Elliot Schmiedl
Director of Homeownership, MHP
Age: 41
Years experience: 15
Massachusetts homebuyers’ ability to afford a home is getting worse and worse, leaving down payment assistance and mortgage discounts as two of the few ways ordinary Bay Staters can land their first home.
According to the latest data from The Warren Group, the publisher of Banker & Tradesman, the statewide median single-family sale price hit $600,000 in November. Additionally, the median statewide condominium sale price in November is up to $511,955.
A ranking by real estate data company ATTOM shows that, between those prices and higher mortgage rates, housing affordability got worse in every part of the state this year. Hampshire County suffered the least, while Essex County suffered the most.
At the Massachusetts Housing Partnership, Elliott Shmiedl is the point person for one of the newest and biggest efforts to try to reverse that trend: the ONE+ mortgage product. Fundedin partnership with the state government, Eastern Bank and The Boston Foundation it combines a heavily discounted, fixed-rate 30-year mortgage with up to $50,000 in down payment and closing cost assistance. First-time homebuyers who utilize the program also don’t need to pay for private mortgage insurance.
The program is available to low to moderate-income first-time homebuyers in the 26 Gateway Cities as well as Framingham, Randolph and Boston. Prospective buyers must complete a homebuyer education class and, if purchasing a multifamily property, participate in a pre-purchase landlord course.
Q: How effective are down-payment assistance and special purpose credit programs in getting people into homes who might otherwise not be able to?
A: It comes down to a math problem. Your average purchase price in Massachusetts has risen something like 30 percent to 40 percent in the last four to five years, and that’s obviously outpacing income growth so these gaps are widening. That’s come at a really inopportune time because while prices have gone up, mortgage rates have gone up too and everybody became a little too comfortable too quickly. So ONE+ mortgage comes with a 30-basis-point discount from the start. It’s just going to mean the difference for that household that doesn’t want to stretch to the point of nearly breaking just to buy their first house.
I look at loan scenarios all the time, and the ones that leave me feeling most uncomfortable are the ones that technically work on paper. They meet all the requirements, but it leaves the household with very little room thereafter. It’s like they’re throwing all their reserves at it. They’re getting in by the skin of their teeth. So, by helping folks with a lower monthly payment, down payment assistance, closing cost assistance, hopefully we’re helping them not just get into the home, but in a way that is sustainable for the future so that they can support that payment going forward.
Q: You might not want competition, in this sense, but do you think that as the state continues to see prices increase and continues to struggle with a lack of inventory, that we’ll see more down payment assistance and mortgage discount programs?
A: Yes, and I actually think many of our banking partners, they may also participate in the MassHousing [mortgage] program, state-sponsored mortgage products but they’re also starting to come out with more and more of their own portfolio products geared towards low- and moderate-income households. I think we chuckle at the same notion, like, “oh no, competition,” but competition is good and if our banks are putting their best foot forward, offering our product, but also alongside it maybe they’re offering their own affordable product, perhaps with no PMI, some even their own down payment assistance. We think that’s all good, because the same way that we want to promote choice of housing options, we want to promote choice of mortgage options and financing options. So, the broader the menu is for first-time homebuyers, we think that’s better in the long run. It might mean a few less loans for us here and there but ultimately it should be more buyers in their first home.
Q: Especially in these current market conditions, how important is it to help low to moderate-income households? The American Dream is being able to own your home and be able to kind of pass down that wealth.
A: It’s incredibly meaningful, because I think it offers opportunity going forward when somebody can fix their housing costs, a 30 year fixed rate mortgage, and not be at the whim of market conditions and landlords raising rent and things like that. It allows them opportunity to put those savings towards other things. Maybe it’s just flat savings, maybe it’s helping put their kids through college, replace an aging car, pay off student loans.
Families are hit with probably more expenses today than they used to be. When you couple that with the increasing cost of housing, it’s really put a lot of people in trouble. So every dollar we can save [a borrower] is meaningful, and of course, it unlocks the potential to build equity. Massachusetts is a strong real estate market. We understand that it’s got a very positive trajectory, if you look at the history. So we feel good about putting people in homes and what the future would bring for them.
Q: Looking ahead to the next year, in 2025 how do you feel the market will play out? Do you think inventory and prices will continue to dominate the story, or do you think that we could see some shifts heading into next year?
A: I’m not super optimistic that we will see like market change in 2025. I think if interest rates can tick down a little, that will be helpful. Of course, there’s a lot of uncertainty there. I do hope that inventory can rise just a little bit, but I don’t necessarily see that happening. So I think it’s important on the financing to continue to be innovative and creative and save people money and create opportunity where we can because it’s just not clear enough that change is on the horizon on this sort of inventory, price, interest rate side.
Schmiedl’s Five Favorite Massachusetts Beaches
- Plum Island Beach, Newburyport
- Crane Beach, Ipswich
- Wingaersheek Beach, Gloucester
- Joseph Sylvia State Beach, Edgartown
- Race Point Beach, Provincetown
