- Buying, renting, or investing in an American home can be difficult and expensive.
- Some innovations may help homebuyers, renters, and investors cope with the affordability crisis.
- Solutions include Bank of America's new no-down-payment mortgage and converting offices to housing.
- 100 People Transforming Business is an annual list highlighting people across industries who are changing the way the world does business. Check out the full list for 2022.
Buying, renting, or investing in an American home can be difficult and expensive.
2022 has brought a perfect storm of factors.
The median home price of a home sold in the US in the third quarter was $454,900, according to the Federal Reserve Bank of St. Louis. That's the most expensive ever recorded.
Mortgage rates have topped 7%, the highest rate in 20 years, which means homebuyers can afford less house for their money.
That's why many people and companies in the real-estate industry are trying to help homebuyers, renters, and investors cope with an affordability crisis.
A crop of new startups — and one big bank — is helping homebuyers and renters gain a foothold
San Francisco's Landed is one of several startups that help buyers score a home.
The 7-year-old company, which has helped buyers purchase more than 1,400 homes across 33 states, can offer wannabe homeowners up to $120,000 to reach a 20% down payment. In return, a buyer's real-estate agent pays Landed a part of their sales commission as a "finder's fee" of sorts for bringing in a buyer.
Tiny homes hold out a beacon of hope to make housing more accessible and affordable. A major player is Icon, an Austin, Texas, construction-technology company that aims to make homebuilding faster, cheaper, and more sustainable by 3D-printing homes.
Don't forget about the 44 million renters in the US. A growing wave of companies that take the old-school rent check online offers tenants rewards for paying rent on time, including cash back, gift cards, and boosted credit scores.
Take the rental-payment platform Piñata, which services 350,000 renters and close to 1,000 property-management companies, owners, and operators. Its founder, Lily Liu, believes it can serve both groups.
"It's a fine line to walk trying to balance benefits for renters but also benefits for the property-management groups and landlords," Liu said. "Our big pitch has always been that they don't have to be combative. When that relationship works in union, it can be pretty powerful."
In September, Bank of America launched a zero-down-payment mortgage in 21 cities that could make it cheaper and easier to buy a home.
"It makes me feel that I am being purposeful," she said. "The support that the bank is giving will change generations, not just the initial person that purchases the home, but it can change the trajectory of a family two generations out."
Old spaces are being transformed into new housing
Office buildings, hotels, and even churches are being converted into apartments at a breakneck pace.
At Gensler, the biggest design firm in the world, the architect Steven Paynter has designed an algorithm that's able to quickly assess which commercial buildings are viable for conversion to multifamily homes, collapsing the survey process from months to hours.
In Calgary, Alberta, where Paynter is based, repurposing buildings could increase the city's downtown population by 23%.
"It'll have a huge impact on the viability of the city and the retail there and the people who live there," Paynter said.
Then there are the abandoned structures and vacant lots ripe for redevelopment into something that serves community needs. That's where the Washington, DC, nonprofit Grounded Solutions Network comes in: It says it helps repurpose "vacant space into vibrant space."
Some advocates are protecting locals from investor or out-of-town interests
In Cincinnati, a local organization spent $14.5 million on 194 single-family homes in hopes of keeping them out of the hands of investors.
The Port in Cincinnati plans to rent out those units itself — and put the renters on a course to own the properties.
"For the vast majority of Americans, the only real-estate asset they'll ever own is their home," Laura Brunner, the president and CEO of The Port, told Insider. "For centuries, that is how we've created wealth in our country, and it has been disproportionately not available to Black and brown people. And now is the worst time for us to be tightening that vice rather than opening the floodgates to increase ownership."
Meanwhile, Andre Dickens put real-estate developers in Atlanta on notice when he became the city's 61st mayor in January.
He's proposed limiting the number of homes that institutional buyers can purchase in Atlanta. Investors bought 31.8% of the homes sold in Atlanta during the second quarter of 2022, making the city the second-busiest investment market behind only Jacksonville, Florida, according to Redfin.
It's also easier than ever to invest in real estate without a lot of cash on hand
New startups promise they can help aspiring real-estate investors build wealth — via the companies becoming a colandlord, co-owning a vacation rental, or investing in shares of commercial buildings — without a major up-front cost. These investing methods are sometimes called fractional ownership or crowdfunding.
In October, the real-estate-investing platform Cadre expanded its reach from more well-heeled accredited investors to nonaccredited ones, allowing investments as small as $1,000.
"It could be a year where we help create more parity between the haves and the have-nots historically," Cadre's cofounder Ryan Williams said.