Hey, thanks for having me. It’s a pleasure to be, to be on.

Technically it’s supposed to be a quarter. So you’re, you’re, you’re talking mortgage terms front-to-back ratio. Actually, 26% of your housing expenses shouldn’t be no more. It shouldn’t be no more than 26% of your monthly income. Your, your back ratio is actually, it’s 38%, which includes like credit cards and car payments and stuff like that. So if you’re at 33%, then you are already, you know, not even qualified to buy, which is horrible.

Well, I grew up in an impoverished area in Brooklyn, New York, and my mom moved us to North Carolina. So I lived in Durham, which was a slightly less impoverished area, but still some of the same inner city issues, and I went through high school, went to college, graduated, and came back, and I kind of wanted to make a difference. I’ve seen a lot of people who look like me that has a lot of potential, but because of their environment, their options were severely cut short.

So, yeah, I got into real estate. Actually, it’s funny you mentioned that because my last appointment before this podcast was actually a mixed couple that met me. They bought their first house, and they both were from similar backgrounds as me and both ex-military and, you know, the disability stuff that comes with that, Mental and physical. And they just thought, “Hey, you know, we are gonna fulfill that American dream and buy our first house.” And I remember at the closing day, I was like, “you’re not done”. They was like, “What do you mean? Like, we, you know, we’re gonna stay here forever.” And I was like, “No, that’s not the best idea.” Long story short, they’re their third house now, and that house has over half a million in equity. And a very similar conversation we had like literally not an hour before I came here about how the economy has changed so much. So going back to when I first started in ’07, we had one of the worst economic crises and, and crises in our country. And when Covid hit…

Oh, it was a horrible idea. I mean, every, every dollar I, I sank into, you know, my business like just went away. It was the craziest thing. It was almost as if I was getting signs that I shouldn’t be doing it. I still haven’t learned my lesson.

But because of that, I got a firm foundation of how the housing and market play a role in our economy. And how ubiquitous housing is. And everyone needing shelter. And so taking that from a kid that’s been in an inner city impoverished area and working with affluent individuals almost on a daily basis. It’s kind of mind-blowing, but at the same time, I feel like I’m in a privileged position to pay it forward.

So in this market, since when the pandemic hit, the real estate market was already going well. Inventory has been steadily declining since the recession. Less and less people wanted to sell more. More people were thinking, “Oh, if I jump into the market, then I won’t have a place to live.” So it was just a reciprocal issue and it was other things that was added to it. But ultimately what happened was during the pandemic and a little bit after the pandemic, the market just kind of went parabolic, and property values went through the roof. And even though there was no inventory, builders have been building like crazy. And some of the areas that I lived in, in Durham and part of Raleigh where there were low-income housing, you’ll see multimillion-dollar houses in that same neighborhood, like on that same street.

And I would ask two questions. How is that possible? Like, who would pay that much for a house on the street? And two, where does all, all those other people go?

I mean, if you take the low-income areas and then you kick ’em out, you know, you gentrify ’em, where do they go? And in this market, they go to the more rural areas. And so the rural areas of the triangle has been pretty much the haven for people who aren’t affluent. So not only just lower income housing or lower-income families but also first-time home buyers. People who are buying in the two, three, even 400,000 range for the first time have to go into the low the to in the rural areas.

I live in Raleigh.

Well, you kind of touched on it about people working from home. So buyer needs have changed, meaning you no longer have to go to the office, so you don’t have to worry about commute times, which means you can probably live on the other side of the country and still keep your job.

Another thing that changed was people being locked up in their house for extended periods of time. Not only are you antsy about getting out of the house. You also have the ability to save money ’cause you’re not going out to bars. You’re not going out to restaurants. So a lot of people had a chance to save money.

Another thing was we had a lot of these hedge funds that were jumping into the real estate market, the residential real estate market, and buying up stuff. So, in addition to having an abundance of qualified buyers, you also have major corporations that jumped into the mix. And then you have multiple offers. And that ultimately goes into a crazy appreciation rate. I remember Durham, and you said the rents have gone up, what 18%, the housing values in Durham has gone up 22%. So, you know, it was like a perfect storm with an already lagging inventory. They just kind of made it worse.

So what has been happening is builders have jumped in saying “Hey, you know, we can kind of fix this inventory issue”. And honestly, builders are not enough. We have had one of the lowest foreclosure rates throughout this whole ordeal. I remember one of the reasons was the moratorium. But once that expired, because of the property values have gone up, people can just refinance rather than sell their house, or rather than undergoing foreclosure.

