Remain open to change

Most everyone understands homebuying and building got more complicated than usual over the past couple of years as labor, supply and inventory shortages became commonplace. In many ways, those shortages have resulted in scenarios few would have predicted.

For starters, consider that the National Association of Realtors (NAR) reported an inventory shortfall of between 5.5 million and 6.8 million housing units at the end of 2021. And while supply slumped, demand increased, resulting in a median price of $346,900. According to the NAR, that’s a jump of almost 17% from 2020 to 2021.

When it comes to supply costs, lumber provides some eye-popping perspective. According to the National Association of Homebuilders, lumber prices peaked at a record-breaking $1,500 per thousand board feet in May before showing some gradual declines through the end of 2021.

Labor shortages add volatility to the already complicated housing market. The Farnsworth Group, which focuses on building, construction and home improvement research, noted that 45% of residential contractors reported labor shortages as recently as October. And while construction firms typically see higher rates of labor shortages at the end of any given year, 45% stood out as exceptionally high.

As a result, it’s not surprising that a panel of economists put together by the NAR believes median home prices will increase by 5.7% in 2022, while a panel of experts polled by Zillow believes home values will rise 6.6% this year.

All of these factors can result in difficult situations for potential homebuyers and all those who work in the industries involved in the homebuying and building process. When faced with so much disruption, the ability to change or reset your mentality becomes invaluable. That’s true for both the homebuyers and builders and those of us in associated industries.

Even as we here at Arvest enjoyed a record-breaking year (2021) in total mortgage volume (more than $4.77 billion), we made some significant resets. In looking for ways to better serve specific groups, including those who qualify as low-to-moderate income, for example, we decided to boost our number of community development lenders and the back-office staffers needed to support those lenders’ efforts.

When appropriate, we also work with state-level bond agencies such as the Arkansas Development Finance Authority. These efforts can result in lower interest rates and some down payment advantages for our customers. Similarly, we work with other state and local agencies that offer beneficial programs and nonprofits that provide credit counseling.

Deeper conversations with customers are a must, too, because they can lead to beneficial discoveries. Maybe a potential homebuyer qualifies for the Section 184 Indian Home Loan Guarantee Program or a USDA loan (one backed by the U.S. Department of Agriculture).

Such conversations also can help customers realize that a reset in their assumptions and expectations may be in order. That could mean considering a prefabricated or manufactured home or a condo instead of what one may consider a more traditional home. Prefabricated homes offer a faster construction timeline, and some programs help finance a manufactured home.

In other cases, resetting may mean choosing aluminum materials instead of wood. It may mean pursuing a renovation or construction loan for those capable of completing fixer-upper projects. Maybe it means a bit of a commute to reach a lower price point.

Sometimes, as simple as it seems, it may be reminding a customer that, “Your home and what makes you happy may not be what your mom and dad had.”

In times of disruption — even unprecedented disruption — remaining open to change and the ability to embrace the unconventional can be critical. And that’s just as true for those of us serving homebuyers and builders as it is those doing the buying and building. Think differently.

Matt Kendall is president and CEO of Arvest Bank’s mortgage division. The opinions expressed are those of the author.