TL;DR: Positive changes are happening in the economy – inflation is dropping, wages are growing faster than expenses, and long-term loan rates might go down. Even though there’s talk of a mild recession in 2024, now might be a great time to invest in residential real estate as a way to protect against high inflation.
May CPI report is in. The economic landscape is showing some exciting shifts.
The inflation rate, a big concern in recent years, has slowed down to 4% in May. It looks like it might even keep going down in the future.
Rents are still growing, but not as fast. Market rent growth has cooled to 4.7% (almost normal?) from its 16.9% high in February 2022.
👋Do remember that the Federal Reserve’s data is a little behind the times, though. All 3 publicly-traded SF REITs just reported 7%+ rent increases.
There’s more good news, too: people’s earnings are growing faster than the cost of living for the first time in two years. This could make life a little easier for many.
The Federal Reserve might stop increasing interest rates because of the lower inflation. The latest inflation data provides room to skip an interest rate increase when the Fed meets on Wednesday, June 14. They could even make borrowing cheaper by the end of this year or early next year.
Update on 6/14/2023: Indeed, as we anticipated, the Federal Reserve held off on increasing interest rates on Wednesday, June 14th. After a series of ten rate hikes, which affected loans for homes and businesses, they’ve decided to pause to review more data. However, they indicated a possibility of two further increases this year to address inflation.
Where are mortgage rates headed?
Another good sign for both the economy and the housing market is the 10-year treasury rate falling to 3.7%. Usually, this means long-term mortgage rates might also go down. We’ve been seeing them around 7%, but they might drop more throughout the year.
However, we need to stay cautious. There’s still the risk of a small recession in 2024, even though a government default was avoided last week and the job market is strong.
This situation creates a unique opportunity. Investing in residential real estate can protect against high inflation besides helping you diversify and take advantage of the tax benefits.
Great time to buy investment properties
Now might be the perfect time to buy investment properties, especially brand-new homes. You could buy these at the list price without waiting for the builder to accept investor offers or getting into bidding wars. You can also get great benefits like free upgrades, closing cost credits, and lower rates through points paid by the seller/builders’ lender. And when the rates do go down in the next year or two, you could refinance and increase your cash flow and the ROI.
You can’t time it better!
The housing market entered a recession or price deceleration phase in May 2022. This was primarily caused by the rapid rise in interest rates. However, the housing market seems to have recovered and is on the rebound as evidenced by the month-on-month median price increases since the beginning of 2023.
BricksFolios makes it super easy to build wealth with a smart real estate portfolio. Whether you’re a first-time investor or an experienced professional, we provide a hassle-free insights-driven investment experience. We carefully choose the best-performing properties so you get the best return on your investments. With BricksFolios, you can build wealth and financial security through real estate using our expertise and our cutting-edge residential real estate wealth platform. By joining our preferred client list, you can get exclusive access to top investment opportunities. Let’s create your success story in real estate investing together. 👉https://bricksfolios.inbestments.com/JoDixit/meet-our-founders
The US economy may be entering a recession in 2023, and if it does, it could be the wealthy who take a bigger hit than usual. This phenomenon, known as Richcession, could be caused by a variety of factors including the tumbling stock, bonds, and crypto markets, as well as tech layoffs disproportionately affecting higher-income workers.
The year 2022 has been a painful one for investors.
The S&P 500’s almost 20% drop in 2022 was devastating for investors, as it ranked as the seventh worst year in the index’s history dating back to 1929. It was a year filled with turmoil, on par with the darkest moments of the Great Depression, the 2008 financial crisis, and the dot com bust.
To make matters worse, bonds, which are typically a source of relief during difficult times in the stock market, also suffered greatly in 2022. The Bloomberg U.S. Aggregate, a benchmark for the American bond market, experienced its worst year on record with a drop of over 12% in 2022.
2022 marked the start of a new “crypto winter,” with high-profile companies collapsing across the board and prices of digital currencies crashing spectacularly. Bitcoin has sunk around 75% since reaching its all-time high in November 2021 and the entire cryptocurrency market has lost over $2 trillion in value.
The pain of the financial turmoil of 2022 will not be easily forgotten.
However, with sticky inflation forcing the Federal Reserve to continue to increase the Fed Fund Rates in 2023, a recession is likely and this time it is the well-off Americans who could get hurt more than usual. This phenomenon is known as Richcession.
According to Federal Reserve figures, the net worth of households in the bottom fifth of income has increased a staggering 42% since the end of 2019, while the top fifth has only seen an increase of 22%. This trend is expected to continue, with the 12-month moving average of annualized monthly wage growth for workers in the bottom quartile by income reaching 7.4% as of November 2022. On the other hand, the average annualized monthly wage growth for workers in the top quartile has been much lower at 4.8%.
Recent layoffs have also disproportionately affected higher-income workers, with tech companies such as Facebook, Amazon, and Twitter making headlines with large-scale layoff announcements.
According to Layoffs.fyi, a website that monitors media reports and company announcements, the tech industry experienced significant job cuts in 2022, with an estimated total of over 150,000 positions being eliminated. These layoffs occurred amid a period of the economic downturn in the tech sector.
The spate of layoffs is likely to intensify in 2023. Amazon has already announced that it will cut over 18,000 jobs more than initially planned. Salesforce is cutting 10% of its workforce, more than 7,000 employees. On 18 January 2023, Microsoft announced a 5% reduction in its workforce, impacting 10,000 employees. And on 20 January 2023, Google laid off 12,000 employees, representing 6% of its workforce. These are difficult decisions that will affect many individuals and their families, and we extend our sympathy and support to those affected.
How can you weather the Richcession?
As the economy faces the potential of a recession, wealthy individuals may be forced to tighten their belts and find ways to weather the financial storm.
One option for them is to invest in residential real estate, which has historically been a stable and profitable investment during economic downturns. By purchasing properties at lower prices and holding onto them for the long term, wealthy individuals can generate passive income and potentially see the value of their investments increase over time.
