Suburbs to Become Less Affordable?

As CEO of Spring EQ, Jerry Schiano brings over 30 years' entrepreneurial experience in the mortgage industry, including founding and successfully leading multiple lending organizations. Prior to starting Spring EQ, he founded New Penn Financial from a startup to a top-30 mortgage lender with over 1,400 offices and 1,800 employees.

Schiano sold New Penn to Shellpoint partners and remained on the executive committee. Prior to New Penn, Schiano founded Wilmington Finance Inc., which he grew into a top-15 originator of Non-Agency residential loans with over 2,000 employees. Schiano is a magna cum laude graduate of C.W. Post Long Island University with a B.S. in Marketing and Economics.

 

How has the COVID-19 pandemic impacted affordability for homeowners? Could affordability improve as the year progresses?

Over the short term, job losses for one or more family members are obviously having an impact on affordability. As the year progresses, however, and if rates drop lower and housing prices decrease as some economists say they will, we could see affordability increase.

 

There have been several reports saying people could move away from the urban centers due to the social distancing and the effects of the virus. What could this mean for affordability and inventory?

Housing inventory is already tight, so if people moving out of urban areas actually becomes a trend, we could see affordability improve in cities. Bear in mind that everybody thought cities would struggle after 9/11 and they came back strong. So, I see a temporary tilt toward less affordability in the suburbs if housing demand exceeds inventory and pushes up some prices while lower urban prices can increase affordability. If there is a flight to the suburbs happening, however, I see it as more of a temporary thing. Urban areas are popular for a reason—people still enjoy living close and walking to the places they want to go.

 

Finances have been one of the biggest hurdles to millennials achieving homeownership. Have recent events made it harder or easier for millennials, or now Gen Zers, to achieve homeownership?

I think homeownership is much harder for younger people right now. A struggling economy will create fewer opportunities for job advancement, and many Gen Zers and even Millennials are struggling with looming college loan debt. Also, if the move to the suburbs proves true, younger buyers will also be faced with more auto expenses, which has an indirect impact on affordability.

 

Numerous reports have found banks are beginning to tighten lending standards and are growing wary of mortgages entering forbearance plans. How could declining access to mortgage credit impact housing? Do you foresee more banks raising credit limits for potential homeowners?

Banks and non-banks are indeed tightening standards, and they are pretty tight. However, if the pandemic eases and the economy starts to improve, I actually see the pendulum swinging back and some of the overlays being reduced toward the end of summer..