Next Step: An Organization Helping People with Sustainable Affordable Housing
Mauricio Chacra: Welcome back to another episode of the Doublewide Dudes. Today we’re joined by Mr. Chris Nicely over at Next Step. Thanks for joining us, Chris.
Chris Nicely: I appreciate it and enjoy the opportunity. Thank you.
Alberto Pina: Yeah, we’re teleconferencing. We’ve got him on a zoom call, looking at him on an iPad and definitely trying to keep up this social distancing, right? A lot’s changed since the last episode aired just two weeks ago. How is this affecting you guys, Chris? What steps are y’all taking to keep your team safe, keep your customers safe, but also keep the business going?
Chris Nicely: We initiated last week a travel ban for all staff. Subsequent to that we saw events starting to be canceled. So, it looks like we made the right decision- we don’t want to be part of the spreading mechanism for the virus. We know that this, in fact, will pass. We would like it to be sooner than later. But we’re in a position where we are always remotely operating anyway.
So we’re able to still stay in touch with our clients and customers, and we’re working them through the process of preparing them for home ownership.
A lot of it is business as usual. Some of the things that we like to do, advocacy and policy wise, we’re not able to participate in simply because that would require us to go somewhere and those meetings are being canceled as we speak.
Alberto Pina: Yeah. You know, it might be an inconvenience for a month or so, but like you said, this is going to go away and we can all just hunker down for a few weeks to a month. We’ll get back to normal sooner than later. Our team’s kind of doing the same thing.
We’re remote first. Similar to what y’all do. So for us, yesterday was a regular day. Do you feel like it was any different on your email with talking to customers?
Mauricio Chacra: No. I was working from home. It’s how we started the business, right? So, it’s back to the roots, but everything was just jiving as normal and we’re going along with it.
Customers across the board are feeling concerned, but again, it’s just natural in a time like this, right? We just gotta go with it, but yeah, everything’s going good. I love the fact that we can work remotely and limit our exposure to put a halt to this.
Alberto Pina: Yeah. And we’ve seen some really cool things, especially with the kids. They’ve extended spring break another week. It looks like they might do that for a few more. One of my kids’ favorite authors, Mo Willems [Editor’s note: James Dean actually writes “Pete the Cat”], who does Pete the Cat, been doing a live broadcast every day at noon to read a story to the kids and then teach them how to draw the characters in his book.
Scholastic’s doing some programs and I think, as a result of this, we’re going to see a lot of really good ideas for education, and all sorts of different ways to continue life as normal at a distance. E-commerce, but for education I guess is what it would be.
Chris Nicely: It’s interesting you bring this up- just a real quick side note, I had a conversation last night about innovation and creativity and how these moments of disruption cause the creative mind to reach out and do things differently. So, I think as a part of what we’re experiencing right now. It’ll be interesting to see the next evolution of some of the things that we take for granted, and how that service or that product is going to be delivered in the future. So, this disruption will always cause some innovation and creativity, and it’ll be interesting to see what comes to the surface.
Alberto Pina: Yeah, 100% agree. Good ideas don’t come up when everything’s going sunshine and rainbows, right?
Chris Nicely: [00:03:50] That’s exactly right.
Alberto Pina: Well real quick, I just want to introduce to our audience who you are and your credentials, Chris. I got to meet you at, I think our HEB kiosk for the first time. Then we got to talking and there’s a lot of similarity and overlap between the mission of your team and what we started Braustin to be all about.
For those of y’all that don’t know, Next Step, and we’ll let Chris talk a little bit more about it, it’s a nonprofit nationwide, and really their mission is to put sustainable home ownership within reach of everyone. We’ll talk more about why that’s important here in a bit.
But as an individual, Chris has been in the industry for a couple of decades, if not a little more. Got degrees from all over the place. College of Wooster’s is where you got your BA, your MBA at Case Western Reserve University, and did some time at Harvard doing some studying over there as well, right?
Chris Nicely: That’s right, they’ll let anybody in.
Alberto Pina: *Laughs* So I would say, probably one of the most educated folks we’ve had on this podcast to date, but I’ve got to ask, what got you into affordable housing in the first place? Why is that your passion?
Chris Nicely: Yeah, that’s, that’s an interesting question because my grandfather was a home builder in West Virginia for decades. And he came from a whole line of builders and furniture makers and that type of thing. And I have had a career significantly focused around the home building industry. But what really got me, and Alberto, you can appreciate this, what really got me is when I became a father.
I started to look at the landscape, especially the housing landscape, and began to worry about the potential of my children being able to buy a home of their own. I saw costs and pricing escalate. I saw wages and resources start to diminish and it really started to bother me that there was going to be potentially a whole generation that were going to be unable to realize the dream of home ownership. And that’s really what fires me up.
