of Color."
Watch the on-demand recording of our DEI webinar series, Part I: “Equity & Affordable Housing from Coast to Coast.”