An Interview With Jason Hartman
Home builders cannot plan communities if they do not have the right land positions. The more homes that can be added to the housing supply in the United States, the more affordability will improve. Our team identifies land positions outside the circumference of larger cities in suburban areas where land prices are typically more affordable– this assists our home builder clients in building homes at a more affordable price point. The top home builders are also focused on continuing to find ways to build homes at an affordable price point to help alleviate the housing shortage and provide housing that is attainable by the largest potential number of buyers.
In many large cities in the US, there is a crisis caused by a shortage of affordable housing options. This has led to a host of social challenges. In this series called “How We Are Helping To Make Housing More Affordable” we are talking to successful business leaders, real estate leaders, and builders, who share the initiatives they are undertaking to create more affordable housing options in the US.
As a part of this series, we had the pleasure of interviewing Anthony Sparrow.
As Executive Vice President, Southeast USA and Mid-Atlantic at Walton Global, Anthony Sparrow is responsible for overseeing the day to day duties of asset management including planning, zoning, operational management and disposition of all raw land assets. Prior to joining Walton in 2016, Mr. Sparrow was a principal in his own development company, using his experience in community development to develop multiple communities in the Charlotte, North Carolina market. He has been a licensed broker since 1984 and has been involved in developing several golf course communities.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?
Iwas always intrigued by various types of developments and all the nuances that went into the building process for homes, communities and business parks. I wanted to turn my interest into an actual job and the real estate industry was a natural path. My goal was to have the ability to participate in building structures that would be around for a long time, so I started my career in the commercial real estate industry and eventually transitioned into residential.
Can you share the most interesting story that happened to you since you began your career?
I have been working in real estate for the past 40 years, so going through the various cycles and downturns in U.S. real estate over the past four decades has made me into who I am today.
In the late 1980s, the office market crashed. I was in the commercial office building market at the time and had to maneuver through low vacancy rates and slow lease ups. It was a difficult time, so I had to reinvent myself and decided to move into residential real estate. I established a track record in residential land development, and I was getting comfortable in that role, when another downturn hit: the Great Recession from 2008 to 2011. I was working for a development company at the time that decided to shut down the operation and I found I was in a position again where I had to think outside of the box and reinvent myself. I decided to start my own development company called Harvest Real Estate Advisors. My company handled lender-owned properties called REOs, that were properties that didn’t make it to foreclosure. This gave me a lot of exposure to available land. Between the bank work-outs and land development, I was able to produce and sell 900 to 1000 lots, even in the downturn. After my third development, I was introduced to Walton by a previous colleague. I liked the business model, so I exited my private development company and joined Walton. I have never looked back.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?
My experiences have given me an in-depth understanding on what it takes to survive in business and how to be successful. It helps me recognize that if you work hard and hit adverse situations head on, adapt and stay focused, you can be successful and achieve your goals.
Starting my own business in the middle of one of the biggest downturns in U.S. history wasn’t easy, but I was successful. It was a confidence booster and the challenge made it that much more rewarding for me.
None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful who helped get you to where you are? Can you share a story about that?
I believe there are key people that come in and out of your life that teach you something along the way. For me, it has been a combination of people and the individual experiences I had with those people.
It started back in high school when my sophomore English teacher helped me develop a strategy to sell tickets for a high school dance — that was my first introduction to sales. A second experience that set the foundation for my career was with my manager from my first sales job. He was adamant that I thoroughly practice my presentations without an audience before I presented. The ritual of going over and over the material and my delivery made me a good presenter — that has been key to what I do. There are many other people who I am truly grateful for, and I continue to come across these important types of people in my life.
Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?
A book I read when I started working in business that had an impact on me was, “When All You’ve Ever Wanted Isn’t Enough” by Harold Kushner. The book essentially talks about what happens when you have business success but realize that it is not everything you thought it would be. It is an inspiring read that got me to a point to be introspective on mind, body and soul every day. This book helped me be thankful for what I have achieved while being thankful for all the other blessing in my life.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
My life lesson quote comes from my current CEO, Bill Doherty’s grandfather: “Don’t shy away from difficult situations, there is often times opportunity within them.” I don’t know if it’s an original quote, but it is very relevant to my entire career.
In real estate, there are constant situations that can set you back. Slowdowns in the market, time delays to obtain approvals from municipalities, supply chain issues, mortgage rate fluctuations, infrastructure challenges, zoning modifications and negotiations with builder groups. The absolute best thing you can do is hit challenging situations head-on and find a way to create a solution. Finding those solutions often leads to additional opportunities. I truly focus on that quote and don’t shy away from difficult situations. You tend to achieve more if you can get over the hurdles and tackle the hard stuff. Difficult situations come in many forms in your personal life and professional life. Hopefully, when you are upfront and honest you can gain some respect along the way.
