NUTS & BOLTS THINK REA Y CONFERENCE STRATEGIES: REITs BALTIMORE
NUTS & BOLTS THINK REA Y CONFERENCE STRATEGIES: REITs BALTIMORE
Exposing the Affordability Smokescreen A NO-HOLDS-BARRED Q&A WITH ZILLOW’S CHIEF ECONOMIST, SVENJA GUDELL
by Carole VanSickle Ellis
venja Gudell, chief economist at Zillow, leads a team of economists, data scientists and analysts dedicated to producing real estate research for con- sumers, academics, policymakers and industry-wide decision-makers. “My team focuses on research spanning affordability, mortgages, negative equity, generational is- S
actual mortgage balance outstanding on it. Since that was my first project and I dug deeply in to that data, it has a special spot in my heart. It was shocking to me, after that research, to find out howmany people were under- water at the height of the housing crisis and to know howmany people are still under- water. While it’s an academic issue for many of them because often homeowners do not even know that they’re underwater if they are not actively looking to move, negative equity can have such tremendous effects on your life, and your livelihood when you do need to move and you’re unable to sell your house because of it. People need to be aware not just of how much of their monthly budget should be going toward mortgage or rent, but how much of it will be going toward mortgage or rent. Affordability differs in different cit- ies, but also by different races, age groups and income groups. Understanding these distinctions helps us analyze what’s going on in a particular area and offer advice. SVENJA GUDELL When you start to dig into affordability for the bottom third of income-earners [who tend to be renters], things get a little bit trickier. Inmany markets, the bottom third of income-earners are actually priced out of for-sale housing because they cannot afford a mortgage. Unfortunately, they are not really able to afford renting either. They may double up or even triple up to make that work. THINK REALTY Can you give us an example?
THINK REALTY This seems like a huge issue. Why don’t we hear about it when real estate market numbers are released quarterly? SVENJA GUDELL This is a great example of what happens when you only look at the median or average numbers in real estate. It’s so easy to gloss over these things. If you look at different subgroups of what you would usually be looking at if you focus on the average, you will dig out a lot more information. In the case of affordability, you will find that there are groups even in affordable areas of the country that are really suffering. EDITOR’S NOTE: Those lowest-earning tenants are the most likely to be most immediately affected by legislation that may, on the face of it, be designed to protect this population, and the landlords who serve those tenants endure elevated risk as well thanks to a nearly nonexistent presence on the political, lobbying and advocacy scenes. Look for the next Q&A in this series on our website, www.ThinkRealty.com, wherein we’ll discuss the unintended ramifications of tenant advocacy not just on landlords, but on this vulnerable population of tenants as well with our Baltimore Expo’s policy panel moderator and Think Realty contributor, Brian Wojcik.
The ‘Overlooked’ Investor Goes toWashington THINK REALTY IS SHINING A LIGHT ON POLICY THAT SO FAR HAS KEPT THE MAIN SOURCE OF THE NATION’S TRULY AFFORDABLE HOUSING—REAL ESTATE INVESTORS— COMPLETELY IN THE DARK.
sues and policy issues,” she told Think Realty in a recent interview. “We cover trends in more than 450
metro areas and provide literally hun- dreds of data series down to the ZIP code level that make it easier for people to make decisions.” In light of the high volume of data at Gudell’s fingertips, Think Realty asked her about one of the timeliest topics of the day: housing affordability. THINK REALTY You’ve said that housing affordability issues often have their root in negative equity. Could you elaborate on that? SVENJA GUDELL My very first project at Zillow was to calculate negative equity, which basically happens when the house that you own is worth less than the
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hile national media headlines, politicians and talking heads
to the detriment of investor and buyer, landlord and tenant. A special legislative panel highlighting Think Realty’s upcom- ing Baltimore-area National Conference and Expo aims to turn decision-makers’ attention to the issue. “It’s very clear that there are gaps between housing policy and effectively cre- ating and sustaining affordable housing,” said Brian Wojcik, CEO and founder of di- yRealty Inc., an online software that assists landlords with their property management. Its stated purpose is “improving the social responsibility of landlording, which makes affordable rental housing more accessible.” Wojcik will be hosting the premier legisla- tive panel of the regional event on June 24, 2017, at the Baltimore Convention Center. “At the end of the day, legislation drives the real estate market or stalls it com-
pletely,” observed Carmen Fields, Think Realty’s Director of Strategic Partnerships. “Our goal at this conference is to put our members in the same room with the professionals who are actively influenc- ing this legislation so that we can work together to protect our interests as real estate investors as well as gain competitive advantage in our sector.” Wojcik added, “The small [inves- tor] business and the small landlord face huge challenges, and it’s our goal to make sure that the people making policy become aware of the unintended consequences of those policies when the interests of the biggest population providing affordable housing in the country are overlooked or forgotten.” For more information or to register for the event, visit www.ThinkRealty.com. •
all scream, “The nation is facing an affordable housing crisis!” a relatively small but powerful community is doing something about it. Often, people think “big government” when they hear the words “affordable hous- ing,” conventionally defined by the Depart- ment of Housing and Urban Development (HUD) as housing that can be obtained for less than 30 percent of the median income in an area. But in reality the vast majority of that essential housing stock is provided by small business owners, real estate investors and individual landlords. Nevertheless, U.S. housing policy ignores these industry drivers completely, failing to protect them in public policy and even passing legislation that actually works
SVENJA GUDELL
42 | think realty magazine may :: june 2017
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