Alberto Pina: Having kids, we’ve talked about it a lot. Having kids definitely changes perspective in a number of ways.
Mauricio Chacra: Do you feel like there’s an affordable home ownership crisis in America right now? Do you expect things to get better or worse?
Chris Nicely: That is the key question. And I will guarantee you there is a crisis right now. If you listen to Freddie Mac economists, they estimate that we have a housing shortage of 3.3 million units in this country. And when you examine the 2019 average sales price of a new single-family home, it was $382,000 as reported by the U.S. Census.
And then you look at the home ownership rate at 65% compared to a high of 69% in 2004. And then when you look at this tsunami of demand, there’s 80 million millennials coming into the prime, first time home buyer stage of their lives without the resources or the employment required to buy a home.
And when you look at it, and think about who really can afford a $380,000 home, who can afford a $38,000 to $76,000 down payment to get into that home, or a minimum payment of $2,000 a month for a mortgage- it’s going to get worse unless leadership opens their minds. We have to become innovative and set aside outdated perceptions and consider the potential role that factory-built housing may play.
Yup. It’s about modular and manufactured housing and how it can be delivered to areas of need, and do it in a way that’s delivering affordable housing. That’s the key.
Mauricio Chacra: Hearing those stats about the millennials coming into the home buying journey, with student debt and different things and overall housing expense increasing, and the wages not really being there along with their debts… It’s scary. It’s just crazy to think that that’s actually a real crisis.
Alberto Pina: 100%, we hear it on the phone with our customers every day, and you’re right. Who starting off in their career can afford a $380,000 home? When people think of affordable housing, or our industry, factory-built housing, most folks, and they don’t mean to be malicious about it, but their mind immediately goes to folks that are at or below the poverty line.
But this problem is well beyond that, and it’s now in our middle-class, right? Teachers, first responders, folks that drive cities are now being priced out of home ownership in their cities.
Chris, you used the term sustainable, affordable housing. How do you think that difference differentiates from what people have in their mind of affordable housing, and why do you think “sustainable affordable housing” and that distinction is so important?
Chris Nicely: Well, when we think about sustainable, it really kind of takes on a different context than maybe what many people might think about. When we think of it, and this is a core part of our mission and refers to individuals’ and families’ abilities to stay securely housed.
We want to be sure that the homeowners have the education and the tools and the resources. Things like home buyer education, budgeting assistance, credit readiness, down payment assistance. We want home buyers to make informed choices along the lines of energy efficiency, loan options, and make those for the improvement of their family situation in affordable housing that can be sustained.
We’re focused not only on the purchase price of the house, the acquisition costs of the house, but we’re also focused very, very keenly on that home ownership experience. The cost of homeownership experience. That’s why we insist on things like energy efficiency. Better energy efficiency is going to be lower utility bills.
That money will be saved and can be applied to mortgage and other considerations. So, for us, it’s not only about buying the house, but it’s the cost associated with owning the house after that.
We’re confident from a sustainable standpoint and a capacity standpoint that the industry, the factory-built housing industry, has the capacity to build. They’re building a 21st century product right now, homes built today.
When I take someone in that hasn’t been into a manufactured or module home recently, and I walk them through the front door, it’s an a-ha moment for them. Offsite construction has been with us for decades, and it’s proven itself to produce a better, more competitively priced product built with brands that all of us know in a precision engineered construction process, and it delivers high value homes with significant savings and ultimately, lower prices that are affordable for the home buyer. And that’s the exciting part for us. That’s the sustainable part, is being ready to buy a house and making the right informed decisions.
Mauricio Chacra: I’ve said it before on the podcast, I’ve seen condos or construction next to the apartment I used to live in just being built. And the materials and how they were used and what they did is exactly what they use in manufactured housing now.
So, it correlates to it just being a house on a frame that’s going to be movable, built at the factory, but the materials are all the same. And the quality is still there. And hearing that, Chris, I know you think manufactured homes are part of the solution.
Alberto and I are biased since we sell mobile homes, we’re in the industry, right? But some of our audience has a picture of a rundown 1950s trailer home in their head, and they don’t think of what mobile homes are. What would you say to people that are concerned about the quality of the manufactured homes today?
Chris Nicely: I’ve been in this industry for 25 years, and granted I’m biased as well because I’ve seen firsthand what manufactured and factory build housing can deliver. Imagine the features that you would love to have in your new home. Things that you see on HGTV, like open floor plans, Island kitchen, farm sinks, luxurious master bath, stainless steel appliances, everything that you would associate with a high value home experience- that describes the kind of lifestyle in today’s manufactured homes.
