Doorify Real Estate Podcast

Breaking Down the Housing Affordability Index with Matt Fowler

• Doorify MLS • Episode 80

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Housing affordability has shifted dramatically in recent years, and understanding the numbers behind it is crucial. The Affordability Index measures how accessible homeownership is, and in the Triangle, it's telling an important story.

In this episode, Matt Fowler, CEO of Doorify MLS, breaks down the Housing Affordability Index—what it means, why it’s changed, and what we can expect moving forward. Matt shares insights from Doorify’s extensive market research, including trends from their latest 2024 Year-End Affordability Index update.  

We also explore the role of zoning regulations, smart growth policies, and data-driven decision-making in shaping the future of housing.

Tune in to hear Matt’s expert take on what’s happening now—and where the market is headed next.

Specifically, this episode highlights the following themes: 

  • How the Doorify Affordability Index measures housing accessibility in the Triangle
  • The key factors affecting home prices, mortgage rates, and income levels
  • Smart growth policies and data-driven solutions for improving affordability

Links from this episode:

1ae5b43598204883b524f061d4880e6d10fca88c (for podfollow.com)

Matt Fowler [00:00:00]:
What Doorify wants to do is we want to point to people like unc, Kenan Flagler, and point to people like the Urban Land Institute that are talking about smart growth policies. And we want to, along with the national association of Realtors, which has a significant investment in this, we want people to know that we're providing data to those organizations trying to get to a place where we can make smart land use decisions.

Andrea Presnal [00:00:32]:
Hi, everyone. Here is another episode of Doorify's podcast. Welcome back. We are joined by Matt Fowler today. Have you ever wondered what the Housing Affordability Index actually means? Well, we have Matt Fowler breaking it all down for us. What it is, how it's changed over time, and why it's just such a useful tool for understanding our market. So thank you, Matt, for coming on and talking to us about this. Let's just dive right in.

Andrea Presnal [00:01:06]:
So we recently posted a blog post that highlights Doorify's Affordability Index. Can you elaborate on what specific actions Doorify is taking to address the affordability challenges faced by potential homeowners in and around the Triangle?

Matt Fowler [00:01:25]:
Yeah. Hey, Andrea, this is such a hot topic. You know, we do a quarterly podcast with the Kenan Flagler School at UNC Business School. And there's also a blog post out there@dorifimls.com from Eric, one of the professors over at UNC, and this is really his field of study. And what we do at Dori is we just measure everything. So we have 2 million home sales going back to the mid-90s, including $20 billion worth of real estate sales that just came through the Doorify network just last year. And what we do is we don't, you know, build houses or sell houses. Doorify is a broker cooperative made up of about 3,000, all 3,000, essentially real estate brokerages in the Triangle.

Matt Fowler [00:02:07]:
And we help them facilitate the listing and then the recording of the sale and tracking that data that we share with policymakers and leaders. And we used to publish the Doorify, used to be the Triangle Affordability index for all 16 counties. And as you can see, like one number for all 16 counties. And as you can see on the blog post, we now publish it for each county with its own number. Wake county is currently at 74 when we published the last one. And what that means is that the housing index is. Is made up of three, like legs to a stool. And it means that in Wake county for the month of December, I guess this is for all last year, it's the average homeowner had 74% of the income necessary to buy a median priced house.

Matt Fowler [00:02:58]:
So it's median income, median home price and the mortgage rates. So that's the three variables in the formula. And before about 2022, right after Covid, the index had never been below 100, which is really the most interesting part of this. I think when you zoom out 20 years, the index going back as long as we have data had never been below 100. And that means that median income people have never found the median income home hard to buy until four years ago. And since then it's really gone down dramatically and then fluctuated around 70. So it's been as low as 68. Now it's up to 74 in Wake county and we're knocking around 70.

Matt Fowler [00:03:42]:
We're not headed back up to 100. For that to happen, income would need to go up and prices and rates would need to remain stable or one of those has to change in order for the index to get better.

