Housing and inflation
Bond rates and inflation
I have been watching twitter and the news a lot In the last couple of weeks and the macro economists and permabears have all charting about the 10 year yields going way up, about 3x sine 5+ months ago.
When the market demands higher rates to attract investor money it can affect existing bond holders who’s held bonds pay much smaller rates and are worth far less as they pay off smaller yields.
Many say the fed is the only one that really wants to buy these government bonds these days, not even other countries outside the US. The yield for the risk or the bet on future inflation in the US is high.
All eyes are in rising yields as so much of the world is tied to debt and part of a fragile system where higher interest rates could make debt explode.
This is making Mortgage rates go up in parallel with the 10 year yield and we know that home prices are based on monthly payments and affordability, which is related to debt-to-income ratio for the month.
When interest rates go up and monthly payments go up that means a home seller needs to drop the home price to offer the same monthly payment.
Right now we have really low inventory though, so that is why buyers are offering over $50,000 to $75,000 over list price with multiple-offers.
This increase in interest rates creates a huge problem for so many with the rising cost of debt:
Government- with $29 trillion dollars its very important to keep their interest rate low to afford servicing the debt.
Zombie companies- these companies only stay in business by rolling over debt at very low interest rates as they aren’t actually profitable. It’s a large part of the businesses in the world.
Corporate debt and stocks- when interest rates are higher than profits are smaller and earnings are smaller making stock values going down.
Credit card holders- usually tied to a variable rate, debt payments even go higher with more interest
Those buying real estate- higher rates means a higher monthly payment.
Fed prints a lot of money
Now the Fed has to print way more Money to keep rates down which then debases the US dollar and purchasing power goes down
Then all of these housing costs go up and even more items.
Labor and Maintenance
Lumber had been up 400% recently for the year and copper 34%, but it all compounds when it increases on so many items. So as you can see housing costs can go up no matter which way the 10 year yield goes.
What my investor partners and I want to invest in
Free and clear high-demand vacation locations
These are prime areas for vacations, Airbnb, great lots, views and locations near oceans, water, warm weather and night life, as well as many bedrooms for larger stays and cash flow.
When you as the homeowner own the property we can negotiate seller financing with you on terms that work for my investors and a price and terms that work for you.
Here’s your motivation to sell your property to us
deferred maintenance- it’s common many have lived in their home for decades and hasn’t been updated since your home was originally built in the 1950s or 1960s
health- you are aging and medical bills have you feeling limited with options and thinking about family and retirement
Covid- covid-19 shut down, rules, and new strains have you uncertain about your future.
income taxes- Many have deferred income taxes and want to stay away from short-term or long-term capital gains to avoid huge tax bills. Also depreciation recapture.
property taxes- you are months or years behind on your property taxes and afraid of losing your property.
vacancies- your bedrooms or property has been vacant for months or years and it’s costing you thousands of dollars.
mortgage payments- you are behind on your mortgage payments with your lender, in forebearance, have a notice of default or near a redemption period as you are entering or in foreclosure.
rental income- you haven’t been collecting rental income for months or over a year because if the eviction moratorium. The tenants won’t leave amd May have damaged the property.
eviction-you need to evict tenants and really are burnt out.
Emergency savings- you’ve delayed putting together an emergency savings account.
retirement-you’ve avoided and put off creating a retirement account.
401k- you’ve put off funding your 401k account
employment- you have uncertainty about your job future, layoffs, downsizing, forced into retirement, furlough, or unemployment.
By now their are growing and compounding concerns getting worse by the day with options and time running out, so let’s discuss the solution of you reaching out and getting an offer from one of my investors to buy your house if the price and terms make sense.