Sean Dobson, CEO of Amherst and a key figure in the residential real estate sector, has voiced growing concern over the long-term impact of economic measures taken during the pandemic. Speaking at the ResiDay conference, he argued that while the intent behind monetary stimulus and low interest rates was to stabilize the economy, the unintended consequence has been a dramatic erosion of housing affordability for millions of Americans. “We’ve probably made housing unaffordable for a whole generation,” Dobson stated, suggesting it could take between 10 and 15 years of consistent wage growth to restore balance.
He described the current state of affordability as worse than the peak market conditions seen in 2006, citing data showing that mortgage-related expenses—including principal, interest, taxes, and insurance (PITI)—now consume approximately 42.9% of median household income. This exceeds the 41.5% observed in 2006 and far surpasses the historically recommended range of 25% to 35%. According to internal Amherst estimates, returning to 2019 affordability levels would require either a 35.3% drop in home prices, a 4.6% reduction in interest rates, or a 55% increase in household income—none of which appear feasible in the near term.
Dobson attributed much of the crisis to what he called “reckless” fiscal and monetary policies during the pandemic, including expansive government spending and prolonged low borrowing costs. These actions, he explained, fueled rapid appreciation in asset values while wages stagnated, creating a widening gap between earning power and housing costs. He also highlighted the role of persistently high mortgage rates, which continue to impose a drag on the economy equivalent to nearly two percentage points in lost productivity.
Another major barrier, he noted, is the tightening of lending standards following the 2008 financial crisis. Regulations such as those introduced under Dodd-Frank have limited access to credit for borrowers with lower FICO scores, effectively excluding a significant portion of potential first-time homebuyers. “Subprime loans weren’t junk,” Dobson clarified, “they served people with below-average credit—and now that pathway is gone.” He pointed out that a drop from a 745 to a 645 credit score can happen after just two missed payments, locking individuals out of prime lending for years.
In light of these challenges, Dobson emphasized the increasing importance of rental housing as a viable alternative. His company, Amherst, focuses on acquiring and managing single-family rental homes for moderate-income families who value suburban living but are unable to secure mortgages. Many of these residents earn around $108,000 annually but face credit hurdles that prevent homeownership. “The traditional system isn’t serving them,” he said, “so we’re stepping in where lenders have pulled back.”
Looking ahead, Dobson expressed skepticism about quick policy fixes from Washington. While he supports innovative financing models and cautious adjustments to lending rules, he acknowledged such proposals often face political resistance. He also warned that artificial intelligence could disrupt employment for service and administrative workers—many of whom fall within Amherst’s tenant base—potentially exacerbating financial instability for those already on the edge of affordability.
— news from Fortune
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‘We’ve probably made housing unaffordable for a whole generation of Americans’: top real-estate CEO on the real cost of Covid economic firefighting
Dobson, in conversation at the residential real-estate conference ResiDay, reflected on the question of what the U.S. is going to do for the family out there that wants to buy a home. “We think the unfortunate part … really the cost of economic policy response to COVID is that we’ve probably made housing unaffordable for a whole generation of Americans.” n nDobson estimated that it will probably take 10 or 15 years of steady income growth to get affordability back to something approaching fairness, referencing postwar to pre-2006 norms. He placed the blame squarely on a combination of pandemic-era monetary policy, describing economic policy as “reckless” as well as surging asset prices and stagnant wage growth. n n“Affordability has probably never been as bad as it is today, the way that we measure it,” Dobson said—worse, even, than the feverish markets of 2006. u200b “You’ve got to be very, very careful.” n nOn the sidelines of the conference, Dobson told Fortune that “rental is going to have to become a part of the solution,” not just because he’s invested in the success of his firm but for the health of the country. “What are our goals?” Dobson asked hypothetically. “Is our goal to get everyone long real estate? Or is our goal to get everybody to live where their kids can go [to a good school] and be successful?” He said the housing industry is facing a big, obvious problem. “In reality, the problem is that homeownership is too difficult to reach, and there aren’t enough homes – across all types and price points – to meet consumer needs.” n nA representative for Amherst said this is “the least affordable period