The real estate market continues it’s upward momentum in prices and downward momentum in supply. Inventory levels are reaching uncomfortable lows while demand continues to surge. Year over year increases are being seen in prices, while certain price bands have been eradicated. To help make sense of it all, Tim Herriage invited Rick Sharga to a Zoom call.
Here is the Video
Tim talks with his good friend Rick Sharga, Executive Vice President of RealtyTrac. They discuss the current market conditions that have resulted from the pandemic and the recession that followed, particularly how this recession is atypical and can’t necessarily be treated like previous ones. Rick talks about his outlook on the foreclosure environment and why data shows that there are not really as many people in serious delinquency as is being reported. They also talk about housing prices and walk through the presumptive President-Elect and Vice President-Elect’s proposed policies regarding the housing industry. This is a very informative session that you will want to be sure to tune in for!
- Foreclosures
- Delinquency rates
- They are the highest they have been since 2009-2010
- However, all of the homeowners who are taking advantage of the governmental forbearance program are included in this number
- As soon as they set up a payment plan with their lender, they are removed from this list
- Equity
- 70% of homeowners have more than 20% equity in their homes
- So they have a much higher likelihood of selling their homes than foreclosing
- This depends on demographics, demand, and interest rates
- Delinquency rates
- Pricing bands
- Sub-$250k homes are in higher demand now than ever before o There is a dichotomy in the workforce but both white-collar and blue-collar workers are looking to buy in this price range
- The lower-middle class has essentially been neutralized in the homebuying process
- Entry and 2nd tier move-up properties are not available o The housing industry crisis is really and affordability crisis Presumptive President-Elect and Vice President-Elect’s policies o $15,000 tax credit for first-time homebuyers A solution in search of a problem
- This will increase demand and drive home prices even higher
- Since this can be used as a down payment, we will likely see less-qualified borrowers who are more prone to foreclosure in the future
- More fees will be tacked on to Fannie Mae and Freddie Mac so the burden will be placed on the average homeowner to pay for this tax credit
- Homeowners Bill of Rights
- Modeled after California’s
- Manifests as punitive
- Few people need this
- Missing a key component: protecting landlords
- 85% of landlords own 2 units or fewer
- Discriminatory practices for conventional lending
- Doesn’t really affect hard money loans
- Could be helpful in low-income neighborhoods o Housing benefits to first responders, essential workers
- Key: in persistently underserved communities
- Provides loans to fix up the properties
- Public credit reporting agency
- Constructing affordable housing
- Will likely only help big developers
- Office space/Industrial space boom
- Industrial – finding holes in markets, cloud computing
- Commercial – short-term pain for long-term progress
- Hotels – currently at about 39% occupancy, will take a while to get them back on their feet
- Retail – was already struggling, more bankruptcies, spaces could be repurposed
- Office space – more people are working from home, but they also need more space per worker in-office
- Predictions/Outlook for 2021
- Depends on how soon we can get the virus under control and how the economy responds
Connect with Rick:
LinkedIn: https://www.linkedin.com/in/ricksharga
Twitter: https://twitter.com/ricksharga
December 9th webinar: https://t.co/NXqDJ82Epf
Connect with Tim:
Blog/Website: https://timherriage.com/
LinkedIn: https://www.linkedin.com/in/herriage
Twitter: https://twitter.com/timherriage
Facebook Page: https://www.facebook.com/timherriage/
Facebook Group: https://www.facebook.com/groups/timherriage/
Instagram: https://www.instagram.com/timherriage/
With business questions: ask@timherriage.com
With BBQ questions: bbq@timherriage.com
Find the podcast:
Podcast Home: https://timherriage.com/business-and-bbq/
iTunes: https://podcasts.apple.com/us/podcast/business-and-bbq/id1459164571
Google Play: https://play.google.com/music/m/Idttcut5lmwchx25qoz3ooetccm?t=Business_and_BBQ
Spotify: https://open.spotify.com/show/05oOyxG1w304L77Ob265cY?si=bSJZeWOqTfyF8hLhQVumcA
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