When to Use Your Next Hard Money Loan
As the United States adjusted to the pandemic’s summer, an unanticipated phenomenon was taking place on a national scale. Americans have been on the move—with the National Association of Realtors reporting that existing home sales jumped 20.7% from May 2020. That trend has persisted throughout the summer months in markets across the country.
In many aspects, the extended time indoors over the course of the widespread mandatory lockdowns seemingly prompted many Americans to reconsider their living situations. While many have had job and school changes, the flexibility and prompt for change has encouraged Americans across the country to reevaluate where they are living. Additionally, many of those in the real estate market prefer to solidify their housing details before the upcoming holiday season and while the warm weather lasts.
Another percentage of the population view the current crisis as a unique opportunity in the housing market. As opposed to purchasing a new primary residence for personal use, they are instead looking to acquire a property to rent out. Buying and selling a property, however, is one of the most major financial transactions you can implement when conditions are ideal. With a pandemic in full swing, those planning to buy in the near future must take a close look at their immediate environment to ensure that buying a new house or getting into the real estate investment sector is the right call.
With mortgage rates reaching historic lows, home prices creeping upwards to record highs, potential home-buyers flooding markets, and current homeowners debating on whether to sell or refinance, there is certainly a lot of factors to consider when it comes to forecasting the U.S. housing market amidst an equally busy national state of affairs. Following an unprecedented first half of the year, what does the remainder of the year have in store for the real estate industry?
2020 Recovery Predictions: V-Shaped or W-Shaped?
V-shaped recession recoveries are those that start with a steep fall but then quickly bottom out before turning back around and immediately moving higher. Accordingly, they are often regarded as a ‘best-case’ scenario. W-shaped recessions start out looking like V-shaped recoveries but then eventually trend downwards after showing misleading signs of recovery. They are often referred to as ‘double-dip’ recoveries as the economy falls twice prior to a full recovery taking place.
Some experts feel that the real estate market’s recovery from the coronavirus will be V-shaped, including Mark Fleming, chief economist at First American Financial Corporation. Fleming notes that the preexisting factors that are attributed to a strong marketplace prior to the onset of the pandemic, such as low supply and mortgage rates have been maintained and will likely continue to do so in the coming months as millennial demand for homeownership is steadily increasing. On the other hand, Ralph McLaughlin, the senior vice president of the home equity startup, Haus, believes the recovery will be a W-shaped process. McLaughlin attributes the initial rebound to pent-up demand from home buying that would typically occur during the spring months, even if there wasn’t a health crisis. When this demand drops off during the remainder of 2020, the recovery will stagnate, according to McLaughlin. The Haus VP predicts that the dip in demand, coupled with a potential resurgence of the virus and the possibility of federal unemployment insurance becoming unavailable, will cause a decline prior to final recovery being reached.
Will 2020 Mortgage Rates Remain Low?
Most economists expect mortgage rates to maintain their low levels. The global economic environment is marred with uncertainty and will likely continue to be for the foreseeable future. This uncertainty keeps long-term bond yields low, and mortgages trend correspondingly with these figures. If the economy does indeed improve, it will prompt an investment shift from bonds to stocks that will cause a temporary mortgage rate rise, but it would be limited in nature as the spread between mortgage rates and 10-year Treasury yields continues to be comparably high and there is ample room to narrow prior to mortgage rates increasing significantly. That’s good news for homeowners, who could potentially save a considerable amount of money due to these continued low-interest rates coupled with the benefits of strong house price appreciation that the market is currently experiencing.
If you are a real estate investor looking to invest in a property, now is a great time to use a hard money loan. We are living in a seller’s market where many individuals are looking for the right house. If you find a property that is in your target location, contact Alpha Funding Partners today. We have multiple programs that can help you with your next hard money loan. To view a list of the types of loans we do, including our fix and flip loan program, please take a look at our lending programs page.