Usually, when the market corrects in that regard, there’s a bunch of cheaper homes that have been repossessed that are now available some way. Or to get in on a fixer-upper or whatever. Or some other opportunities other than just hitting the MLS, and now that just haven’t been the case. So yeah, the people who were just on the bubble of buying are no longer able to buy, and it’s super unfortunate. So that’s what’s going on all over the country, not just here in Raleigh Durham.

Well, I can tell you that one of the issues that we have is that we don’t have the infrastructure for a population boom. So to rezone certain inner-city areas so you can add more units, would be pretty much the easiest thing to do. Because the government would approve it, you can have builders come in and let’s say if hypothetically that was the case, then you would have overpopulation of lower-income families.

Now, that is not the case because property values have gone up. So like I was saying before a lot of those homes in those inner city areas, and the lower income areas are pretty much worth more with the house torn down. A builder will build something three or four times the value. So, that has been an issue, and that’s been a hot-button item for literally every legislator or any politician period, locally to try to get more votes or whatever.

Well that’s one solution. I mean, it’s not like it’s all owned by the government, right? So this has to be fueled somewhat by capitalism and I know that there has been a lot of tax breaks and stuff like that to entice investors to try to build up and build out. But that just hasn’t happened, and again, we don’t have the infrastructure for that much growth. So we’re kind of managing it.

I know in some of the smaller towns, water is the biggest issue. So even though you have areas like Zebulon or Creedmore, a lot of those rural areas that builders are building in, they’re building in heavy and people moving out there because it’s affordable. They don’t have the utilities to keep up. So, let’s say downtown Raleigh for example, if they were just to build up. First off, you would have to have a lot of interested sellers who are willing to give up their properties to let the project happen or have some sort of eminent domain to take it back and create opportunities there. You still have the issue of how much it’s gonna cost, and frankly, it’s just not feasible.

I have a couple of affordable housing ideas that could work. In fact, we were working on one last summer that we may pick up again because we’ve gotten approvals from the county here, wake County, and Durham. But yeah, because building materials…

So yeah, because building materials are really expensive still, relatively. One of the things we could do is build with containers, with shipping containers. I’ve done a lot of research on the types of containers that could be used. There are actually some that are prefabbed, that has a kitchen and all that kind of stuff. You can put together like Legos and put insulation, and boom. You have a house that is a fraction of the time and the cost that it would take to build one of those ADUs or the smaller seven or eight-hundred-square-foot houses that our city needs. You can also do multi-unit houses with the containers.

Another idea I had was there’s a couple companies going around with 3D printers that literally print out concrete. It lays concrete like toothpaste. The problem with that is no one has yet to achieve a certificate of occupancy with a built house. We have a couple ideas of how we can, you know, kind of get over that hurdle. Kind of seems a little….

Permitting is an issue. So, you know, are our…

No, we’re not, and neither are the builders. A lot of the builders I talked to about this, they were like, “ahh…”. Real estate is so － The process, pretty much everything in real estate is so antiquated. When you come with a new idea, people just look at you funny. But that is the best way. It would definitely be more expensive on the permitting side ’cause you’d literally have to have someone from the city or whoever is pulling the permits on site the entire time. But you’re talking about maybe a two or three-week build process versus an eight to twelve-month build process.

Yeah. Yeah. It’s simple, you know, it’s pretty quick, and they’re sustainable. I mean, they have a ton of those 3D-printed structures in Europe. I mean, it’s not new tech by any means. It’s definitely a new concept to the building world, but….

Oh, you’re talking about anywhere from 75 to like 85% less than it would normally cost. I mean the biggest expense is concrete, which － It’s concrete. It’s not that expensive and with the right machines, and there’s several of ’em. I’ve seen at least a half a dozen different designs for these 3D printers.

No, no, no, no. We definitely don’t live in a Soviet country. Thank god for that. But yeah, our building codes and standards are very high. So, when you get issued a certificate of occupancy, that means that house is livable, it’s clean, there’s no asbestos or any crazy stuff like that. The house is not gonna fall apart. And the houses that have tried, there’s a company in New York, and there’s another one in Texas, they’re both are trying it, but the reason why they didn’t get the certificate of occupancy wasn’t because of the structure. It was because they missed something in the process that wasn’t permanent. Or it could be an access for maintenance issues. So like, you know, if a pipe bursts, you can’t get behind the concrete to you know—stuff like that. So yeah, I mean there’s several different ways to get around that in the design itself.

I say, ultimately a 3D-printing route would be the most affordable, the most scalable, process. But shipping containers, they’re just like Legos. You put ’em together, and you won’t have any issues or permitting. I think the, the most imminent solution would be shipping containers.

Yeah, one shipping container, if my memory serves correctly, is around anywhere from 800 to a thousand square feet.

Yeah. And I mean, if you had two, you can make it pretty nice.