Ok super. Let’s now shift to the main part of our discussion about the shortage of affordable housing. Lack of affordable housing has been a problem for a long time in the United States. But it seems that it has gotten a lot worse over the past five years, particularly in the large cities. I know this is a huge topic, but for the benefit of our readers can you briefly explain to our readers what brought us to this place? Where did this crisis come from?
The position that the United States is in right now as it relates to housing really stemmed from the Great Recession. The roughly 4-to-5-year period between 2008–2012 created a perfect storm for the country. The resale market had an abundance of foreclosures and short sales, home values plummeted, and people were losing their jobs. At the same time, the new home market was hit hard. Many home builders who had robust development plans that used past production in the early 2000s to forecast their 5-year plans, were left in the dust with a large excess of home and land inventory that they heavily invested in. It was a time where only the fittest could survive — many smaller home builders, merchant lot developers, and affiliated real estate companies went out of business.
It took time for home builders to get past that and reconcile their inventory. For Walton and our land assets, we experienced cancellations on many of our land deals and rejections from home builders from what we thought would be a healthy pipeline of land buyers for our land that we acquired. We found ourselves in a similar situation as the home building industry: deals that we thought would be purchased and exited in about 5 to 7 years, didn’t have a buyer.
As many home builders were recovering from that time, they scaled way back on their home development plans and were building significantly less homes — they were proceeding with caution for good reason. Many studies show the home building slow down lasted from about 2009 to 2019 — a full decade.
While all of this was happening, the United States did not stop growing in population and in migration from other countries. Children that were born in the 80s and 90s formed the country’s largest generation today: the millennials. People in this generation are now getting married, having children and forming new households. This has created another perfect storm for the United States that we are now experiencing — more households needed than what’s available — a housing shortage that is extenuating home values and affordability for many Americans.
Can you describe to our readers how your work is making an impact to address this crisis? Can you share some of the initiatives you are leading to help correct this issue?
A shift in the home building industry happened during the past decade. Prior to 2009, many home builders purchased large tracts of land themselves and held it in their pipeline until they were ready to build homes. As a residual from the Great Recession, public home builders are now scrutinized by Wall Street if they carry too much non-revenue generating inventory on their balance sheets; holding land that is not being developed falls into that category.
Today, many public home builders have adopted a “land-light” strategy, meaning they prefer not to fully acquire land needed to develop a community until they intend to build homes, so they can free up capital to expand market share. Instead of purchasing land themselves, many home builders are turning to “land bankers” to purchase land for them until they are approaching the home building stage.
In 2019, Walton evolved our business to support the growing land light strategy that is often referred to as “just-in-time inventory.” In years past, we identified land in the path of growth, acquired it and then we reached out to a home builder or developer to purchase it. Since 2019, we continue to find land in the path of growth, but we reach out to home builders or developers and secure a land buyer before we acquire the land — using a land banker strategy. Providing land in this “just in time” manner allows builders to use their capital more efficiently to put lots and homes on the ground versus carrying land they aren’t ready for.
Walton has more than half of the top 20 public home builders as our clients. I lead a team of asset managers who cover 31 regions across the country, mostly in the Southern states near large cities experiencing growth, who are on the ground supporting home builders to get them what they need as it pertains to land, so they can get to a point of developing lots and building homes. This includes collaborating with city jurisdiction to get proper zoning and entitlements, work with the home builders’ engineers regarding the design of communities, plan home development phasing, review financial models and develop home pricing. We work alongside home builders for essentially every aspect of the building process to get lots on the ground and new homes to the market.
The resale market is the tightest it has been in history. Since mortgage rates started to increase last year, Americans who own homes want to keep their low mortgage rate of 3–4 percent. Other Americans who don’t own a home or had a life changing event where they must move, still want to own a home. A combination of the housing shortage, that is projected to last for the next decade by many economists, and the tight resale market is driving people to the new home market.
Home builders cannot plan communities if they do not have the right land positions. The more homes that can be added to the housing supply in the United States, the more affordability will improve. Our team identifies land positions outside the circumference of larger cities in suburban areas where land prices are typically more affordable– this assists our home builder clients in building homes at a more affordable price point. The top home builders are also focused on continuing to find ways to build homes at an affordable price point to help alleviate the housing shortage and provide housing that is attainable by the largest potential number of buyers.
Can you share something about your work that makes you most proud? Is there a particular story or incident that you found most uplifting?
I have been with Walton Global for nearly nine years. Being part of the business evolving to what it is today from when I started has been the most rewarding experience in my entire career.
The process of being strategic, consistently reviewing what is successful, and creating solutions that adapt to the changing market, is the most unique way for Walton to serve this industry. It is also the best way for our company to create value for home builders and our investors. I am proud to be a part of forming valuable relationships with the top home builders in the United States and to continue to find ways to provide “just in time” land inventory for them so that housing demand and affordability can be met. We have a lot of activity in front of us, and I’m looking forward to tackling it with them.
In your opinion, what should other home builders do to further address these problems?
