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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 40 December 2024 E X P E R T I N S I G H T S ASSESSING TODAY'S LANDSCAPE Derrick Barker, Co-Founder & CEO of Nectar, discusses his beginnings in the mortgage market, elements that attracted him to home finance, and trends that will help shape the direction of the market moving forward. B y E R I C C . P E C K D errick Barker is Co-Founder and CEO of Nectar. He start- ed buying real estate from his dorm room at Harvard. After Harvard, he spent three years trading complex securities at Goldman Sachs, while simultaneously building a 500-plus unit real estate portfolio in his hometown of Atlanta. He left Goldman Sachs to focus on real estate full time, eventually growing his portfolio to more than 4,700 units and $400 million in asset value. MortgagePoint had a chance to catch up with Derrick to discuss his start in the mortgage finance space, what attracted him to his chosen profession, and other trends that will shape the marketplace in 2025 and beyond. Q: How did you first get your start in the industry? What attracted you to the mortgage finance space? I got my start in real estate investing while I was still in college at Harvard. During my senior year, a few room- mates and I started buying and flipping houses. We were all from neighbor- hoods highly impacted by the Great Recession of 2008, and we set out to create opportunity out of the low prices that following the crisis. We were able to raise some initial capital from an alumnus who liked our pitch. After graduating, I worked as a bond trader at Goldman Sachs for a few years, but continued building my Expert Insights real estate portfolio on the side. By 2013, I had amassed a 500-unit multifamily portfolio. This gave me a strong plat- form to focus on addressing the housing shortage directly, so I left Goldman to focus on real estate full time. What attracted me to mortgage finance specifically was seeing how bro- ken traditional capital structures were/ are and how that impacts the supply of housing and the businesses that create that supply. Having been a real estate operator myself, I recognized the gaps in the market for providing liquidity even to very strong property owners. These gaps reduce our capacity to build hous- ing units, even where there is strong demand for housing, and therefore they create economic opportunity. That's what led me to start Nectar in 2021 … to provide liquidity and creative financing to quality sponsors who were being poorly served by traditional capi- tal sources. Q: In the current market, what do you see as possible market corrections to alleviate the affordability crisis? If you create more units than new households can absorb, prices go down. If you create fewer units than house- holds can absorb, prices go up. To in- crease affordability, you have to increase supply. It's purely a numbers game, and it takes four things to create housing. Labor, materials, land, and capital. If you increase one or all of these things, you increase the supply and alleviate affordability challenges. For instance, there was a record amount of new multifamily supply hitting the market in 2023-2024 because of low interest rates (increased capital availability). That is why rent growth has slowed across the nation and slowed by the most in markets with the most supply relative to population. At the same time, higher interest rates have dramatically slowed new construction starts (reduced capital availability). So once this current wave of new supply gets absorbed, there will be limited new competition Derrick Barker Co-Founder & CEO Nectar