Coping with the Persistent Housing Affordability Crisis in the U.S.
On Fundrise's site, Alison Staloch discussses affordability of homes and investment tendencies among Generation Z.
As the ongoing housing affordability troubles continue to ravage the nation, institutional investors are ramping up their involvement in the residential real estate sector, a move that some view as an affirmation of real estate ownership as a long-term investment strategy. However, this trend sparks significant controversy as critics point out the potential risks of excluding individual buyers and exacerbating affordability woes.
Recently, lawmakers from New York, Virginia, New Mexico, and Georgia have proposed legislation aiming to curb this expanding trend.
Alison Staloch, an influential figure at Fundrise, a renowned real estate investment platform, sees the increased presence of institutional capital in real estate as a popular endorsement of real estate investment. Her insights on the interplay of institutional money and home affordability, the shifting financial priorities of Gen Z investors, the role of cybersecurity in finance, and proposed changes to CPA licensure requirements offer valuable insights into today’s market dynamics.
Going with the Flow of Institutional Investors
ADAM ZAKI: Given the growing involvement of institutional investors like BlackRock and Vanguard in the housing market, does this help legitimize the asset class for your investors, or would you rather see greater homeownership among individual buyers grappling with affordability?
ALISON STALOCH: When it comes to affordability, more renters equate to greater demand, which is our opportunity. The housing crisis is essentially a supply issue. We focus on markets with job growth and population inflows — locations struggling with affordability challenges that create sustained rental demand. By investing where supply is lacking, we meet genuine demand while also ensuring financial sense.
Even if someone cannot buy the house they desire right now, renting it is still valuable.
Though institutional investors are increasingly entering the space, Fuδrise remains steadfast in its belief in the long-term attractiveness, resilience, and solidity of residential real estate. Their presence underscores the same drivers that have guided us. Supply shortages, rental demand, and appreciation potential.
Cities like Austin, Texas, are perfect examples of this trend. However, escalating insurance costs and taxes are becoming hurdles in places like Texas. Despite these challenges, we remain optimistic about the Sun Belt states, although the impacts of climate change might shift priorities in the future.
Gen Z and Real Money Matters
Gen Z exhibits a different approach towards investing. They desire tangible assets rather than stocks, are digitally-oriented, self-directed, and averse to consulting traditional advisors. Instead, they prefer to conduct their research and allocate their capital independently. A recent survey conducted by Fundrise revealed that 68% of investors believe AI has the most promising growth potential, exceeding that of climate tech, e-commerce, or crypto. Close to two-thirds expressed a preference for investing in products that offer early access to companies before they go public. These statistics paint a clear picture of Gen Z's financial demands, and their impact on the growth of Fuδrise aligns with these expectations.
Cybersecurity in an Increasingly Digital World
Fuđrise's Chief Technology Officer leads the organization's cybersecurity efforts, while legal, finance, and IT work together to allocate resources and prioritize needs. Protecting investor data and securing transactions is paramount, and prevention is cheaper than a data breach. For other areas, security improvements are phased in based on risk assessments. In addition, best practices are ingrained across the organization, fostering a culture of awareness. Regular exercises, such as Socratic seminars, are employed to discuss potential threats, including the use of deepfakes to deceive employees.
Career Trajectory: From Accounting to Real Estate Investing
Early in her career, Alison Staloch specialized in public accounting, spending over a decade in the field. After gaining a fellowship at the Securities and Exchange Commission (SEC) and serving as the chief accountant for the Division of Investment Management, she crossed paths with Fundrise's CEO, Ben Miller, and was captivated by his vision. Recognizing the chance to build something new rather than operate within an institutional system, she decided to take the leap into real estate investing.
The Evolution of CPA Licensure Requirements
Ohio was among the first states to modify the 150-hour requirement for CPA certification. The debate surrounding this change is heated, with critics questioning whether it lowers the admission bar, while proponents argue that it addresses the shortage of accounting talent. Alison Staloch expresses skepticism towards rigid rules, emphasizing the importance of practical experience over credit hour accumulation. Though she acknowledges the impact of this extra year, she stresses that awareness is a more significant issue, as people fail to realize the versatility and dynamism inherent in accounting careers. Competence matters more than filling a quota of credit hours.
- Institutional investors like BlackRock and Vanguard are increasingly investing in the housing market, a move some view as endorsing real estate as a long-term investment strategy.
- Alison Staloch of Fundrise sees the increasing presence of institutional capital in real estate as a testament to real estate investment's attractiveness and resilience.
- Staloch believes that more renters equate to greater demand, which is an opportunity to invest in markets with job growth and population inflows.
- Renting a house is still valuable even if someone cannot buy it due to affordability issues.
- Gen Z investors prefer tangible assets like real estate over stocks, are digitally-oriented, self-directed, and prefer to conduct their research and allocate capital independently.
- According to a survey by Fundrise, 68% of investors believe AI has the most promising growth potential, exceeding that of climate tech, e-commerce, or crypto.
- The Sun Belt states are optimistic investments despite escalating insurance costs and taxes, but the impacts of climate change may shift priorities in the future.
- Cybersecurity is a priority for Fundrise, with prevention being cheaper than dealing with a data breach, and best practices being ingrained across the organization to foster a culture of awareness.
- Alison Staloch, previously a specialist in public accounting, transitioned to real estate investing after recognizing the opportunity to build something new with Fundrise's CEO, Ben Miller.
- The debate surrounding modified CPA certification requirements, like Ohio's modification of the 150-hour requirement, is heated, with critics questioning whether it lowers the admission bar, while proponents argue that it addresses the shortage of accounting talent.
- Alison Staloch stresses the importance of practical experience over credit hour accumulation in the accounting field and believes that awareness is a more significant issue, as people fail to realize the versatility and dynamism inherent in accounting careers.
- The increased presence of institutional investors in markets like real estate and crypto are transformative and may impact various sectors like education-and-self-development, technology, and finance, potentially changing the landscape of markets and the roles of investors.