Andrea Presnal [00:03:53]:
So what would you say when you're looking at this, are the two, two to three key metrics that are most crucial for understanding kind of the state of where we are?

Matt Fowler [00:04:04]:
I think you have to start with supply. So if there aren't enough houses on the market to go around for people, they become expensive. So you know, income, median household income is going to do what it does. And you know, a regional housing index can't do anything about that. Government can't do a lot about people's income. Right. So we also have mortgage rates as another leg of that stool. So mortgage rates are going to have to come down.

Matt Fowler [00:04:30]:
All the intelligence that we have looking forward shows that they're not going to come down dramatically. We don't want them to come down to the, to the stimulative rates that we saw during COVID because that was done by the central bank in order to stimulate the economy after a horrendous global shock of the shutdown. Like hopefully that doesn't happen again so we won't have to have those rates again. That means they're not going to go below probably six. They may fluctuate into the upper five, say five and a half to seven and a half. Looking out the next 24 to 48 months, no one has a crystal ball that works, but no one expects, no one that I talk to in economics expects those rates to trend outside of that range.

Andrea Presnal [00:05:11]:
You mentioned that inventory is slowly increasing. What factors do you think contribute to this slow growth and what impacts do you see foresee on the market in the Short and long term.

Matt Fowler [00:05:26]:
Yeah, that's such a, that's such an important topic, Andrea. You know, you hear people in the media talking about zoning committee meetings and announcing these new developments in Garner and in Johnston county and Chatham. The building regulations, zoning regulations in the building codes vary across the 16 county coverage area where we operate. And it's easier to build in some places than others. And the supply is clearly going to be met, as it always is, by an intensive building that's happening. Drive down the road, you see it. What Doorify wants to do is we want to point to people like unc, Kenan Flagler, and point to people like the Urban Land Institute that are talking about smart growth policies. And we want to, along with the national association of Realtors, which has a significant investment in this, we want people to know that we're providing data to those organizations, trying to get to a place where we can make smart land use decisions.

Matt Fowler [00:06:26]:
We're going to have more condos, we're going to have more affordable houses. We're going to have more upper end houses. The median price in Chatham county is now in the 600s, so that might be affordable for some people, but it's clearly not for people looking in the 2002. And there needs to be a lot more of those. And we want to put them in places that are smart to put them based on utilities, schools, transportation. That's a super complicated thing to do across an uneven web of judicial regulations across this 16 county area. So we're one of the only agencies that goes across the whole place that we're active in all 16 counties. We have subscribers in every little town.

Matt Fowler [00:07:11]:
And they're in these zoning committee meetings. And we're seeking to empower them with all the data that we have to go into their local communities. Our subscribers, the real estate brokers that are small businesses and you see at the grocery store, they have the power of our technology behind them and we know what the truth about demand and supply really is on an every day, every hour basis. And what we're trying to do is share that information with decision makers so we can live in a better tribe.

Andrea Presnal [00:07:41]:
So how, how does the Triangle housing market compare to other similar markets in the US and what, what can we learn from those competitors?

Matt Fowler [00:07:52]:
Well, so how does it compare? First, we are benefiting from really significant inbound migration. Eric and his article at UNC talks about that quite a bit. And we're North Carolina, specifically, the Triangle area in eastern North Carolina are some of the highest rates of inbound migration. People moving Here to work remote or just to work here or to be with closer to family. North Carolina is well positioned in the job market and geographically and that's fueling a lot of. Of our growth. So even in a down economy, if we were to have one in the next cycle or three, North Carolina is better suited, better situated to than, than many economies. You think about Cincinnati, Las Vegas, people, places where there are significant percentage of excess inventory.

Matt Fowler [00:08:44]:
In the past there's been a lot of building there. There has been a lot of building in North Carolina for a lot of different reasons, mostly regulatory. So I think we're, we're looking to grow both our subscribers. We think the summer is going to be a high watermark for price. Certainly if you're thinking about selling your house, I think it's a pretty good time. If you're thinking about buying, it's just always expensive to wait. You know, what's the best time to plant a tree is always 40 years ago or today if you haven't done that, it's a steady stair steps up. So I really want.