While the average homebuyer may be deterred by the recent increase in mortgage rates, savvy real estate investors are taking a selective contrarian view, recognizing the potential benefits of lower prices, increased rental income, tax advantages, and equity growth. They are making data-driven decisions at a property level vs. being swayed by media reports projecting gloom and doom.
Below is an example from BricksFolios.com of how these investors analyze a property for its potential Total Wealth over the years.
By making data-driven decisions, these investors are positioning themselves for success. This moment represents a significant opportunity, similar to the one we saw at the beginning of the pandemic or during the 2008 economic crisis.
What can we expect from the housing market in 2023?
In 2022, the real estate market experienced a dramatic shift due to the rapid increase in mortgage rates. Mortgage rates are the lifeblood that drives home sales. These rates more than doubled in a very short period of time, effectively bringing the housing frenzy to a halt.
Although the rapid increase in mortgage rates in 2022 was unprecedented, it is worth noting that the current rates are still below the average rate observed prior to the pandemic, dating back to 1971. Understanding this historical perspective is crucial in evaluating the current state of the market and identifying opportunities within it.
This year may be characterized by a sense of hangover from 2022, with a slow movement in home prices, rents, inventory, and interest rates. It may be a sluggish start. As Chief Economist at the National Association of Realtors, Lawrence Yun has noted that the mortgage market has already factored in the expected mild rate hike by the Federal Reserve. This means that if mortgage rates stabilize, we can anticipate a stabilization and potentially even an increase in home sales during the traditional buying season. As a result, home prices are expected to remain stable.
How may the Recession impact home prices?
It is important to note that an economic slowdown does not necessarily lead to a housing crisis.
In fact, during 4 of the last 6 recessions, home prices actually increased. The only two times that home prices fell were in the early 1990s and during the housing crash of 2008.
A repeat of the 2008 Housing Crash in 2023?
The early 2000s housing boom was characterized by irresponsible lending practices, in which banks granted high-risk loans to risky borrowers until the market eventually collapsed. In response to this crash, the federal government implemented regulations to better control the banking industry and promote more stringent lending practices.
At the beginning of the pandemic, with economic uncertainty looming, banks further tightened their requirements for borrowers, demanding larger down payments, excellent credit scores, and more income documentation.
As seen in the table below, this has resulted in a generation of financially secure and thoroughly vetted buyers, who are well-equipped to handle their mortgage payments, even if their home value decreases or the economy experiences challenges.
Metric
Great Recession (Entering 2007)
COVID-19 (February 2020)
Home equity
12.7B
20.1B 29.6B (Sept 2022) 9.5B added in less than 2 years.
Percent of Homeowners with a Mortgage
68.4%
62.9%
Number of Active Mortgages
53.7M
52.9M
Mortgage Payment to Income Ratio
31.8%
20.9%
Percent of Homeowners w/ Less Than 10% Equity
14.5%
6.6%
Average Original Credit Score
708
736
Average Current Credit Score
713
747
Total Market CLTV
57.4%
52.3%
Average DTI at Origination
34.5
33.5
Mortgage Delinquency Rate
4.92%
3.28%
Number of Active Subprime Loans
5.1M
1.98M
Number of Active ARM Mortgages
12.89M
3.2M
ARM Mortgages Scheduled to Reset w/in 3 Years
4.95M
320K
GNMA/GSE Share
63%
75%
Source: Black Knight & Urban Institute
Based on what we know as of now, there is minimal risk of a repeat of the housing market crash in 2008, when millions of Americans defaulted on subprime mortgages and flooded the market with excess inventory, causing home values to plummet and leading the country into a severe recession.
Supply and Demand Imbalance Persists
The severe imbalance between supply and demand in the housing market is a key factor driving home price appreciation. Housing completions have consistently lagged behind household growth since the Great Recession in 2008.
In the period from January 2012 to June 2021, 12.3 million U.S. households were formed, yet only 7 million new single-family homes were built. Thus, there is a housing deficit of 5.3 million.
This disparity between the number of new households and the number of new homes being built has contributed to the current shortage of housing supply and the resulting appreciation in home prices.
Work with Experts!
Real estate is a highly local market, meaning that the performance of the market can vary significantly depending on the specific location. Economic conditions, including factors such as employment rates, population growth, and income levels, can all impact the demand for housing in a particular area and, in turn, the prices of homes. For example, a region like Seattle with a strong local economy was not much impacted even during the Great Housing crisis of 2008. On the other hand, an area with a struggling local economy and high unemployment may see a decrease in demand for housing and a decrease in home prices.
When it comes to purchasing or investing in real estate, it is essential to research and understand the local market conditions. Proper analysis and scenario modeling can help ensure that you are selecting properties that have the potential to contribute to your long-term wealth.
At BricksFolios Real Estate Solutions, America’s Real Estate Wealth Advisor, we offer a trail-blazing residential real estate wealth platform and unique white-glove service to help remove the guesswork and hassle from building a smart real estate portfolio. Our Real Estate Wealth Advisors can assist you in finding wealth-building properties that align with your portfolio goals. Don’t let the process of building a successful real estate portfolio overwhelm you – let us help you acquire the right properties and achieve enduring wealth through real estate investing.
The U.S. stock market has pulled back ~20% and entered a bear market on the fears of inflation and economic growth.
The stock market is a 𝘭𝘦𝘢𝘥𝘪𝘯𝘨 indicator of the economy, and much of the selling the past year has been due to the fear of the current inflationary environment and slowing economic growth.
The Market is rallying this morning, with futures soaring over 3% in the Nasdaq.
If inflation is under control, the Federal Reserve can stop raising interest rates, and that has a HUGE impact on the market.
#𝟮 Core Inflation came in at 6.3% YOY and .3% over October
Inflation is broken into 2 parts- Headline & Core Inflation.
