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The Home Affordability Game: An Exercise in Patience

Louis Zitting is Founder and CEO of Murray, Utah-based MonitorBase, a tool that provides daily alerts when past customers or consumers in your markets meet both your minimum credit standards and are indicating mortgage-shopping behaviors. After a user is notified that a prospect is “in the market,” Monitorbase’s system produces and distributes a corporate compliance-approved, highly responsive offer.

Zitting began his career as a web developer in his 20s, building websites for mortgage companies. He eventually changed his career and became a loan originator, focusing primarily on direct-to-consumer marketing. He became a branch manager, where he learned to access various credit and public data sources to create highly targeted direct mail offers.

Once Zitting realized the value of available data to identify which consumers are in the market, he left the mortgage origination to start MonitorBase. Zitting’s passion for data, combined with the creative side of web development and finding new ways to help clients grow their business while removing complexity from this process, has helped shape MonitorBase to what it is today.

MReport recently had a chance to chat with Zitting to discuss the state of the home buyer market and the affordability issues faced by many of today’s home shoppers.

The housing affordability issue seems like a vicious cycle, as inflation and the rise in rates are forces acting against first-time buyers looking to purchase. What needs to change in order to remedy this issue and break this cycle?
Zitting: We all know the housing inventory story, so I won't repeat what everyone else is saying. But other issues include low-income, low credit, and minorities being underserved. Lenders aren't intentionally neglecting these borrowers, but it happens because there may be a language barrier or even a geographic barrier. A typical non-bank mortgage lender may only have one or two branches in a state. That means they are probably good at serving the metropolitan area surrounding their physical location, but they probably don't have the marketing reach and referral partners in the suburbs or rural areas in the state.

Do you foresee housing affordability issues lingering throughout the remainder of the year, or do you think the issue will extend beyond?
Zitting: I believe affordability is going to be a long-term issue. Most first-time buyers are in their 30s and the population of this demographic is growing rapidly. The supply of affordable homes will continue to have trouble keeping up. I think we may see many more first-time buyers purchasing condos or townhomes. Otherwise, they will need to move further away from metropolitan areas to find any affordable homes.

Besides renting, what are some options you would suggest to a buyer currently shopping in this ever-competitive market?
Zitting: Homebuyers should consider their current job. They either need to increase their income or move to a lower cost area. This is happening more rapidly now with many employers embracing the ability to work remotely. Or, as previously mentioned, they should consider buying a condo. That will allow them to start building equity and have the tax benefits of owning versus renting.

Are downpayment assistance plans and first-time buyer plans feasible options to turn to in this market?
Zitting: Homebuyers should definitely take advantage of any down payment assistance or first-time buyer programs available to them. However, the down payment is only part of the problem. The other issue is how much their mortgage payment is going to cost with higher home prices and higher rates. They may be forced to work on income growth to catch up with the growing cost of housing.

What advice would you give to a prospective buyer forced to sit on the sidelines due to affordability concerns?
Zitting: My advice for a prospective homebuyer in our current market is to be patient and not give up. They can work on saving money for a down payment and, more importantly, reduce their other debts. In order to qualify for a higher priced home, they won't have as much room in their total debt-to-income (DTI) ratio for non-mortgage debt. The inventory of available homes will increase at some point and rates will likely come back down a little. As the Fed hits the brakes on the economy, this may put us in recession territory. But that should provide a better market for first-time homebuyers if they have maintained a good job and didn't get themselves into debt trouble.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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