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Expert: Workforce housing segment could soften in 2019

Focus on profitable segments

Lenders saw a negative profit margin twice in 2018, even hitting an all-time low in the fourth quarter, and the hurdles are far from over going into 2019. 

Lenders should stay focused on more value-added products, according to Beth O’Brien, CoreVest Finance president and CEO and 2018 HousingWire Women of Influence winner.

HousingWire Women of Influence award honors the shapers, the changers, the ones who are making a difference in the housing industry and paving the path for others to follow.

And nominations are now open for this year’s award!

The honors are given to individuals who are making notable contributions to both their businesses and to the industry at-large – with a specific focus on contributions made in the most recent 12 months. Their energy, ideas, achievements, as well as commitment to excellence and progress, give us a look at the future of the industry.

Is this someone you know? Is it you? Check out our tips on how to win here, then nominate here!

O’Brien explained women can focus on empowering people in their rise to leadership.

“Leadership is all about empowering people,” O’Brien said. “I think you need to focus on building leaders the same way you focus on building any other part of your business. If your leadership team does not grow, your business cannot scale reasonably.”

“A few tactical initiatives we like to focus on include building managers’ personal brands through speaking engagements and blog posts and running cross divisional strategic projects and driving P&L initiatives,” she said.

HousingWire sat down with O’Brien to discuss how mortgage lenders can work to stay profitable in 2019.

HousingWire: The Mortgage Bankers Association shows lenders saw a loss in profitability in the first and fourth quarter of 2018. What can lenders do to stay profitable? 

Beth O’Brien: We try to stay focused on more value-added products. Not all lenders have that flexibility but because we are a private lender we can address the needs of the clients with bespoke lending products. Those types of products tend to be higher margin.

HW: What will the greatest hurdle be for lenders in 2019 and why?

BO: We are very focused on credit quality as we continue to see a number of years of a benign valuation environment. While we are still bullish on values in the workforce housing segment, there are some signs of softening in certain markets.

HW: Would you say now is a good time to invest in multifamily and single-family real estate? Why or why not?

BO: Absolutely, household formation rates in the cohort that needs workforce housing continues to show strong growth. I believe there will be a housing shortage for this group over the next five to 10 years and that we are financing predominantly this group.

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