I believe we collectively need to work with jurisdictions to further educate each other on current buyer trends and the challenges associated with those trends from a governance perspective. We need to work together to identify what the American public want in their communities, and then figure out how that can mesh with the demands on local government.
Consumer preferences in a home have changed. For example, many home buyers aren’t looking for big lots because they want less yard work and more time for recreation. They don’t want the upgraded materials such as “all brick” at the cost of affordability, which is top of mind for most home buyers combined with ease of living and low maintenance.
I worked with a home builder that shared that roughly 37 percent of a cost of a home was related to government regulations and reporting. In my personal experience, I recently submitted an application to a jurisdiction and the cost was three times higher to submit the application than three years ago.
Can you share three things that the community and society can do to help you address the root of this crisis? Can you give some examples?
In my opinion, there is room for jurisdictions across the country to review their guidelines and regulations to ensure it is tailored to what home buyers want and need. For example, a story was shared with me recently where a jurisdiction rejected town homes in an area adjacent to their downtown and wanted single-family homes instead in the community. A key buyer type for that area is millennials that often prefer town homes, as there is less maintenance. Town homes would have been higher density, more affordable and would have provided more people with disposable income within walking distance of local businesses. This community could benefit from the higher density of homes.
Growth is moving further out from the city’s core, so long-term infrastructure planning for water and sewer to accommodate growth is also necessary from governmental entities.
At the same time, residents living in existing communities can be more open to what type of new developments are proposed in their area and to the needs of today’s buyers. Residents may not want to deal with additional traffic or what they think may be higher property taxes, but growth can be positive.
I was sitting in a city planning and zoning meeting last month where the surrounding neighbors were fighting the council on entitlements for a new community. Just before the entitlement hearing, the council recognized a group of young ROTC graduates from the local high school. I sat and watched both meetings and I thought about how we are building new communities for the generations that will come after us. These communities will support the school children that will replace these graduating seniors. Without new families in the community, it will only age and lose its vibrance. We need to work together to plan for future growth.
If you had the power to influence legislation, are there laws which you would like to see introduced that might help you in your work?
First, pass legislation to support grants and funds for basic infrastructure for roads, water and sewer at the federal and state level. Those funds should be strictly allocated to municipalities for those specific uses.
Second, pass state legislation requiring local jurisdictions to focus on infrastructure needs and public safety including roads, fire, police and utilities versus architectural styles and amenities. Right now, there appears to be more focus on what builders can build and the styles of homes, materials, etc. versus the basic infrastructure and services needed to allow more communities to be built.
What are your “5 things I wish someone told me when I first started leading my company” and why? Please share a story or example for each.
- The facts are not always obvious, dig to make sure you have them.
- Never get a laugh at someone’s expense without getting their permission first.
- Seek to understand before seeking to be understood.
- Hard work brings a lot of luck.
- Things are never as bad or as good as they seem.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I believe we should have term limits and a mandatory retirement age on all elected officials in the United States. There was a time when our civil servants were states people. They had real jobs and served long enough to make an impact and then went back to their professions. This created a steady flow of fresh ideas from new people and limited special interests. I believe we have lost that in our country. That is a simple change that can bring new and evolving ideas.
Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might just see this, especially if we tag them. 🙂
Winston Churchill. He tackled one of the most daunting tasks in the history of Great Britain and succeeded.
How can our readers further follow your work online?
I can be found on LinkedIn.
This was very meaningful, thank you so much, and we wish you only continued success.
About The Interviewer: Jason Hartman is the Founder and CEO of Empowered Investor. Jason has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. Empowered Investor helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Through Jason’s podcasts, educational events, referrals, mentoring and software to track your investments, investors can easily locate, finance and purchase properties in these exceptional markets with confidence and peace of mind.
Starting with very little, Jason, while still in college at the age of 19, embarked on a career in real estate. While brokering properties for clients, he was investing in his own portfolio along the way. Through creativity, persistence and hard work, he earned a number of prestigious industry awards and became a young multi-millionaire. Jason purchased a California real estate brokerage firm that was later acquired by Coldwell Banker. He combined his dedication and business talents to become a successful entrepreneur, public speaker, author, and media personality. Over the years he developed his Complete Solution for Real Estate Investors™ where his innovative firm educates and assists investors in acquiring prudent investments nationwide for their portfolio. Jason’s sought after educational events, speaking engagements, and his popular “Creating Wealth Podcast” inspire and empower hundreds of thousands of people in 189 countries worldwide.
While running his successful real estate and media businesses, Jason also believes that giving back to the community plays an important role in building strong personal relationships. He established The Jason Hartman Foundation in 2005 to provide financial literacy education to young adults providing the all-important real world skills not taught in school which are the key to the financial stability and success of future generations. We’re in a global monetary crisis caused by decades of misguided policies and the cycle of financial dependence has to be broken, literacy and self-reliance are a good start. Visit JasonHartman.com for free materials and resources.