Add to that exterior enhancements that are featured in other homes like higher pitched roofs, gables, concrete block foundations, integrated porches… You get the picture. If you can’t see it, then let somebody take you through a manufacturer, factory build house.
Step through that front door and you will be amazed. It is typical, the reaction of somebody that does that, when they walk through that front door, you open it and they walked through that front door. Their first reaction is, “Ohhhh!”
Mauricio Chacra: They didn’t know it was possible.
Chris Nicely: That’s when they know, when they see what’s possible.
Alberto Pina: Yeah. I remember that myself. I mean, thinking back a little over a decade ago, I almost didn’t show up to my interview in this industry because I didn’t want to sell trailer homes or mobile homes. I didn’t really know anything about them other than what you see on the news or the Wizard of Oz.
And I remember walking into the first factory-built home I’d ever seen, truly seen from the inside, and I was just blown away. I mean, it was nicer than the home my wife and I were living in at the time. A lot of people think, well, that’s a real house. But like we’ve said, they’re all built with the same stuff.
This is just a more efficient process, and that efficiency is what drives down the price, not a lack of quality or lack of safe, secure construction. And I always tell folks it’s just like cell phones. You just look at the transition of cell phones over the last 10 years and what technology has done to that, right?
It used to be the size of a brick and now it fits in your pocket and you can pretty well fly a rocket with it. That same technology has transformed our industry and transformed how these homes are built, and the quality we’re able to bring to this efficient building system.
Chris, for those with more time and resources on their hands, what can they do to bring about or to help with this sustainable housing crisis in their communities?
Chris Nicely: Well, I think the biggest thing is spread the word. We understand those that live in manufactured housing today or elect to make that decision to buy a manufactured home, they get it. They understand it. They see the product that’s being produced today.
Don’t keep that a secret when. You hear somebody casting dispersions on either the manufactured home or the people that live in it. Step back and correct them. And in that conversation about housing, stay open, stay creative, be open to new ideas, listen to others’ experience with factory-built housing and imagine how factory-built housing done right can contribute to the affordable housing program in your area.
So, stay open. Be creative. Relate what you know and what you’ve experienced and give a family an alternative to living in a crowded beehive, multifamily, multistory building, and give them an opportunity to own a single-family home of their own. That’s really the message I would (give). Open your mind. Allow new ideas in to be evaluated for their own merits. And I think you’ll be pleased with what you see.
Alberto Pina: Yeah, that’s huge. I think part of the problem we’re seeing, and I know y’all see on a national level, is I think everybody agrees on both sides of the fence that affordable housing is something we need as a society in our communities. But a lot of times we see this “not in my backyard” kind of mentality where folks that may be able to afford some of these $380,000 homes, they want the people in their community to have affordable housing, as long as it’s not their next door neighbor.
Why do you think that is, Chris? I know we’re off script a little bit, but I think you’ve got the answers.
Chris Nicely: It’s disappointing to see some of the municipalities that are zoning manufactured housing out there based on their understanding of the product and the people that are living in the homes to something that was 30, 40, 50 years ago.
It’s unfortunate that they drive by homes that are 50, 60 years old and they interpret that to be the product of today, and they’re not open minded enough to look at the facts and look at the product itself and talk to people that are realizing this dream of American home ownership.
So, I think that closed-minded effort to protect status quo is where a lot of progress is being stymied. And I think that that’s why we need to consider or continue to be open to new ideas. If it’s not working now, if you don’t have affordable housing, if you can’t afford a home, open your mind to something a little bit different.
Take a look for another time. If you looked at it 10 years ago, look at it again today and see what you can get.
Alberto Pina: 100% agree. And again, I was one of them 11 years ago. I just didn’t know my own ignorance. I didn’t know what this product allowed for families. And in a lot of ways, that’s kind of how Next Step got started, right? Y’all were founded by Stacey Epperson when she saw a lot of working-class folks out in Appalachia, struggling in poor housing, and from what we read online, she wanted families to have access to high-quality, energy efficient homes. All the stuff you’ve talked about. What are you and your team doing at Next Step currently to help people access affordable housing?
Chris Nicely: Well, Stacey Epperson is still a part of our organization as founder, and she still continues to be a visionary for housing and affordable housing and really believes in manufactured housing done right.
The efforts that Next Step is taking on, on a national scale, is we’re building houses with partners all across the country, whether that be in San Bernardino, California, Phoenix, Arizona, San Antonio, New Orleans, Indianapolis, and even small smaller towns like Danville, Virginia and La Grange, Texas.
We’re trying to make sure that manufactured housing done right is delivered to a local family in need. The other thing that we’re doing is working with Freddie Mac and Fannie Mae, to ensure that there are fair loans for buyers of manufactured housing. That there are lenders out there increasing number of lenders that will have mortgages and loans available for families that want to buy a manufactured home. So, we’re working with Freddie Mac and Fannie Mae to deliver those kinds of products.