Headline inflation is primarily used in comparing purchasing power year over year, however, it includes food & energy prices.
Core inflation 𝘰𝘮𝘪𝘵𝘴 food and energy prices, which are highly volatile in price.
Core inflation is the preferred metric in predicting 𝘧𝘶𝘵𝘶𝘳𝘦 inflation rates.
Both numbers are not good currently – but 6.3 is a better read for where we can see inflation trending in the near-term future.
The greatest economists, investors, and writers alike have never been able to fully pin a market bottom or price top perfectly.
The only constant in all of our historical inflationary data is that it does eventually stabilize.
It’s still too early to tell when we will see inflation back at “normal” levels.
But this too shall pass.
#4 How did the Mortgage Rates React to October’s CPI Report?
The Fed has been raising rates to slow inflation. Since housing is a key transmission mechanism for Fed policy, the housing market has slowed dramatically as the Fed raised rates (and mortgage rates increased).
Mortgage Rates have trended lower today driven by lower than expected increase in inflation.
#5 Will the Federal Reserve stop the Fed Rate increase?
With inflation still so high, the data reaffirm our expectations of a Fed rate hike on 14 December 2022 of at least 0.50%. Today’s report does not dispel the chances of a 0.75% Fed rate hike, but it lowers the chance somewhat.
You must have seen a ton of inflation news with conflicting views recently.
Probably your stock portfolio also got impacted by the latest inflation report.
Let us help break it down, especially in the context of real estate.
US inflation was 8.3% in August. Still way too high from the typical inflation of 2%.
8.3% is down slightly from 8.5% in July and down from 9.1% in June.
Looks like inflation may have peaked. So that’s the good news.
But, of that 8.3% number, gas prices were down over 10% so other prices, like shelter, food, and medical care, actually went up slightly in August, offsetting the decline in gas prices. That hurts.
Every single stock in the NASDAQ 100 fell yesterday. This is the first time it has happened since March 2020.
There are only 4 other times in history when the S&P 500 fell more than 4% in a given day (3 of those times were during the Lehman crisis).
How has inflation affected real estate?
Mortgage rates have also climbed up.
Most experts think mortgage rates will likely start to come down once inflation has peaked and begins to come down. Rates will likely start coming down in early 2023.
The rapid increase in mortgage rates has priced out a lot of buyers. Additionally, it has made even a lot of qualified buyers nervous.
This has lowered the demand (the Feds want housing to cool).
Where is the opportunity?
This demand reduction has created a lot of opportunities for savvy buyers and investors to grab great cash-flowing/equity-building properties at unheard-of discounts.
Rents rose 0.7% in August, their fastest pace since 1991. This has increased the cash flow for real estate investors.
Real estate is attracting a lot of institutional investors given its inherent hedge against inflation and other advantages.
You may also want to diversify your portfolio with real estate.
Don’t get misguided by news cycles predicting doom. Remember savvy investors build the most wealth during uncertain times.
This market has created tons of real estate investment opportunities. You need to know how to find and structure the deal.
We are teaching a Master Class: Is it 2008 again or a great wealth-building opportunity?
When? Wednesday 21st October at 5.00 PM.
Where? Zoom webinar, so you can join from anywhere.
What you will learn? Learn an analytics-led approach to implementing a forward-looking roadmap to finding, analyzing, and modeling your real estate investments for success.
We will provide our take on the market, pick up a live property on the market and guide you through the process of structuring an acquisition – offer price, funding strategy, rental strategy, reinvestment, or exit strategy.
This is a paid Master Class and the fee is $30. However, for our readers, we are offering a 100% discount coupon so that you can attend this for FREE.
We have ONLY 15 coupon codes on a first come, first serve basis. Use this link to reserve your spot.
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The Fed rate has been increased again by .75% on 28th July 2022.
This is not really breaking news but was widely expected given the Fed’s well-published resolve to fight inflation.
The latest increase brings the federal funds rate to between 2.25% and 2.50%, which is where it was at its most recent high in summer 2019 before the coronavirus pandemic.
This marks the fourth interest rate hike of the year as consumer prices have risen at the fastest pace in more than 40 years. Five months ago, the federal funds rate was near zero percent.
?Lots of folks are confused between the Fed Rate and the mortgage interest rates.
Fed Rate vs. Mortgage Rates
?♂️The Federal Reserve does not set mortgage rates.
Banks use the Fed rate as a benchmark for what they charge each other for short-term borrowing. However, it feeds directly through to a multitude of consumer debt products, such as adjustable-rate mortgages (when their period is up for adjustment), credit cards, and auto loans.
Fixed-rate mortgages correlate with the 10-year Treasury rate. When this rate goes up, the popular 30-year fixed rate mortgage tends to do the same and vice versa.
The law of supply and demand also influences the rates for fixed mortgages like how the home prices are influenced by the supply and demand for homes. When lenders have too much business, they tend to raise rates to decrease demand and increase the profit. When business is light, they tend to cut rates to attract more customers to increase the volume.
Price inflation pushes on rates as well. When inflation is low, rates trend lower. When inflation picks up, so do fixed mortgage rates.
Are The Mortgage Rates At Historical High?
Reading and listening to the news cycles may make you feel that the sky is falling and the mortgage rates have reached their historical highs, but the fact is they have not.
The mortgage rates are nowhere near their historical highs as can be seen from the chart below from Freddie.
Will people stop buying homes?
Again news cycles may make you wonder like that but let’s see the facts. The chart below shows the Existing Home Sales and the 30-year fixed rate mortgage from Jan 1, 1980.
The average rate for the 30-year fixed-rate mortgage was 5.3% for the week ending Thursday, July 28, 2002, as per Freddie. FYI they publish the weekly average mortgage rates every Thursday.
As can be seen in the chart above, they have been many more years since 1980 when this rate was way higher along with higher home sales.