Matt Fowler [00:09:15]:
I know Andrew, you bought a house and you've benefited from, from that equity creation that you see happening. My daughter has a really, you know, dramatically. You buy a house, you sit on the couch watching television and all of a sudden you've got a lot more money when you get your house appraised. And I think that's just amazing. And we want that for everybody, you know, for. Right, for all Americans. That's the point of housing accessibility and affordability. Is trying to advocate for more development but in the right way.

Matt Fowler [00:09:42]:
And then you said, what can we learn from other places? I think if you drive through Atlanta or throw some shade at Charlotte, you drive through Charlotte, I don't want to live there. It's sprawl like crazy. And you know, Charlotte kind of ate the little towns that it grew. It grew into Atlanta did too. You know, you think about Paces and Roswell, little towns that used to be kind of have a quaint little downtown and they were their own destination when they're not so much anymore. That's what I think about the triangle. We have these really special little, you know, little county courthouses. There's 16 of them surrounded by little shops and there's other little towns around that have that, that small town way of life.

Matt Fowler [00:10:25]:
But you're still 12 minutes from RDU and I think we want to preserve that. And we want, yeah, we want people that work in our stores and service industries not have to drive 80 miles to get to, you know, a nice place to live for their, them and their families. That has to be created. You know, it, I guess it, it grows organically sometimes, but it's really incentivized and encouraged by the regulations that we have. And I'm not, I'm not saying remove regulations. As a radical libertarian economist I just spoke to at a conference was, was saying like we have these environmental regulations, the, the stairwells have to be certain size in order to protect people from fire. And that's not a, I don't see that as a, you know, horrible government intrusion into construction. I consider that, you know, the place doesn't look like I'll throw more shade at someplace like Mexico City or, you know, where the building regulations don't look like ours.

Matt Fowler [00:11:23]:
We don't want our cities, I think, to look like the worst places. So that's my answer. We can look and see how it's been other, other places. And I think what's going to happen is the different communities are going to adopt regulations that will be more or less successful going forward. I think we should keep an eye on the ones that are doing well. I think Durham's ADU policy, for example, is particularly successful and we need to repeat that. We need to tell Chapel Hill and Garner that these policies worked and they did allow people to build affordable housing in urban core or in the downtown area and we should try to do more of that. Maybe I think it's Doorify's role to maybe amplify the things that are working and say that houses that have the word greenway in them sell for more than houses that don't because people value greenways.

Matt Fowler [00:12:14]:
That's information that I think we have and we can share with, with people building houses and renovating houses and maybe we can make data driven decisions that would let us build a better Raleigh or build a better Chapel.

Andrea Presnal [00:12:27]:
Well, that leads me to my next question. How does Doriphy plan to leverage its engineering level data analysis to further empower our real estate professionals in navigating this market? Like, are there any new tools or resources being developed? Because I think knowledge is power. Right? And that's what we always want to do at Doorify, to help our, you know, real estate professionals make the best decisions while navigating the market. So how, how can we empower and leverage this to help them?

Matt Fowler [00:13:03]:
Yeah, I guess most of our focus, Andrea, and you know, you and I work on this every day, but most of our focus is on the accuracy and completeness of the data and those are Those are two different things. And we're, we're about to launch a new product and you process as well as a new product that is going to use. It's already kind of being tested and it's up and running in Atlanta. It looks like it's going to work for us. But it uses AI to study the images, the video or the, or the photographs that you've taken, as well as a collection of databases that we have access to across the Internet. You can think of it as like the car facts of houses we have access to and we've built a lot of this ourselves. So when somebody, you know, lists 104 Oak Street. They put that into our database and we give them like they know a lot about it.