And finally, through our Smart MH Program, we’re working with home buyers themselves. And we’re trying to help them understand what they need to do to buy a home of their own and then get them the help they need to buy that house. It would include things like home buyer education, down payment assistance, credit assistance. All of those programs are wrapped up into the Smart MH Program that gives homebuyers the help they need to buy a home of their own
Mauricio Chacra: That guidance is crucial, and I’ve been sending clients to that program. If we get in a position to be able to have a conversation, a realistic conversation, to where they didn’t find guidance anywhere else, I’m going to take the time to do that.
It doesn’t matter how long it takes from me. Anywhere else they’ll go, they get a hard no, and they give up that year. Come back the following year, things are looking up and depending on what type of dealers or people you get in front of… Most people, if they can’t help you right then and there, they’re just going to (say) “kick rocks,” right?
So that’s unfortunately what some of these potential homeowners come across. Which is why I refer everyone to the Next Step program, right? To where it’s “Hey, right now, financially or credit wise, you’re not in a position to buy, but we’re going to help you get there, and these people are going to help you do it.” So, I think that guidance is incredible and I’m excited to offer it to homeowners.
Alberto Pina: Yeah. And it’s big, coming from a national nonprofit- there’s a lot of credit counseling and credit repair out there that are very much for-profit. And you just feel a difference. There’s a lot of them that I’m sure have great intentions, but if your business model is driven around making money so you can turn a profit as a business, you can’t always necessarily give the best guidance.
Whereas a team like yours, Chris, it’s a nonprofit, and it’s truly with the customer’s best intentions at heart. Y’all don’t have a dog in the hunt as far as who they bought from, how they buy. It’s all about getting them ready to stand on their own feet and become a homeowner on their own.
Chris, before we sign off, you mentioned y’all’s work with Freddie Mac and Fannie Mae, and this year’s just been huge as far as this new program, MH Advantage, and I know your team has put a lot of time and effort over the last few years to get that to the point where it is today.
And we could probably do a whole episode just on that program. We probably should, right? We gotta get Chris back, but just real briefly, for those that don’t know that are listening, Chris, can you kinda touch on what that is and why that is so huge for all the problems we’ve been talking about today?
Chris Nicely: It recognizes the advances in manufactured housing through these loans available from Fannie Mae and Freddie Mac. Fannie Mae offers something called MH Advantage. Freddie Mac offers something called Choice Home and it recognizes the 21st century manufactured home.
And it will require certain features in the home, like a high energy efficiency, a higher pitch rough, drywall throughout, a lower set, a covered front porch. Those types of features will be key elements to those loans. But for a buyer, what’s critical is a couple things.
One, it’s going to be a competitive interest rate. So that means lower payments.
Two, it’s a 30-year term, with a longer term, that also contributes to lower payments.
And three, the appraisal process, which doesn’t sound like a big deal, but the appraisal process allows site-built comps to be used when putting together comps required for your loan. And the biggest thing is these loans are available for as little as 3% down. So, combining affordable housing, lower payments, competitive rates, and 3% down…it’s an incredible step towards affordable housing, and it’s an incredible boost for those buyers that are considering manufactured housing. And with all those things combined, it’s very, very exciting.
Alberto Pina: I was showing the team, when you look at these homes, what these new class, cross mod, so many different names, I think as an industry we’re trying to figure out what we’re going to call them, but to someone that didn’t know any better, you can’t tell they were built in the factory. Attached garages, the roof pitch, they look like what most folks would consider traditional housing.
Like I said, we probably need to get you back Chris and do an entire episode on this program, because it’s going to change our industry. But more than that, I think it’s really gonna elevate our industry and allow us to solve the problems our industry is here to solve.
Chris Nicely: And the interesting part about it, Alberto, is that these houses will be delivered, still, at anywhere between 15 and 20% less cost than a similar site-built home. So that’s the key. So, yeah, that’s huge.
Mauricio Chacra: Well, if folks want to know a little bit more about Next Step, Chris, and what you folks are doing over there, where can they find you and where can they start?
Chris Nicely: Well, start on the internet, like we do with everything, and then look up https://nextstepus.org/ and let’s get started. Let’s do something together.
Alberto Pina: Well, thank you so much for joining us on the podcast, Chris. Folks, if you’re listening and you have questions on how to get in a position to become a homeowner, they’re a great resource. And if you’re listening and you’re just an advocate of our industry and looking for a way to get some tax write offs and donate to an awesome nonprofit, definitely look these guys up. They’re doing some amazing work.
Mauricio Chacra: Thanks a lot, Chris. All right, thanks for listening to the podcast. We’ll talk to you soon.