The highest recorded Existing Home Sales of 7.1 million happened in October 2005 when the 30-year fixed-rate mortgage was 6.07%. We are neither advocating that the present higher mortgage will not have an impact on the demand and are nor trying to imply that these periods are similar. We are merely pointing out that in the past buyers have bought homes with much higher interest rates and their homes still built wealth for them.
Great Investment Opportunites
The combination of blistering home prices for the past 2+ years coupled with the rapid surge in the mortgage rates increased housing inventory, and a record inflation has priced out thousands of potential homebuyers looking to buy a home to live in.
This sudden demand reduction is forcing the builders and the sellers to reduce the prices significantly. The combination of these factors has opened great real estate investment opportunities.
?Savvy investors are taking advantage of this opportunity and are adding great deals to their portfolios. While the regular homebuyer is taking a lopsided view of the surge in the mortgage rates, the real estate investors are taking a holistic look – lower prices, higher rent increase, tax benefits, equity growth, etc. This opportunity is similar to the one we had at the onset of the pandemic. We at BricksFolios Real Estate Solutions, America’s Real Estate Wealth Advisors, were able to help our investor clients grab some great wealth-building deals at that time.
Watch the video below by BricksFolios co-founder Vinod Sharma to learn how to structure wealth-building deals in any market conditions, including the present high-inflation high mortgage rate market. Learn how smart real estate investments build enduring wealth for you and your loved ones.
Warren Buffett aptly said, “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.”
✅Get your facts right. ✅Do data-driven smart investments. ✅Don’t let undue fears make you miss the opportunities.
?Book time here for a free consultation to talk about how you can take advantage of this opportunity.
The brokerage firms Redfin and Compass announced layoffs on 14th June 2022. As reported by CNBC, the moves come amid rising mortgage rates and a slowdown in the housing market. Redfin, which just the other week announced it was rescinding job offers to cut costs, has announced that 8% of its workforce is being eliminated. “…We don’t have enough work for our agents and support staff,” its CEO Glenn Kelman said. Compass announced it is letting go 10% of its staff due to “clear signals of slowing economic growth.”
While we are truly sick to our stomach by the impact on the individuals that have lost their jobs — and the effects on their families and everyone else in their broader communities, we are not surprised by this. The writing was clearly written on the wall and it was ominous given the lack of a path to profitability. Burning cash to show growth is not a recipe for building a sustainable business.
Similarly, Redfin’s 2022 First Quarter’s Real estate services gross profit was $23.7 million, a decrease of 41% year-over-year, and the real estate services gross margin was 13%, compared to 24% in the first quarter of 2021. Their Net loss was $90.8 million, compared to a net loss of $35.8 million in the first quarter of 2021. Things are most likely are going to become worse in the next couple of quarters due to how quickly the market has shifted.
Unfortunately, these layoffs are just the beginning.
The traditional real estate agents will be exposed in this market.
They are going to be caught flat-footed on this one.
Listings that used to sell in less than a week, could take months to sell.
Primary homebuyers will view dozens and dozens of homes with no urgency to make an offer.
The traditional real estate agents’ transaction volume will go down and with that their commission too. Their buyers will demand more rebates.
No innovation, no enduring business.
The coming months will likely see thousands of traditional real estate agents quit the profession due to the fact that their brokerages have failed to innovate from the consumer perspective.
Their own businesses as well as their agents’ businesses have not been built to not just survive, but thrive despite uncertain economic times.
We find it inexplicable and inexcusable that all the legacy, as well as new companies/brokerages, didn’t respond to the changing needs of the consumers – the buyers, sellers, and the homeowners. Their focus has been to look for the next transaction and make their split without providing real value.
In the coming years, don’t be surprised that 70 to 80% of the traditional agents will be out of business given the higher expectations that the clients have of them and the rapid digital transformation of the industry. Not to mention the Department of Justice’s lawsuit against the National Association of Realtors and other such lawsuits.
However, not all is lost.
Consider these facts:
The typical US homeowners are not retiring on their 401K/IRA. At retirement over 80 percent of their net worth is built by their home(s) but no one is helping them buy true wealth-building homes.
The US homeowners are sitting on record home equity of $26.3 Trillion but most of them don’t know how to leverage this equity to build more wealth.
These homeowners are losing over $150 billion of potential wealth every year since there is no solution to manage their homes as assets.
The traditional real estate agents can’t help. They are drowning in the “sea of sameness”. They lack the toolset and the mindset to help their clients with smart data-driven decisions to build wealth with a smart real estate portfolio.
These facts represent a huge untapped opportunity.
The need of the hour is for the real estate agents to:
elevate themselves as premium, trusted Real Estate Wealth Advisors,
provide superior differentiated services that their clients cannot find anywhere else, and
enable their clients to live the life they dream of with a smart real estate portfolio.
America’s Real Estate Wealth Advisor
This is exactly what we do at BricksFolios, America’s Real Estate Wealth Advisor. #Elevate #Differentiate #ChangeTheGame is the core premise on which we have built our business.
SEATTLE, Oct. 23, 2021 – BricksFolios Real Estate Solutions, a trailblazing wealth-focused brokerage, continues its growth spree by sponsoring Inman Connect at #ICLV, the largest event for the residential real estate community in North America.
Jo Dixit, the Co-Founder/Chief Wealth Officer/Designated Broker at BricksFolios, says, “We’re excited to meet fellow agents and brokers and demonstrate how they can Elevate, Differentiate, and Change The Game in their favor.”
“The traditional residential real estate process is cumbersome, time-consuming, and, quite frankly, broken, making it extremely difficult for Real Estate Agents and their clients to build wealth with real estate. We have fixed this with our proprietary technology and unique end-to-end white-glove, hassle-free service that removes the guesswork from building enduring wealth and enables you to build the life you want.
