S. Clay Sparkman
What the…what just happened? Was that 2020 that just ran over our nation like a buss out of control, knocking down everything in its path? Uh, yes.
Today is January 22nd, 2020! We have a new POTUS and VPOTUS in The White House. We have a new congress ruled by a razor thin majority of Democrats. We have the promise of 100 million Covid vaccinations administered in 100 days–which, though extremely ambitious, would go a long way toward alleviating the effects of Covid on the way we live (or die) and on the health of the financial markets which lift us up or pull us down. And we haven’t had an insurrection in over two weeks now. Though no one can claim to know what tomorrow will bring, things momentarily look like they may be moving toward a period of relative calm and stability.
So much has been so tentative and chaotic for so long now that it is difficult to imagine that we may be settling in for a period of greater stability by the summer of 2021. And yet we must always remain vigilant, because we really don’t know what 2021 will bring. Just the hangover effects of 2020 will be washing over us and our lives for some time to come.
Let’s take stake of where we think we are now. Throughout much of the nation, it continues to be a seller’s market in real estate. This may make many investors nervous as once again we think back to the balloon which popped in 2007-2008. Generally, though, there sems to be a feeling among experts that this is not a balloon market—but rather that high prices are driven by lack of sufficient supply. Portland, where our office happens to be based, is experiencing the lowest home inventory at any time since these records were kept. The inventory is 0.8, which indicates that there are just over three weeks of inventory on the market. Think about that: If no new homes were to be listed in the next three weeks, the inventory would drop to zero! It is difficult to argue that a market like that is inflated.
Still, it should be noted that record low interest rates and a wave of people working from home due to Covid has also driven these markets. There should be some correction as remote workers make their way back into the office. However, there is also speculation as to what extent “home workers” may remain home workers after Covid is no longer driving this trend.
CNBC’s Jim Cramer sees the state of real estate markets as a positive. He argues that the boon provides a bridge by which the rest of the economy may adjust and stabilize in a healthy manner. See Kevin Stankiewicz’s January 21st article in CNBC, Cramer says the hot housing market is a boon, not a red flag, for U.S. economy.
Our traditional sweet sport here at Fairfield is to arrange money for home projects (renovation and construction). There are indicators that buyers are less willing to take on updates and repairs. They are walking away from properties that are not turnkey ready. Hence in spite of generally low inventories, this should provide an access point into the markets for those who fix and flip or fix and rent properties for a living.
Of course, we would be remiss if we failed to take note of the state of rental defaults as we move forward in 2021. A recent Forbes article touches on this point. The December 28th, 2020 Of course, I would be remiss to ignore the impact of rental payment defaults as we forge ahead in 2021. A recent Forbes article by Nathan Miller, Three Predictions for The Rental and Housing Markets in 2021, points out:
“While home sale prices and activity have hit record highs in some areas, landlords and renters across the country have been struggling to make ends meet, despite federal legislation and private programs put in place for their protection. As of November, data aggregated from over 600,000 rentals in the U.S. shows a nearly 30% drop in rent payments received compared to the same period in March — before the pandemic hit.
As a private money provider, we are always looking for ways that we may assist those who need bridge or short-term funding for commercial or profit ventures. We have decided to actively seek out landlords who may be in trouble due to the impact of this tremendous decline in rental payments over the past year. Again, that is what we do: We provide bridge funding to those who either (a) wish to take on a short-term real estate project, or (b) need an infusion of cash for a relatively short period of time to help them through periods of dramatic cash shortage due to unpredictable or unexpected scenarios.
If you happen to know of someone who has these or similar types of needs, we would be happy to discuss our private money options with you or your associates.
May this be a year of health and prosperity for you and the ones you love.
Regards,
Clay
Clay Sparkman
Fairfield Financial Services, Inc
503.476.2909
Broker blog: https://privatemoneysource.com/broker-blog/
Investor blog: https://privatemoneysource.com/blog/
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