Yeah, yeah. No, no. If they’re built correctly, you can actually get mortgage loans on them, you know, as real property. Yeah, it’ll be a… Yeah, both solutions will be affixed to the property, so it’ll be considered as real property. You know, real personal property or separate personal properties like a refrigerator or a microwave or something like that. Real property is the door that’s attached to the house or, most notably, the stove that’s attached to the house or something that’s permanently affixed to the house. You know, a pool. That’s a real property.

So, a mobile home, for example, a mobile home is very difficult to get financed because, number one, it still has a VIN number ’cause it’s a mobile home and it has an axle, but for the most part, it’s not attached to the property. So, both solutions are, you know, affixed to the property and could be counted as such.

So yeah, container homes is just, you know, and they make ’em prefab. You can buy ’em anywhere from five to 15 grand per container. So super cheap. I’ve seen some used for like two grand. The only issue with the used ones is you don’t know if it’s been contaminated. So yeah. I mean, it’s really cheap, and that will combat the rising property values even in the lower-income areas.

I mean, if we’re talking about just the house and not the lot. Yeah, I would say you could probably be into it 50 or 60 grand.

So, you hit on it. The utilities. Okay, so you have to get drainage, water, electric to it. That can be one of the biggest things. The foundation. Getting the footing right. Getting approvals before you start, that can be pretty expensive too. But in comparison to a normal build. I mean, that’s not the biggest expense. With a container, that could be the biggest expense.

Yeah, I don’t think it’s that simple. Yeah, and you did hit the nail on the head. Affordable housing and homelessness are two totally different things. Affordable housing is families who have that high debt to income ratio, where they’re putting their whole check into rent. Both mom and dad are working or if a single mom, whatever, but they’re trying, and their efforts are not being rewarded.

Homelessness is something totally different. There is － I mean, of course there is some homeless people who just fell on bad luck, and they’re trying to figure something out. You have a lot of ’em where something that they’ve done, a choice that they’ve made to get ’em in that circumstance and getting a better environment for ’em may not always, you know…and I’m speaking this from a business aspect, and I started in property management when I started real estate. So I’ve dealt with this quite a bit. Even though you create a better environment for ’em, it may not be something that’s gonna help them change who they are or the choices that they make, and that’s the unfortunate thing.

But, to answer your question for affordable housing. Yeah, the rural container idea can work fantastically well, being that the property will still maintain its value since it’s considered as real property. So, it’s…

It will still be an investment. The house would still have the possibility of appreciating and all that stuff. Banks would give loans for it. So it’s easy to get financing for that, which is the biggest issue for someone who’s trying to buy their first house.

So, the homelessness issue. I’m working with two different churches now who have land behind their churches, and they’re gonna start putting pods and ADUs back there. So, they could help with that. I think it’s a several-step － and you know more about this than I do, but I kind of see it as like a several-step process. You definitely don’t want someone feeling comfortable and trying to live off government, but you also wanna give ’em a chance, and you wanna put ’em in circumstances where they can win, and if they just don’t have the want to win, then that shouldn’t be on the person given the help. You know what I mean?

So there’s a couple churches that I’m working with that they’re planning on putting some ADUs back there, but they’re also having some rehabilitation programs and different things to help people get back on their feet because that’s pretty much what it is. More so, homelessness is more of a mindset than anything else. I mean, I remember there’s times where I was technically homeless too, but I wasn’t trying to stay there, and when I got a hand up, I took that hand, and I made sure that person that gave me their hand knew I appreciated that they helped me out. So, but yeah, I don’t know if that answers your question.

That’s a whole other can of worms.

I was gonna mention that there are…I dunno if you ever heard of like any lottery options.

Yeah, yeah. So low income, let’s say single mom applies and she qualifies. She gets to live in a neighborhood where she definitely can’t afford to be there, but she gets grants or what have you to help her stay there, and as long as she keeps a job, or whatever, that kind of helps and to be honest with you, that honestly, that could be like a solution period. I mean, because if you take a － like with me and my mom, for example, she got me out of that environment of gang violence, drugs, and all that stuff, and I got to see a different side of life. It changed my life. If that was available or if that was more widely available. I mean, ’cause there’s areas all over the place where if a person had just an opportunity to live at, a place for a year or two, their lives will change. So I’ve heard of a couple areas that have done those lottery programs.

Well, you can go to timmclarke.com. That’s actually my entire name with dot com after it. I have a couple articles about affordable housing, about buying your first house, about the pitfalls you can make from buying a house, the different types of loans that are available, the history of interest rates, a bunch of cool stuff that can help you kind of get your mindset together in buying, even some tips and tricks about the business. I’m also on Instagram and TikTok. All the same thing Tim M Clarke. And Twitter.

Have a good one, guys.