PERE exec on Carson: ‘Our business isn’t brain surgery’

The retired neurosurgeon’s lack of experience with housing policy was baffling to some, but an asset in the eyes of Avanath Capital’s founder.

Industry leaders have reacted with mixed opinions to President-elect Donald Trump’s choice of neurosurgeon Ben Carson to lead the Department of Housing and Urban Development.

The appointment, announced on Monday, still requires Senate approval after Trump’s inauguration.

In conversations with private equity real estate executives in the days following the appointment, most – whether or not they work in the multifamily space – expressed surprise over Carson’s new role. The neurosurgeon has no experience in housing policy nor in government.

“Every conversation about HUD I’ve had this week has been ‘what the hell?’” one Chicago-based executive told PERE. “Nobody has a clue what he’ll do, and the industry hates that uncertainty, along with the general lack of clarity around housing and other policies from the incoming administration.”

Another industry insider also pointed to the uncertainty surrounding the pick. “It’s difficult to predict at this stage exactly what Carson will do in the seat without any prior experience in housing or a bureaucracy,” he said. “Like much of the new president’s policies, it’s a guessing game right now.”

One executive, however, was very vocal in his support of Carson’s appointment. Daryl Carter, the founder of Irvine, California-based private equity real estate firm Avanath Capital Management, said he saw Carson’s inexperience as a positive for HUD, which provides rental assistance for five million low-income families. Carter, who knows Carson from fundraising efforts at their shared alma mater, the University of Michigan, said Carson could see HUD with a fresh set of eyes.

“The initial feedback I’ve heard from a lot of people is he has no housing experience,” Carter said. “But he’s a brain surgeon. Our business isn’t brain surgery.”

Carter said he draws similarities between his own background and Carson’s, as both grew up in poor African-American neighborhoods in Detroit, went to college and graduate school and became successful in their respective professions. Carter characterized these pathways as representative of the American Dream.

“People say he doesn’t have any housing experience, but he understands the aspirational nature of what housing can do to transform a community and a neighborhood,” Carter said. “I think that is the biggest thing that he has going for him, that he has made that transformation in a highly aspirational manner.”

Under Carson, Carter, who has worked with HUD since 1994, said he hopes the organization will continue to improve operating efficiency, such as reducing the time it takes to inspect apartments and approve new renters. He also wants HUD to expand the voucher program to families that currently do not qualify for affordable housing because of higher incomes but still have trouble affording market-rate rent.

Carter and other executives also said that HUD is not the only organization that affects the affordable housing business. Changes in other governmental bodies, such as the Securities and Exchange Commission and groups dealing with infrastructure and transportation, could also change the environment for private equity real estate players in this space.