in modern history” for housing, noting that the PITI (Principal, Interest, Taxes and Insurance) on an FHA-insurance mortgage with a 97% loan-to-value ratio currently consumes about 42.9% of median income. That is slightly higher than 2006 averages of 41.5%, and well above the longer-term 25%-35% range. n nThe Price of Economic Firefighting n nWhat was so reckless about U.S. economic policy, according to Dobson? A brief refresher on the last decade-plus and the era of quantitative easing is required. n nThe onset of Covid-19 triggered trillions in government spending and ultralow interest rates as the Federal Reserve returned to the playbook that was improvised in the crisis of 2008. While meant to stave off recession and mass unemployment, this “easy money” era sent home prices and rents skyrocketing. n nDobson told Lambert that this set of government and Fed policies, though well-intended, created new winners and losers in the housing market. “There’s a tax on the U.S. economy that’s almost 200 basis points because of the shoot-up that occurred. And the Fed needs to get rid of that tax,” he said, pointing to persistently high mortgage rates and nominal rates that are “probably 1 [percent] higher than they’re supposed to be given the rate of inflation that we have.” n nAmherst’s own analytics show just how far out of reach the average home has become. Right now, he said, “you’re so far away from fair value,” that you can only reach affordability one of three ways: by changing the price of the home, the price of the money, or the income of the family.” An Amherst Group representative provided internal estimates projecting that, for housing affordability in the U.S. to get back in line with 2019 levels, the price of the home would need to go down 35.3%, interest rates to go down 4.6%, or income to go up by about half (55%). None of these is plausible on their own, Dobson told Lambert, and only incremental progress is likely as incomes, prices, and rates gradually realign over many years. u200b n nCredit constraints are another culprit: while post-crisis regulations have shored up mortgage lending standards, they have also squeezed out borrowers with lower credit scores—historically, a large swath of would-be first-time buyers. “Subprime mortgages were serving millions of Americans to get them to buy homes … when Dodd-Frank was passed, there was a maximum credit risk allowed on the table. That only serves the top 25% of the consumer base,” Dobson explained. As a result, lending criteria systematically exclude half the market, leaving many Americans as permanent renters despite wanting homeownership. u200b n nThe reason these were called subprime wasn’t because they were junk, he added, they were simply mortgages for people with below-average credit scores. He asked the crowd if they knew what it took to go from a 745 FICO score to a 645 FICO score: “Two missed payments. You can go from prime to subprime in two months.” After that, it takes five years to get back to prime status, he added. “This whole system of how we decide who gets credit and who gets to decide, and then what we do when the mortgage defaults, is something built in the ’40s.” n nInstitutional Owners and the Rental Shift n nDobson also addressed the growing role of institutional landlords like Amherst. Despite public criticism that firms like his crowd out homeowners, he maintains they instead fill a void left by tighter credit and lower homebuilding. Amherst’s residents often have modest incomes and below-prime credit but aspire to the benefits of suburban homes—yards, schools, and community—even if they rent, not own. u200b “We got involved simply because … the nation is not going to finance [our customers] to live in the home.” n nIn conversation with Fortune, Dobson argued that Amherst’s rise fills a vacuum and his residents are not served by the current mortgage industry. He said many Amherst residents have credit scores around 650 and a small percentage — fewer than 10% — have inconsistent payment histories: “If that was a mortgage pool, it would be a disaster.” Dobson said the model is a needed adaptation to post-pandemic American realities: it finances and upgrades homes at scale and offers housing stability when the government and traditional lenders have retreated. n nAs for solutions, Dobson told Lambert he was skeptical of quick fixes from Washington. He advocated for expanding credit access—potentially through innovative financing or careful relaxation of lending standards—but notes that such ideas can be “the fastest way to end a meeting with a politician.” n nIn conversation with Fortune, Dobson looked out on the future for the economy, his residents and the pursuit of a good life. On the subject of artificial intelligence, he said he thinks its impact on jobs will be most acute for frontline and service professionals, which make up a large chunk of Amherst’s residents. Dobson told Fortune that his average new resident makes slightly over $100,000 (Amherst said the median annual income of new residents is $108,000). And if these residents are working a job “pushing paper and part of the workflow process,” then they could be in trouble, he said.