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Affordable Housing Solutions

Updated: 4 days ago

The adaptable mindset - home buying in action!

The U.S. housing market presents both good news and challenging news to first time homebuyers.


The challenge: Younger people face homeownership headwinds not faced by their parents. For many, it is more challenging to get on the homeownership ladder today. Above, this is shown by the progressively higher housing inflation over generations.


The good news: But home values outpacing inflation create amazing long-term value for those buying homes. The good news is, even with more expensive housing, the value of getting on the homeownership ladder is higher than ever. It is estimated the long-term value of both owning a home and the opportunity cost of renting is $9 million!


For more homebuying suggestions and why home buying is a great option, please see:


Jeff Hulett is a career banker, data scientist, and choice architect. He teaches personal finance at James Madison University and provides personal finance seminars. His book -- Making Choice, Making Money: Your Guide to Making Confident Financial Decisions -- is available at jeffhulett.com and Amazon.


Improvise, adapt, and overcome! The essence of overcoming any challenge, like affordable housing, is adaptability. This is the willingness to take a different path than those paths suggested by tradition. People are amazingly adaptable. It is in our nature. However, sometimes it is challenging to be adaptable when we lack knowledge or experience with something that seems scary or difficult. Your adaptability is a key enabler to homeownership success. The good news is, once you start, you will find buying a home is neither difficult nor scary. And let's face it, there are $9 million good reasons to explore your adaptability!


Adaptation strategies: The following are a few homeownership adaptations to consider. These are variations of more traditional home buying approaches to help you get on the homeownership ladder. Your path may include versions of these adaptations and/or more traditional housing approaches. Success come to those that learn, surround themselves with a great decision process, and take action! Please keep in mind.... not making a decision is a decision.


1. Reverse Migration: For some, the pandemic has provided more work location flexibility. If you are presently living in a hotter/higher-cost market, it may be time to relocate to a relatively lower-cost but rising housing market. A new norm called the "donut effect" enables people to live outside a headquarters city, but close enough for periodic onsite meetings. A hundred years ago, the U.S. saw a rural-to-urban migration as people flocked to big cities for work. Today, there is a new “urban to less urban” migration owing to pandemic concerns and new work-from-anywhere company employee location policies. My oldest son Josh and his wife did just this for their first home! They moved from Arlington, VA, an expensive suburb of Washington DC to Richmond, VA -- about 90 miles away. Josh said:

"It was a great decision. My company is open to a more mobile work culture and I do not mind driving into the office periodically. Richmond is a great city and the lower housing cost made it possible for us to start a family as homeowners!"

2. Country Music Lifestyle: Some have taken the new pandemic work-from-anywhere norms to explore many areas. Some are moving with the seasons to areas that interest them. WiFi and mobile technology enable them to work hard. Interesting areas (ski, beach, hiking, etc) allow them to play hard. If you are currently living in multiple locations, it may be time to buy an investment property. Buy it in an area you may want to eventually live. You may need a property manager to handle the rental since you are not always in town. As we discussed in our Homeownership is an important wealth-building platform article, this will enable you to offset the larger renting opportunity cost and still build equity. Eventually, you may wish to live in this home. Once you do, this will help you realize the full homeownership value.


3. Friends & Tenants: If you are just entering the workforce, consider a lower-cost city and buying a home with the intent to rent rooms to others. Mortgage companies do have programs to include rental income from others for mortgage loan income qualification. Most mortgage companies have low down payment mortgages (e.g., FHA-insured loans) for those with income but not as much in savings. There are many resources for finding more affordable U.S. housing markets. Here is one example from the google search “most affordable US housing markets:” Forbes Article.


4. Co-ownership: Most people think of joint ownership in the context of a married couple. A little-known but increasing trend is toward multiple joint owners that are not married. It could even be more than 2 people. Because homes have become less affordable, co-ownership is a way for a group of people to pool their resources to buy a home together. It is a great way for people that may not have enough income and assets separately to come together to buy a home. As you can imagine, this could get tricky. It is important that all members of the group are aligned on their criteria for buying the home. Also important is alignment for exiting the home. What if someone gets another job? What if someone cannot pay their fair share? In my experience, a well-crafted operating agreement is essential for documenting the exit criteria. The operating agreement, signed by all parties, contains the exit rules all parties agree upon. My two younger sons went into a co-ownership agreement to buy a home. They had 4 co-owners, my two sons and two other friends. My son Daniel said:

"The operating agreement was critical, it helped us all get on the same page. We had good discussions about our goals and the many 'what ifs.' We are all more confident and really like living together!"