We elevate Real Estate Agents to the role of a premium, trusted Real Estate wealth advisor for life, for their clients, and enable them to close multiple deals per client. With us, agents provide truly differentiated services that clients cannot find anywhere else. Period.”
Jo Dixit, Co-Founder/Chief Wealth Officer/Designated Broker at BricksFolios
American homeowners aren’t retiring on their 401Ks/IRAs/other assets. Instead, they’re retiring with the wealth they’ve built up through their homes. At retirement, over 80% of their personal net worth comes from the home(s) they own. This presents a huge opportunity since traditional financial planners and wealth managers aren’t incentivized to recommend real estate investments.
In reality, most agents lack the training, tools, and support that they need to become premium Real Estate Wealth Advisors, so they can enable their clients to build a smart real estate portfolio that can assist with needs like planning for their kids’ college education, retirement, diversifying their larger portfolio, passive income, etc.
“At BricksFolios, we’ve solved these problems for our real estate wealth advisors and their clients with our proprietary technology that enables them to buy true wealth-building homes. For homeowners, we provide a wealth dashboard of their home that provides hyper-personalized insights for saving more money and building faster wealth with the largest asset they own, their homes”, says Vinod Sharma, Co-founder, and CTO at BricksFolios and CEO of InBestments.
Sharma went on to explain that, “Our Real Estate Wealth Advisors are able to create and capture new ‘demand’ and make competition irrelevant with our white-glove experience, and technology.
Figure 2 – BricksFolios: Attract, not compete.
HNIs (High Net Worth Individuals) are attracted to them, who see the tremendous benefits of our solution. They not only buy multiple properties but also become our referral machine.”
BricksFolios is driving unprecedented innovation in unconventional ways, pretty much how Tesla is reshaping the automotive industry. Its senior leadership comes from companies including Microsoft, GE, Accenture, EY, Apple, Visa, SAP, etc. According to Dixit, “Our clients call us the “Morgan Stanley of Real Estate”, and that motivates us to work even harder to democratize wealth-building through real estate.”
Inman Connect attendees can visit BricksFolios at booth #214 to meet our founders and real estate wealth advisors, see a demo of our platform – built by and for agents, ask questions, and start working on their plan to Elevate, Differentiate and Change The Game!
The BricksFolios team will be especially interested in talking to agents and brokers who want to bring BricksFolios into new markets.
Tears, relief, gratitude, and an end to a long, hard road in sight.
On 15th December 2020, Seattle hit a historic milestone as around a dozen health care workers and first responders were vaccinated against Covid-19 in what was the first run of vaccinations.
With a total of 205,069 cases, 12,649 hospitalizations, and 2,953 deaths in Washington state as of 15th Dec 2020, what does the vaccine rollout could mean for the Seattle housing market?
Before we delve into that, let’s see how the housing market fared last month.
Supply down, sales and prices are up
The saga of acute low inventory continued with available inventory dropping by 53.8% compared to the same time last year. On the other hand, brisk sales continue unabated with Closed Sales up by almost 23% on a year on year basis. The lack of inventory is making potential sellers think twice, knowing their search for a new home could be tough.
One indicator of the sales brisk activity is the ratio of pending sales to new listings. November’s 8,584 pending sales outgained the month’s new listings at 6,425 area-wide. This pattern was interrupted this year only in the months of March and April when the stay-at-home orders were in vogue.
Even in our white-hot housing market, savvy High Networth Individuals (HNIs) and investors are lapping up the Cash flow rentals, while taking advantage of the historic low-interest rates.
Mortgage interest rates have set record lows more than a dozen times this year, and last week there was yet another. Rates on a 30-year fixed-rate mortgage fell to their lowest level, at 2.71%, for the 14th time this year.
HNI and Millennial Clients driving demand for Real Estate Agents and Loan Officers “Our team has never been so busy with the tremendous demand from the real estate agents and loan officers whose Millennial clients are buying their first home, while their HNIs (High Networth Individual) clients are looking to diversify their portfolio by adding income-producing properties. Of course, the HNIS are looking for a stable asset class vis-à-vis the volatile stocks based investments”, said Vinod Sharma, who is the CEO of www.inBestments.com, USA’s first residential real estate wealth platform that enables the buyers and the homeowners to look at the homes from the prism of wealth, and helps them #BuildWealth with hyper-personalized insights.
COVID-19 vaccine and the Seattle housing market?
COVID-19 has dramatically changed the landscape of the housing market. With low mortgage rates locked-in and a desire for more space amid the pandemic, buyers flooded the housing market in search of bigger homes, away from the crowded urban areas. Now, with vaccine on the horizon, many people are wondering what could it mean for Seattle’s housing market. When “normalcy” begins, whether it’s six months from now, or a year or more from now, what happens to mortgage rates and housing when it returns? No one can be certain but most experts agree there are a few things we can count on.
WFH Trend will continue.
COVID-19 taught us the importance of home and home life. Working from home (WFH) eliminated long commutes and gave us some of our time. Despite all the complications of WFH, buyers are looking for homes with a big backyard and space for a home office. The big tech companies in the Seattle area have already announced plans which allows their employees to continue to work from home in a hybrid model.
People should return to urban areas
Some of the pandemic-driven housing trends with people seeking out larger homes in less dense areas could slow down. People, especially Millenials, will likely return to the urban areas. As the pandemic comes to an end, condos and apartments will see increased activity, sales, and appreciation.
Inventory will increase
Potential sellers who hunkered down to ride out the pandemic could be more willing to host open houses and make a move themselves. This will help alleviate some of our inventory woes.
Foreign buyers return
Before the pandemic hit, there was a significant presence of foreign buyers in our market. A vaccine could also lead to non-US buyers returning to the market, which would increase the buyer demand.
Mortage rates will likely go up
As life gets back to the new normal, people will start spending more, traveling more, eating out more, and doing everything else that stimulates the economy. A stronger economy likely means interest rates may start to rise from our present historic lows.
