NCST continues our journey – now in our 10th year and more than 24,000 properties later – assisting community buyers in their endeavors to purchase and rehabilitate REO properties, key to restoring vulnerable neighborhoods and preserving affordable housing. We constantly seek ways to improve our programs and services and to create additional innovative programs.
To that end, we conducted an annual buyer survey to gain their insight of our program effectiveness, collect information about their challenges and opportunities, and to capture recommendations on ideas for new tools and services needed to support their work. We greatly appreciate the buyers who completed the survey – 63 percent of whom have worked with NCST for more than three years.
Buyers remain especially concerned about the lack of available REO properties, pricing that’s too high to support economical acquisition and rehab, and inadequate access to well-priced capital. On the topic of supply, more than half of all buyers identified investor competition as a key challenge, which represents a higher percentage than identified this concern in the past. The common theme is community buyers and investors are pursuing the same properties, but for different end uses, and it can be hard to compete with their cash offers. We also heard that investors access properties before they’re listed or often further back in the pipeline, such as through note sales, which reduces available inventory even more.
The survey revealed additional interesting findings:
- Nearly 60 percent of buyer respondents work in small organizations with less than $1 million to acquire and rehab properties. These buyers report the condition of most vacant homes requires a huge renovation investment to make them safe and livable, which can make it increasingly tough for their business model to work. It’s mission-centric for NCST to maintain programs that serve organizations of varying sizes. We plan to focus more on capacity building for our smaller buyer organizations.
- Sources of subsidy are more becoming more difficult to find, and we’re working with more buyers than ever who utilize loans/lines of credits from banks and private equity/capital partners to acquire and rehab properties. However, a third of buyer respondents use CDBG and HOME grants to acquire properties, and they’re keeping company with a small population of buyers still using NSP program income. NCST will support this work and help leverage these fund sources.
- More than 50 percent of the buyers are unable to acquire the majority of their desired inventory through NCST programs. This number is higher than years prior. Buyers rely more heavily on acquiring properties from the MLS, auctions, tax sales, direct purchase from homeowners, and other sources. We continue to focus on adding new sources of inventory where possible and now more than ever, helping buyers use the pre-listed First Look window.
NCST remains committed to our mission, which can only be achieved through partnerships. We’re grateful for the commitment made by our community buyers, the banks and financial institutions, community leaders, and elected officials who advocate for the preservation of our neighborhoods and affordable housing.
Annie Carvalho serves as Vice President, Strategy and Development, for NCST.