The homeownership professionals: To achieve homeownership, it will help to engage professional advisors. Your home buying team may include both:

  • A realtor: someone to help you find a home, and

  • A mortgage loan officer: someone to help you get a mortgage.

The best part about your professional advisors is that your success is aligned with their success. That is, their job performance evaluation is enhanced when you close on your new home. There is some nuance to the realtor’s incentives. They are incented to make sure the house transaction closes, but not necessarily at the best price for you. You may consider the realtor as part of a 3-way negotiation:

  • seller - wants to sell at the highest price

  • buyer - wants to buy at the lowest price

  • realtor - wants the transaction to close with as little work (cost) to them as possible.

This incentive misalignment is not such a bad thing, since getting on the housing ladder is most important. As we show in the Homeownership is an important wealth-building platform article, your final price is not so important when you view it as part of a long-term series of housing transactions. Finally, with today’s information and decision tools, it may be possible to buy a house without a realtor.

The pro is - you should save money on the commission. The con is - you will be trading your time value for the expertise a good realtor provides.

For first-time homebuyers, I recommend using a realtor. For more home buying information, including tools to help make the best home buying decision, please see our article: Making the best home buying decision.


At the beginning of the house-hunting process, be sure to get pre-qualified for a mortgage loan. Particularly for first-time homebuyers, an experienced mortgage lender will help you learn the important aspects of mortgage lending.


For first-time homebuyers, my family has worked with Chris Lester. Chris is a very experienced mortgage loan officer. He has helped my first-time homebuying children get on the homeownership ladder. If you reach out to him, please let him know Jeff H says "hi"! Also, not all mortgage companies build first-time homebuyer specialization. It is a best practice to confirm the percent of loans the loan officer closes for first-time homebuyers.


Next are a few suggestions for first-time homebuyers:

  • Educate yourself! There are many resources. The Consumer Financial Protection Bureau is a good place to start: Buying a house

  • Pull your basic information together about mortgage qualification, including how much money is available for a down payment and closing costs plus your monthly income.

  • Down payment funding is typically a challenge for first-time homebuyers. If your family is able and willing to help, now is a good time to ask. Also, many localities offer Down Payment Assistance ("DPA") programs. Check out this resource to find DPAs near you.

Learning about the mortgage process is essential for making informed decisions optimizing long-term wealth. Most important, you will learn what you need to do to be successful both now and in the future. You will be amazed at the number of mortgage options available. If for some reason you do not qualify for the house you had in mind, remember this is not a “Yes or No” result. It is a “Now or Not yet” intermediate step toward the next home. Voltaire's timeless advice is on point for the homebuying decision process:

Don't let perfect be the enemy of the good.

Making the best homebuying decision: There is certainly more to home buying than the mortgage. You will also need to weigh your many homebuying preference factors. Such as size, location, schools, rental readiness, neighborhood type, and many more. Our brains have some amazing strengths, the preference weighting process is NOT one of them. Multiple criteria, costs, and multiple home alternatives create a burden for our brains to process. This is especially true since:

  • Home buying is infrequent, and

  • Home buying often combines the unique needs of multiple buyers.

Those in the real estate business train their brains to handle these decisions. For the rest of us, the volume of information and lack of process transparency may create confusion and a lack of confidence.


The good news is that there are affordable decision science-enabled apps available to help! I suggest using simple and effective decision apps to help you weigh and order your preferences, costs, and home alternatives. I‘ve used Definitive Choice in the past.

Decision apps are like “pocket confidence!” It is reassuring to know where you stand and when to walk away from a home sales negotiation.

In today's information-overload world, the potential for decision-making bias is higher than ever. Keep in mind that bias, more broadly defined, simply describes a decision process leading to a less-than-accurate outcome. This can happen to anyone. Decisions apps and housing education are your greatest countermeasure. By actively owning the homeownership decision process, you are increasing the likelihood of the best result.

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