Next Normal
A safe, effective and widely accessible vaccine would obviously be welcome, but without a crystal ball, it’s hard to know what will happen. Record price appreciation, migration to Zoom towns, and brisk sales certainly weren’t predicted to be an outcome of a pandemic. It will take time for the economy to level out and for people to get back to work, but one thing is certain, we are not going back to the old normal but would rather adjust to the Next normal.
The volatility surrounding the 2020 presidential election helped push mortgage rates to their 13th record low this year, giving both homeowners and buyers a boost.
“The average 30-year mortgage interest rate fell to 2.72%, an all-time record low. Some 19.4 million homeowners are now in a position to save an average of $309 per month by refinancing, for an aggregate $5.98 billion in potential monthly savings – also the most in history”, said Jo Dixit, who has a unique vantage point being a licensed loan originator and a RE Designated Broker.
With rates now close to a full percentage point lower than they were a year ago, buyers in the 4 county Puget Sound region of King, Pierce, Snohomish, and Kitsap, are snapping homes up almost as fast as they’re listed.
So, last month saw more of the same – unprecedented low inventory, anxious buyers, bidding, and another surge in home prices.
Seattle housing market continued to defy seasonality as new records were broken by both buyers and sellers.
Sellers continued to have little competition as escalation clauses, appraisal gap waivers, and “as-is” offers were used by the buyers fighting hard, to secure a place they could call home.
October 2020 saw a 53.76% drop in active listings compared to the same month a year ago, an increase of 6.2%% in pending sales (mutually accepted offers). On a month-on-month (MoM) basis, the housing supply decreased by 10%.
Sellers are trying to take advantage of the soaring prices as evidenced by the 24.2% increase in New Listings. However, the tremendous pent-up demand aided by the buyer’s desire for a larger home and historic low-interest rates is leading to listings being stripped from the market at a stunning pace.
“Homeowners are saving big by refinancing and are taking advantage of low-interest rates to buy investment properties and second homes. Even in this white-hot, multiple-bid market, there are plenty of cash flowing rental properties available that pay for themselves.
“Smart homeowners are tapping their home equity to grab these income-producing properties”, said Jo Dixit, Designated Broker of BricksFolios Real Estate Solutions, a niche wealth-focused brokerage that enables home buyers to build wealth with smart real estate portfolio.
Find cash flow rentals before your coffee gets cold!
SEATTLE (August 22, 2019) — InBestments CEO, Vinod Sharma, had the opportunity to have a brief chat with Bob Goldberg, CEO of the National Association of REALTORS® at the second annual #iOiSummit in Seattle.
iOi stands for Innovation, Opportunity & Investment. This summit brought together 500+ real estate technology minds, investors and REALTOR® members to collaborate, network, and lead change. These two days provided a forum for incredible discussions and actionable insights.
From this brief conversation with Bob and Bob’s participation in a couple of sessions at this summit, our CEO walked away impressed with the vision that Bob has in navigating NAR in the present tumultuous times facing the residential real estate industry. They talked about how InBestments can elevate the agents to the role of a trusted real estate wealth adviser for life, for their clients by providing differentiated, superior services that their clients can’t find anywhere else. They also talked about how InBestments can potentially be a useful tool in the financial well-being planning for the NAR members.
Like many large companies in any industry, NAR is a huge national organization that does not pivot on a dime. But Bob’s efforts and leadership is already showing transformational change. He is indeed true to his stated mission of “smashing the ivory tower” and “turning the pyramid upside down.”
#iOiSummit and REACH® are a couple of the most important pieces of Bob’s mission to keep the members and association ahead of the industry evolution.
Being a platform created by and for agents, we look forward to continuing our dialogue with NAR, and are certainly looking to participating in the next #iOiSummit.
What is InBestments?
InBestments is a pioneer residential real estate wealth platform that removes the guesswork from real estate, whether you are buying your first home to live in or your 60th investment property to hold as a rental or to flip.
Our core value-prop for people looking to buy a home – Don’t just buy a home, buy a true wealth-building home. Every other real estate portal out there is trying to sell you homes mostly based on emotions. However, we enable you to buy homes which are true assets helping you build wealth.
After half a decade of planning, changes to laws governing accessory dwelling units (ADUs) and detached accessory dwelling units (DADUs) were passed by the Seattle City Council.
Even though ADUs have been allowed since 1994, only 1.61% of 135,000 lots in
single-family zones have an ADU owing to numerous cumbersome rules and regulations. We think this legislation is a step in the right direction. It creates meaningful changes to provide flexible, affordable housing options for families, homeowners, and renters. As per the latest NWMLS market report, the median price for a home in Seattle is $781,000. This makes 75% of Seattle off limits to new neighbors who do not have a down-payment or can’t rent a whole house. We have apartment bans in 75% of the city. ADUs are one way to induce mixed-income neighborhoods and more equity. They also help homeowners afford to stay in their homes by generating supplemental rental income and promote inter-generational living. It will help cut people commutes by putting affordable ADUs closer to work.
Here are the highlights from this legislation:
Reduces the minimum lot size from 4,000 square feet to 3,200 for single family homes.
Allows two ADUs on one lot instead of one.
Allows DADUs of up to 1,000 square feet, the same size currently allowed for ADUs
Eliminates the requirement for the Homeowners to live on the lot containing an ADU in order to rent it out.
Removes a requirement for off-street parking, an expensive and onerous hurdle.
Increases maximum households’ size to 12 unrelated people on lots with two ADUs
Increases DADU height limits by 1-2 feet, with flexibility for green building strategies.
Limits Floor Area Ration (FAR) for SF 5000, SF 7200, and SF 9600 zones to 0.5, except that lots with less than 5,000 square feet of lot area can include up to 2,500 square feet of total chargeable floor area. This is intended to curb McMansions.
Limits FAR in Residential Small Lot (RSL) zones to 0.75.
