We all want to know what’s next.
Will home values maintain or start to see a decline?
What about rental real estate, how will that fare in the coming months?
Well, we can’t tell the future, but we can make a few educated predictions about real estate after lockdown.
- Income-producing real estate is going to be all the rage…again. Like circa 2010 when anyone who had a few dollars laying around decided to jump in. This will be very similar – except that the competition will be more stiff. The 2008 recession was historic because middle-income professionals were affected. The housing market was at the crux of the entire crisis.
This time it’s different.
For one thing, real estate had nothing to do with coronavirus and, largely, saw no reason for a pull back. Sure, the coastal cities were overvalued…but aren’t they always?
Second, real estate lending has been conservative and largely responsible in recent years. That’s a good thing. Now this doesn’t mean that all lending has been staying between the lines. Far from it. The auto loan industry has been handing out money like it’s going out of style and has been a looming mountain of default for a few years now. Here’s the risk: People are emotionally tied to their homes and will do whatever they can to save them. But your car? Eh. Park it and walk away. Let the impound guy try to locate it.
That said, we do expect credit to become more difficult but because banks are holding a lot of bad debt on fundamentally depreciating hunks of metal.
- Silver and gold will re-emerge as safe havens. Precious metals have been ignored for the better part of the last decade. But now that governments have been printing money like madmen, inflation is likely to rise and without a true store of value, many will see their purchasing power erode away.
- Renter’s will continue to feel the pinch. Remember how we just talked about inflation? In times of inflation, your currency does not buy you as much as it once did. To counteract the effects, property owners will likely raise rents and renters will be forced to pay even more of their income to cover it.
Now, of course we don’t know what tomorrow will bring but we can be as prepared as possible.
If you’d like to learn more about how you can invest in real estate and thrive in the new economy, consider joining the HJV Inner Circle.