State housing exec focuses on first-time buyers, rejuvenating neighborhoods

State housing exec focuses on first-time buyers, rejuvenating neighborhoods
Mary Townley is director of homeownership for the Michigan State Housing Development Authority. (COURTESY PHOTO)

The Michigan State Housing Development Authority is on the frontlines of the state’s efforts to add more housing supply, from urban centers like Detroit and Grand Rapids to rural parts of the Upper Peninsula and in the far southwest corner of the state. Increasing homeownership is a key part of those efforts, said Mary Townley, who as director of homeownership heads up MSHDA’s efforts around helping buy homes. The program works with banks and other mortgage lenders and offers down payment assistance on homes priced up to $224,500.

 

How have MSHDA’s homeownership programs fared during this real estate cycle, starting with the COVID-19 pandemic in the spring of 2020?

When COVID hit back in 2020, the immediate effects of it were everybody was at a halt for a good three to six months. Realtors couldn’t show homes, lenders were all working from home and couldn’t meet with clients. So it was just kind of a, “Let’s put a pause on things and figure out what everybody can do going forward.”

So after that pause, interest rates were at an all-time low, Realtors started doing virtual showings of properties (and) eligible homeowners were still working with the banks, and everybody started to take the turn. When interest rates started to rise, MSHDA had an advantage because we fund with bonds.

 

What does that mean?

So our interest rates are not necessarily tied to the same component like a bank offering a mortgage product. So our bond rates are typically lower. And MSHDA continued on with growth over the last couple of years. Within the last, probably six months, we’ve had record volume of transactions that we’ve worked with and purchased from our banking partners, or our lending partners.

So we do feel that we still have significant skin in the game for new purchasers, and we’re continuing to offer our product line to lenders across the state so that they can support the first-time homebuyer all the way to the jumbo (loan) homebuyer. And the jumbo, of course, is that really high end.

 

Given the price limit you mentioned of $224,500, how is that affecting MSHDA’s programs during a period of rising prices the last few years?

So we did see a rise in that middle range (where) home values went up significantly. The low-to-moderate side did go up, but maybe not as much as the mid-range.

We have a fairly new down payment assistance program. Our typical standard DPA is $7,500, but we began offering a higher DPA in certain ZIP codes across the state … and that new DPA is $10,000.

 

What does that mean?

So a (would-be) homeowner can again use that for closing costs, prepaids and down payment. So that helps offset a little bit of the rise in the sales price. If you look at low-to-moderate income households versus what rents are going for, we believe that most individuals that have a very stable job and the willingness to be a homeowner can purchase and have the same house payment as rent, if not even lower. So, you know, everybody says (home) values are too high, my payments too high. But they really need to go to a lender and check that out and see if what they’re looking for falls below a rent payment.

 

How would you say MSHDA’s homeownership programs are holding up in this current market where prices remain even as demand is somewhat muted?

We have a sales staff that are on the road five days a week and they go out and meet with lenders and Realtors and promote the program and participate in community events. And we’ve gotten very positive feedback from our lenders.

Basically saying, “We promote your program, we get first-time homebuyers in.” And because of that, they’ve referred us to other individuals that were in their circle of friends to do this same kind of thing. So I think that we have a major piece in this affordable housing realm in the state of Michigan. We’re just going to continue to do it and do more marketing to our partners and also the general public.

 

Given the current market, as well as a large-scale push by private and public sector to bring more housing to the market, how do you see MSHDA’s homeownership programs being a part of that?

So years ago, we provided the funds for certain cities across the state to address blighted properties. So a lot of those that were severely abused and no longer livable, we provided funds for those to be demolished. There was another group of houses that were not blighted, but they also weren’t attracting new homebuyers for that home or even that community. So we are partnering with communities that have available funding to rehab those homes, and then we come in and work with that community, that city, and offer a MSHDA program to a potential buyer.

So we’re focusing heavily on communities that are trying to rejuvenate neighborhoods … get them back up and running to attract young families. And I think that is one of our key programs that we’re going to be focusing on in the next probably 12-24 months. We have a housing stock, it may not be in the best shape in some areas, but we do have a sound housing stack that we can build off of.

 

Given all of this, what would you say is most keeping you up at night these days?

You know, we need to do a really good job at listening to our partners. What works with our program and what doesn’t work with our program? And then work at meaningful change so that we can put more individuals in homeownership. I’m always looking for efficiency, streamlining processes, what makes sense for that first-time homebuyer? Those are kind of the ideas that keep me up at night.

 

What’s the feedback you’ve been getting from those partners?

Of course, they’re always looking for better pricing. Our initial prices are probably the lowest in the market right now, but that’s always a continuous ask and that’s their job to ask.

Then (also) look at maybe a different delivery process. Right now we accept packages electronically for lenders, and we’re continuing to streamline that also. I think we need to be open-minded and we need to move I.T. to that next century of it for our lenders.

From Crain’s Detroit Business