Makes exemptions to Floor Area Ratio (FAR):
Up to 250 square feet of garage won’t count against FAR.
Neither will up to 35 square feet of dedicated bike parking.
Houses that already exist on the lot get a one-time pass to expand up to 20 percent past the limit.
All stories, or portions of stories, that are underground.
All portions of a story that extend no more than 4 feet above existing or
4 finished grade, whichever is lower. Here’s where the ADUs come in: They don’t count against FAR.
Durkan signs Executive Order to encourage more affordable ADUs
On July 9th 2019, Mayor Jenny A. Durkan signed this legislation and an Executive Order to advance the development of more (ADUs) like backyard cottages and in-law apartments in single-family zoned neighborhoods throughout Seattle.
Following are the highlights from this Executive Order:
Assisting homeowners navigating the complex design and permitting processes:
Pre-approved plans: The Executive Order directs the Department of Construction and Inspections to make pre-approved plans available at low cost.
ADU Navigator: Additionally, the department will hire an “ADU Navigator” to guide homeowners through the permitting process.
Resources website: The Office of Planning and Community Development will develop a website with a comprehensive inventory of resources to help connect prospective ADU owners with the design and construction community.
Piloting strategies that support equitable ADU development and affordability among homeowners and tenants:
Offer low-interest financing to help homeowners develop ADUs or habitable space through the Office of Housing’s Home Repair Loan Program.
The City will also explore additional financing tools, including loan terms suitable to incentivize the affordable creation of ADUs.
Convening a workgroup to advise on ADU programs and services provided by the City, including stewarding ongoing assessment to evaluate the effectiveness of our ADU regulatory changes, services, and programs within three years. (We think waiving building permit fees for 5 years, like the City of Portland, would have been a better incentive.)
The new regulatory rules will go in effect August 8, 2019.
What is the potential impact of this new law?
The city’s most recent environmental analysis estimated the new rules would result in 4,430 accessory units built (125% more vs. status quo) and 1,580 houses torn down over 10 years, versus 1,970 accessory units built and 2,030 houses razed under the status quo.
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What is ADU and DADU?
An accessory dwelling unit or detached accessory dwelling unit (also called an in-law unit or a backyard cottage) is a separate living space within a house or on the same property as an existing house. These units aren’t legal unless they have been established through a permit process. A legally permitted unit in the home is called an accessory dwelling unit (ADU). A legally permitted unit on the property (but not within the home) is called a backyard cottage or detached accessory dwelling unit (DADU).
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Join our Facebook group “Build Wealth with Smart Real Estate Investments“, a community of lenders, agents, RE investors, home buyers, and homeowners, working together with a singular goal – build wealth with smart real estate.
#BreakingNews Today, the Federal Reserve Board has announced a 0.25% increase in its key policy rate in its ongoing effort to curb inflation. While this rate increase was originally expected to be 0.5%, the collapse of SVB, Signature Bank, Credit Suisse and continued turmoil at smaller banks has forced the Fed to take a more cautious approach. 📉💸
The good news is that the Fed’s acknowledgment that future rate increases will depend on the significance and duration of tightened borrowing conditions indicates that it is taking a measured approach to managing inflation and promoting economic growth. The other good news is that the Fed forecast it’ll hike interest rates only one more time — probably by another 25 basis points — before pausing.💼🌱
However, it’s important to note that while the immediate reaction to the Fed’s statement has resulted in a decline in the 10-year yield as well as mortgage rates, tighter credit conditions may limit any dramatic, near-term downward movement of mortgage rates. This may make it more difficult for some homebuyers to secure funding, slowing down the housing market and potentially increasing the time it takes to sell a home. 🏡🤔
But where there are challenges, there are also opportunities!
In the medium run, economists are predicting a recession and lowering of the Fed fund rate to prop up the economy. This should help mortgage rates decline.
Waiting for the housing market to bottom?
The housing recession is over as spring comes early this year. Sales of previously owned homes spiked to about 4.58 million in February, up 14.5 percent from the previous month, according to data from the National Association of Realtors, exceeding analysts’ expectations and breaking a 12-month streak of steady declines. It’s the biggest monthly percentage increase since July 2020, although sales are still down 22.6 percent from a year ago.
If you’re able to come up with a smart funding strategy by taking advantage of the lower rate, lower prices, and lower competition, you can purchase wealth-building properties.
As the founders of BricksFolios.com, America’s Real Estate Wealth Advisor, we help our clients navigate the complexities of the housing market and understand how economic conditions may impact their real estate investments. While the current economic turmoil may create challenges, it also presents opportunities for those who are able to adapt and take advantage of changing conditions.
Reach out to us today to discuss how you can take advantage of the present economic conditions and build your real estate wealth.
According to the December inflation report, the consumer price index (CPI) has shown a downward trend, reaching 6.45%.
This is the sixth consecutive month of deceleration after reaching a peak of 9.1% in June 2022.
This trend in inflation is closely related to mortgage rates, as inflation and interest rates have an inverse relationship. As inflation decreases, it is likely that the mortgage rates will also decrease, making it more affordable for individuals to purchase a home.
The housing market has seen persistent inflationary pressure in the form of higher mortgage rates and rising rents, however, private sector data indicates that this trend is likely to ease in the near future as an increase in apartment construction is expected to boost rental vacancy rates.
Despite the decline in overall inflation, it remains above the average hourly earnings rate of 4.6%, which has led to a decline in the standard of living for a significant portion of the population.
However, a persistent housing shortage and limited listings continue to pose challenges for the market.
With mortgage rates expected to decline, with a 30-year mortgage rate dropping below 6% becoming a distinct possibility, this presents a unique opportunity to secure great deals on homes and investment properties. The window of opportunity to negotiate on price and upgrades may be closing soon, so don’t miss out on this chance to grab a fantastic deal on your dream home or investment property. Not only can you negotiate hard on the purchase price and upgrades, but you’ll also have the opportunity to refinance at a lower rate in the future, potentially saving thousands in the long run.
