Affordability is definitely challenging, warns VP, but waiting could cost clients more in the long run
As home prices continue to rise and inventory remains tight, first-time buyers and aspiring property investors face significant challenges. In areas like the Bronx, where home prices have increased by 7.1% – outpacing the national average of 5% – affordability is becoming a growing concern. Mark Fisher (pictured), regional vice president at UNMB Home Loans Inc., says his team is addressing these issues through education, strategic loan options, and creative solutions for homebuyers and investors alike.
With the housing market becoming increasingly competitive, however, many potential buyers are struggling to afford a home. Here, Fisher emphasizes the importance of acting quickly rather than waiting for the "perfect" time to buy – which may never actually arrive.
“Affordability is definitely challenging,” he said. “I think in today’s market, we also have more challenging buyers – the ones that are active in the market now as the markets have constrained over the past few years in terms of just total volume. The people that are in the market are serious, but a lot of them do have more challenges to overcome, and two of those big challenges [are] monthly payments and out-of-pocket funds.”
In order to bridge that gap, Fisher recommends brokers lean into government-backed loan programs – specifically ones that offer lower down-payment requirements and more flexible credit qualifications.
“We’re really leaning into FHA loan products, VA loans, Fannie Mae Home Ready and the Freddie Mac’s Home Possible program,” he told MPA. “[It's about] taking the extra step to see if the client can fit into any of these programs that could save them money, either upfront or over the long term, depending on what is most important to them. Most clients don’t realize that there could be a better option compared to just your regular conventional loan product. It’s our job to educate them and get their information and see what they fit into.”
‘Get into the market as soon as you’re able’
The reality of the market means that waiting to save for a traditional 20% down payment may not be the best strategy – something that people seem to be ignoring. In 2023, 66% of people planning to buy a home chose to delay their purchase to watch the rates come down. Similarly, in 2024, two thirds of prospective home buyers put off their purchase until mortgage rates fell.
“Saving 20% down for the average home price, which in our area is much more expensive than average across the country – that’s a big endeavour,” Fisher said. “So waiting isn’t a great option for many people, because, as we’ve seen … it was 7% appreciation. And waiting to save is outpaced by the run-up in the market.”
Instead of holding off, he encouraged buyers to enter the market as soon as they can afford the minimum down payment and closing costs.
Read next: Down Payment on a House: Tips to Determine the Right Amount
“The best thing people can do to get into the market is to get to the market faster,” he said. “The best thing we can help borrowers do is get into the market as soon as they’re able.”
As the demand for investment properties rises, Fisher added that there’s been a shift in the types of loans and markets investors are considering.
“The current market has also been volatile for people who are looking to invest,” he said. “Just because of the way prices are, they’re not necessarily able to pencil out in terms of bringing the returns they’re looking to get.”
Instead of focusing solely on familiar markets, Fisher encouraged investors to broaden their search based on their financial goals.
“Sometimes you have to educate borrowers, and they might have their mind set in one direction in terms of what they’re looking to buy… Are they looking for cash flow, price appreciation? Adding value means asking questions that dig deeper. Don’t be afraid to ask, ‘What exactly is your objective?’”
For example, while the Bronx remains a strong appreciation market, properties may not generate immediate positive cash flow.
“Someone looking to buy an investment property in the Bronx, New York, you know, the average multi-family investment property is going to be at least $750,000… it’s very difficult for you to make a big profit without renting out, you know, an illegal unit, like a finished basement unit,” Fisher said. “You might want to think about going into Connecticut or Jersey, or upstate New York. So you could find things that make more sense, that will keep you the cash flow that you’re looking for.”
‘If you have a bad tenant, you have to be prepared to weather the storm’
One loan product that has gained traction recently is the Debt Service Coverage Ratio (DSCR) loan, which bases qualification on the property’s income rather than the borrower’s personal income.
“DSCR loans have a few different benefits,” Fisher said. “Obviously, the main benefit is that you don’t have to income qualify. It’s based on the name of the asset instead of your personal income. So it’s less paperwork-intensive.”
New York remains a tenant-friendly state, posing unique challenges for landlords dealing with problematic renters.
“If you have a bad tenant, you have to be prepared to weather the storm for probably about a year or so to get that non-paying tenant out,” Fisher said. “Being a real estate investor is the ‘sexy thing’ right now. Whereas if you go back a few years, it wasn’t so.”
With rising interest in rental properties, Fisher advised new landlords to be financially prepared for unexpected costs.
“There’s always expenses that come up that you didn’t pencil into your budget. Although having reserves isn’t always required, it’s definitely a great idea.”
And for those considering investments in multi-family properties, Fisher pinpointed the need to evaluate the legalities of renting additional units, such as basement apartments.
“There is a shortage of housing in New York City, so I believe municipalities are becoming more lenient in terms of renting ADU units and finished basement apartments… If you are buying in the city, it does provide you with extra income to actually make it a profitable venture,” he said.
“You have to think a little bit more creatively. The best thing we can do is guide buyers in the right direction, helping them build wealth through smart real estate decisions.”
