The media loves throwing up big headlines about business, finance, and the housing market. Though there is a lot more to the stories behind the headlines, and the click bait titles thrown up on the web.
So, what is really happening out there? What isn’t being covered or said? Is it another financial apocalypse? If so, how are so many finding real estate so incredibly profitable right now?
Consumer spending and debt performance is an important leading economic indicator that can often help predict what’s coming down the pipeline for real estate. Both for commercial and residential real estate.
Target recently seemed to report more positive numbers. Hyperinflation shows that people are still spending like crazy, no matter the price.
However, Amazon let go of a big property tax break after being unable to support hiring workers for a new warehouse. Walmart is reporting a second year of losses in what should be a fantastic period for discount retailers. Though in many cases this may be more about poor implementation of technology, and deteriorating customer service than prices. Something pivotal to operating any business.
Meanwhile the data shows consumers racking up a record amount of credit card debt, and setting new records for defaults on that, as well as their auto loans.
House Sales Retreating
According to recent headlines existing home sales have now been declining for 12 months in a row.
That doesn’t sound great, but it may be balancing supply and demand.
Consider that ATTOM recently reported cash home buyers making up over 50% of all transactions in some cities. So, the money and buyers are out there. They may just be more selective, and be having a harder time getting home loans.
House Prices Are Floating Down
Media pundits have continuously revised their data and forecasts for home prices in the past couple of months. They just don’t seem to be able to nail it down.
Goldman Sachs has said the market will bottom out this summer, with a total average dip of 6%. Of course, this is contrasted with some sellers finding it hard to sell for double digits less than they previously paid for properties. While new record high prices are being set in other areas of the country. Even for the most luxurious properties, or teardowns in popular areas. In some cases producing millions and tens of millions in house flipping profits.
Again, real estate is all local. It is about the right product, right price, and right buyer.
Mortgage Defaults Are Up
We recently covered the data on how mortgage debt performance was deteriorating at the end of last year.
There will be some defaults that are unavoidable for those that didn’t buy wisely. Yet, this is only going to help fuel the rental market with more demand from tenants. Boosting occupancy, and supporting higher rents.
The news websites thrive on spreading fear. Pundits and the media often don’t know what they are talking about, or misrepresent the data.
There may be some trends which appear negative. Yet, there is still immense opportunity. Investors who are doing it right are finding this one of the most profitable times to be engaging in the market.