??Late last week, we had listed this gorgeous home in Redmond Ridge East. We went under contract in 4 days even before the offer review date!
While we are happy for our sellers and the buyers, I wanted to share a few insights.
The market has shifted rapidly. What worked till last month or even a couple of weeks ago, doesn’t work anymore!
Gone are the days when you could receive multiple crazy offers within a couple of days even for an outdated/ugly home. Therefore you need a team that’s ahead of the curve and is not reacting to events but anticipating them and incorporating those insights in the BricksFolios 4Ps (our selling framework):
?. ??????? – the home, get it prime time ready.
?. ??????????? – to the serious IBP – Ideal Buyer Profile. You need to know the IBP for the product.
?. ????????? – Reach the buyer via the channels they trust. The channels include the people they are influenced by positively, and
?. ??????? – This is the most important P. If you don’t get it right from the get-go, you are inviting heartache. Your original list price plays a huge role in getting the right offers and in the subsequent negotiations.
???? ?? ?????? ?? ??? ???????? ??????? ???????
???????: If you are looking to sell your home, ask the listing agents whom you are interviewing about the 4Ps, and save yourself from having your property sitting on the market despite price reductions like happening with many listings these days. Work with experts, they know the game. They are not cheap but will get you top dollars quickly.
?????/?????????: If you are a buyer/investor, remember you can find great deals in any market conditions as long as you do solid research and make data-driven decisions.
✔️Domestic and international investment capital is pouring into US real estate. Low-interest rates (yes the rates are still low compared to the typical historical rates) and attractive risk-adjusted returns are among the factors fueling this demand.
✔️When stock, bonds, and crypto prices are tumbling, throwing portfolio concentrations out of sync, institutional investors typically resort to real estate to keep their portfolios of stocks and other assets in balance.
✅Individual investors can learn from this playbook of institutional investors on how to balance their portfolios, stabilize them, and capitalize on the inherent inflation hedge, as well as the tax benefits that residential real estate offers.
?The housing market is still very strong and there continues to be a severe imbalance between supply and demand.
??????/???????: If you are a Real Estate Agent, know that competition for buyers/sellers is going to be far more fierce going forward. In the last two years, there has been a high influx of new real estate licensees, with over 156,000 people becoming realtors, which is a 60% surge as compared to 2018 and 2019, The New York Times reports.
#Elevate #Differentiate #ChangeTheGame
??? ???? ?? ???????, ?????????????, ??? ?????? ??? ????, ??? ????? ???? ??????. ??? ????? ?? ????? ??????? ?? ???? ??? ?? ??? ??? ??? ?????? ?????????. If you are looking to recession-proof your career, check this out.
Hope this blog has been helpful. I would love your thoughts on what think of the present market and the opportunities that it offers.
Each year, HousingWire, USA’s premier housing and mortgage publication, recognizes outstanding women in housing who are making notable contributions to both their businesses and to the industry at-large. Their energy, ideas, achievements, as well as commitment to excellence and progress give us a look at the future of the industry.
Jyotsna (Jo) Dixit has been nominated this year for building a category redefining real estate wealth platform and a DFY (Done For You) white-glove service that removes the guesswork and the hassle from building wealth with a smart real estate portfolio.
?Amazing! Can’t believe it has been 4 years already for BricksFolios Real Estate Solutions! What an awesome way to celebrate this anniversary! Congratulations to Jo Dixit, my co-founder at BricksFolios Real Estate Solutions and InBestments. Jo, Team BricksFolios and InBestments are really proud of you?.
In these 4 years, a lot has happened!
We built a category redefining real estate wealth platform and DFY (Done For You) service.
Our trailblazing wealth platform analyzes every property listed on the market for its wealth-building potential and provides you with the insights necessary for making smart data-driven decisions. Our engineering team continues to push the boundaries with new innovations.
We built a DFY white-glove, end-to-end service that takes away the hassle and the guesswork at every step of the way to help you build wealth with a smart real estate portfolio.
We built a team of specialists – Real Estate Wealth Advisors, Deal Analysts, Leasing & Property Managers, Schedulers, Showing Agents, Marketers, Concierge Service, etc., to help take away the friction and guesswork.
To coincide with BricksFolios’ 4th year anniversary, our latest innovation, ????? ????????? ?????? (???), was unveiled to a select cohort last week, and the feedback has been overwhelmingly positive.
SPS is the industry’s first goals-based real estate portfolio planning system. SPS provides a snapshot of your current real estate portfolio with deep hyper-personalized insights, and enables you to create a personalized portfolio plan designed to get you closer to meeting your goals.
The overarching goal is to help you live the life you dream of!
Vinod Sharma & Jo Dixit
Co-founders, BricksFolios & InBestments
?If you would like to avail a free personalized real estate portfolio planning session, click here.
What will you receive from this personalized real estate portfolio planning session?
We will generate a Smart Insights report, a wealth dashboard for each of your properties. Smart Insights provides personalized insights to save money and build wealth at the property level.
We will build a Smart Portfolio that shows the consolidated view of all your properties and provides insights at the portfolio level.
We will collaborate with you to create a custom real estate portfolio plan to help you plan for goals like:
retirement planning,
savings for your kids’ college funds,
diversifying your larger portfolio,
generating passive income,
building a hedge against inflation,
taking advantage of the tax benefits, etc.,
You may directly book time for this complimentary session by clicking here.
In closing, doing a startup is hard, but we have been lucky to have an amazing team, friends, clients, vendor partners, and well-wishers who have supported us through the years.
?THANK YOU all for your steadfast support. We still have a long way to go with #MissionMillion to enable a million families to live the life they dream of with a smart real estate portfolio.
If you are a real estate agent or want to become one, and are hungry to #Elevate #Differentiate #ChangeTheGame, then check out our Career page.
