We are in what’s traditionally known as the year’s peak mover and home buyer season. So, what factors are influencing the market the most? What does it mean for investors?
1. Banks In Distress
The most obvious big headline is the new banking crisis. We are being told that everything is well under control and that the damage of several recent big bank failures is contained.
Given historical data, and current monetary policy, that seems highly unlikely. It seems more probable that more banks will have issues in the near future.
That means hundreds of billions of dollars in assets going up for sale. Real estate and mortgage debt are a large part of that. Either institution are shedding assets for liquidity, or their new owners will have a lot of inventory they obtained cheaply and will be attempting to liquidate as well.
Access to these portfolios is limited. Though there are incredible bargains popping up, with more likely to be made available, at least off-market before the end of the year.
2. Rising Inflation
Regardless of official numbers being published, consumers are seeing and feeling real inflation at the checkout. Gas prices recently went up again, even the cheapest candy bars at your local gas station are likely three to four times the price they used to be.
Some pockets of the population at the top and bottom of the market may be somewhat insulated from this. It’s obvious though, that prices have only been going up.
This certainly applies to real estate. Not just interest rates, but insurance, utilities, and rents. In fact, even among rent-controlled apartments in NYC, the rent control board has recommended a massive and historic increase of almost 17%. A hike that is expected to impact around a million households if passed.
This will of course only fuel more moving out of NY to NJ, and southern states like GA as many more seek more affordable housing options.
3. Investors Need A Haven For Their Money
It’s pretty easy to point out many places investors probably shouldn’t put or keep their money right now.
Among those seem to be public stocks, municipal bonds, crypto, and banks.
They need somewhere to diversify their holdings, without taking on more risk. And, at the same time while being able to keep up with inflation, having access to cash flow in case other sources dry up, and solid downside protection.
This all clearly seems to converge in real estate. It is just a matter of how you do it, who you do it with, and who you have to manage it.
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