"We have an unprecedented crisis in housing"

There is no panacea as it relates to the housing shortage. Yet one prominent non-profit has implemented something of a full court press in promoting the rehabilitation of existing stock – a full 10% of which comprises vacant structures – to create affordable housing.

Christopher Tyson (pictured), president of the National Community Stabilization Trust (NCST) spoke to Mortgage Professional America about the group’s vision of mass rehabilitation of homes to address the supply-side facet of the housing crisis. The non-profit’s initiative emerges amid a housing landscape lacking some 3.8 million homes of a sufficient supply nationally.

“We recognize that we have an unprecedented crisis in housing regarding a low supply across the board,” Tyson told MPA during a telephone interview. “We simply don’t have enough housing units to meet the demand for housing, and that’s in pretty much every market across the country.”

Eyeing the housing aftermarket

NCST has trained its sights on rehabbing aging stock to mitigate the housing shortage. “We have a significant portion of our housing stock that was built before 1980 that is aging, that is in need of repair,” Tyson said. “So, we like to focus on those opportunities in what I like to call the housing aftermarket. This is what happens to defaulted, distressed, and abandoned properties as they find their way back to market.”

Yet much of that aftermarket activity hasn’t been traditionally undertaken toward the idea of creating affordable housing, he added.

“A lot of that activity exists in the auction space,” he noted. “Servicers of foreclosed property tend to dump those properties into auction spaces. Those spaces, just because of the nature of an auction, privilege those with cash and those that can move quickly. That tends not to be people seeking affordable homes to buy.”

That’s where the non-profit steps in. NCST works with local community groups to facilitate the purchase of distressed properties, while also providing policy research and guidance on federal level to combat the housing crisis and provide more affordable housing for families across the country, as stated in its mission statement.

It is guided by an ideal transcending a borrower’s ownership of brick-and-mortar property to call one’s own, but more the sum of its parts, Tyson suggested. Rather, the overall vision was described as predicated on helping to stabilize entire swaths of neighborhoods through homeownership in the aggregate toward building community wealth and advancing racial and ethnic equity.

“When we think about the role homeownership plays in stabilizing communities, and when we think about the role that homeownership has played in widening racial disparities, homeownership has a big return on investment,” Tyson said. “But we’ve got to make it affordable. And we are in an era of rising interest rates and constraints on supply drive costs up in every market. That is what our focus has been: How to do we maximize these opportunities in the housing aftermarket to address the need of affordable homeownership?”

NCST was created in the wake of a past housing crisis

The question is hardly rhetorical, given NCST’s track record. The non-profit’s REOMatch™ platform provides approved, mission-driven buyers with an exclusive first look at distressed mortgaged property – giving them an edge over cash buyers. The platform has facilitated more than 28,000 transfers of homes across the country. Once transferred, the platform collects information on the rehabilitation process and the ultimate transfer to a new homeowner. Over 80% of the homes transferred through the platform are sold to owner-occupant purchasers, according to its literature.

Tyson explained that NCST has a network of more than 300 non-profits across the US that purchase property via its platform before rehabilitating the real estate and bringing it to market largely for the benefit of affordable home seekers.

The NCST’s heightened efforts amid current market challenges are reminiscent of the earlier housing crisis, dubbed the Great Recession. The group was established during the mortgage crisis in 2008 guided by concern over the impact that vacant, abandoned, and distressed homes would have on communities and to avert mass ownership in private equity hands.

At the peak of the financial crisis, a great number of homeowners would simply walk away from properties rendered as being underwater – marked by mortgage debt far exceeding home values. According to CoreLogic, one in four homes was underwater with negative equity at the time.

Today’s housing crisis is less linear but sparked by a confluence of forces spurred by global pandemic ultimately impacting interest rates as an aftereffect. In terms of its housing shortage facet, not even a sudden housing construction boom would begin to immediately address the issue, Tyson noted. “Some of that is because we simply haven’t built enough housing,” he said. “But the reality is that we can’t build our way out of this crisis – building takes time, and the crisis is immediate and getting worse.”

Through the benefit of historical analysis, we know the root cause of the Great Recession was excessive mortgage lending to borrowers who otherwise would not have qualified for home loans. While an equally dramatic moniker has yet to be coined for the current crisis, the urgency to mitigate it has clearly intensified.

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