Matt Fowler [00:13:54]:
The realtor's been through the house, but we add things that they may not know about it and things that may not be immediately discoverable by the realtor. So we have a database that tells us if fiber is hot at that house, not if it's available in the zip code, but if it's turned on at that like in that house. Fiber Internet. We know if the property is eligible for down payment assistance for people who may income qualify into a program that would give them 10 to $16,000 to, for their down payment as a grant. Like if you're a home buyer and you don't know that the house you're looking at is actually $16,000 cheaper for you if you had, if you knew about this program. So we notify the realtors about this, we notify the home, the buyers about this when they're just shopping. @Doorifymls.com we also clean the data and from the photos we fill out the form. So the form has the things on it that buyers can search for like Internet, yes, no or fiber, yes, no or green building score that says this house has certified it to be inexpensive to own because of its green building score.

Matt Fowler [00:15:08]:
It doesn't have some super old expensive heating thing to use. And you don't need to know about all that even as the buyer or the realtor. We'll help notify you about that when you, when you create the listing and then we go out and compare it to all the other properties that we have. Again, we've got this 2 million record database that we're now using AI to study and make suggestions to the realtor. So when you load listings in the IR system we can tell you about that greenway in the remarks we can tell you about about the property in a more complete way. We can also tell you about how that property is going or how the transaction may work out based on what we're seeing in the marketplace. The, the clicks that we see online, the number of times that property has been emailed to someone to, to, to. That's an indication of demand.

Matt Fowler [00:16:01]:
Whether the property has multiple showings scheduled or if there are multiple offers open on that property. All those things are in our data set. And as we learn through those things, this is something that we can share back with the subscribers as they put listings in to further optimize how that works. If you've used Etsy or sold on Amazon or ebay, they have these very simple techniques built into the, into the A process and they're just kind of coming to the MLS world. But you'll start to see, start to see that happen. And data science is called data amplification, where you use this consumer data to, to talk back to the creation of the data and it creates that, that loop adds a lot of value.

Andrea Presnal [00:16:46]:
All right, well, kind of closing out here. Looking beyond 2024, what are the biggest opportunities and challenges you see for the Triangle housing market? Doorify preparing for them?

Matt Fowler [00:17:02]:
Yeah, it's, it's finding a place to put affordable housing. Finding developers who want to invest in building, you know, units under 300 in our markets, occasionally under 200, if it makes sense. And doing that in a, putting it in a place where people, you know, can still get to work and get to schools and it's walkable. Putting it in a place where the local communities will, you know, will accept and include that into the fabric of the, of the community is something we want to advocate for, is really. It's about development, smart development, but development. It's going to, the development is going to happen, but we'd like it to be, we'd like to have it create a thoughtful result, not a, you know, completely organic result. I think we've all been in places where the building requirements for just the drugstores and gas stations, you know, are different and they match the local environment. More thinking of places like Park City and Asheville to some extent.

Matt Fowler [00:18:03]:
Right. They've had some regulations up there that I think have maintained the created value in the, in the community I mentioned. Durham too is doing better with first time homebuyers than there's some other places because of that ADU performance. So that's really. It's about supply. I think the mortgage rates are going to stay roughly where they are. I think income will probably inch up next year in 25, but it's the supply that's constrained by regulation, constrained by the rates, constrained by land cost and availability. So those are things that we just want to watch as time goes on.

Matt Fowler [00:18:36]:
And maybe watch Doorifymls.com for stories that come from from UNC and other guest bloggers and from us, hopefully shining a light on the success stories that are providing this affordable housing in the Triangle. We'll keep trying to tell that story well.

Andrea Presnal [00:18:52]:
Understanding the Housing Affordability Index is honestly key to navigating this market. We know it's ever changing and we encourage all of you to explore the data further. Stay informed about these important trends. Thank you Matt Fowler for sharing your expertise on Housing Affordability Index. We appreciate your insights and your valu valuable information that you provided. Be sure to subscribe like and give us, you know, your feedback and thoughts on this podcast and we look forward to seeing you next time. Thanks so much.

Matt Fowler [00:19:28]:
Thanks Andrea.

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