There are several easy ways to make quick money in America today than just walking around the house. The real estate market is hot, real estate revenues are at a record high. With an average of $ 66,000 per home, ությունը HGTV-inspired monks gather in business for months.
And now, so are American financiers. Today, there are more than 60 banks and other firms that finance flyers, according to AlphaFlow Investment Company, which buys real estate loans from lenders. That is almost 50% more than a little over two months.
It was always a matter of time before lenders put their fears aside and started writing fixed-income checks again. Memories of the 2007 bust are slowly fading, most importantly, most fixed-income investment rates are still so low in the epidemic that lenders are desperate to seize everything that provides a lucrative return, especially when it comes to with business. it blooms.
The average annual interest rate on a fixed real estate loan is more than twice as high as the 3.09% interest rate a bank can earn on a 30-year mortgage loan, more than twice as high as the 3.75% interest rate on a number of the largest loans. for garbage. Rated borrowers can pay. Loans to flip-flops also tend to be short-term, often measured in months rather than years, which is attractive to many lenders when interest rates rise.
To be clear, the big names on Wall Street are not going into business, at least not yet. So far, these are mostly second-tier regional banks և shadow lenders with names most Americans have never heard of, such as Cutter Hill Capital, Builders Capital և Temple View Capital.
Still, they collectively plow the market so much cash that they have surprised some of the veterans walking around the house. De on Piazza, a contractor who specializes in home remodeling near Wilmington, Delaware, says he has never seen as many competitors in his business in four decades as he does today.
“Banks are just throwing money at you,” Piazza said.
None of this is a cause for panic over another expected housing bust. Experts say that we are far from that opportunity at the moment. Still, they are concerned that this cash flow will only foam the market, which is similar to rising financial assets at record interest rates, and will further raise the prices of inaccessible homes. many Americans are struggling.
“The problem is speculation when prices go up, because that’s what people expect,” said Benjamin Keys, an associate professor of real estate at the University of Pennsylvania’s Uharton School of Real Estate. “Some of it becomes a prophecy when a lot of money is invested.”
Flippers benefits city dwellers who are fleeing urban epidemic life and looking to buy homes in the suburbs. There is not so much to buy. Inventory of existing homes has been minimal since at least 1999.
These low stocks encourage investors to buy older or more desolate property, effectively increasing the supply of affordable homes for sale. About 5.9% of home sales in 2020 fell to these buyers, which is the second highest percentage of any year since 2012, according to research firm Attom Data Solutions.
Those who flock to the real estate market have made huge profits. The average gross profit from the sale of such a house in 2020 reached a record $ 66,300, which is the highest figure for at least 2005, according to Atom. The boxers find that they have to pay more for the houses they buy, which reduces the return on investment by 2020. On average 40.5% in 2019 Compared to 41.5%
High dollar rates make lenders more attractive to lenders, participate in parties, and reduce the potential profitability of financiers. Current interest rates on loans have fallen by 2 percentage points since the same period last year, said Ut on Bicham, CEO of Deutsche Bank, a former commercial real estate firm now run by Toorak Capital Partners, an investment firm specializing in this type of lending.
Many investors expect the turnaround to continue its rise this year. There are still families who want to leave the cities and move to larger suburban homes. AlphaFlow estimates that each could sell $ 75 billion worth of homes over the next two years, up from an average of $ 56 billion each in the last three years.
And if unemployment remains high, և mortgage schemes end, lenders may end up seizing a growing number of homes. Speculators who have been aggressively relocated as a result of the recent thawing of their home-buying property may be once again ready to buy back the homeowners the banks may want to dump.
The industry has changed since the housing bubble, according to people who renovate homes or fund bubbles. For one thing, the supply of homes is so much heavier that after years of relatively low-rise construction, prices are less likely to fall, says Ray Sturm, co-founder and CEO of AlphaFlow.
When home sales hit a decade-low of more than 4 million units a year last May, they soon returned to end the year at 6.65 million, according to the National Association of Realtors. That was probably because it was difficult to find homes during the epidemic, says Toorak’s Beacham.
“There is a tangled demand for apartments. “We expect 2021 to be a strong year for this market,” Bicham said, referring to the shirts.
The most common home noise states are Tennessee, Arizona, Alabama, Georgia and Nevada, according to Attom.
Torak is not alone in seeing better times. Civil finance services provide loans to investors who buy, renovate apartment buildings, rent a single family, and this year it is planned to increase loans by more than 50% to $ 1.7 billion. William Tessar, vice president of Redondo Beach, California, said:
His optimism is partly due to the company’s new opportunities for cheaper financing, as recently acquired by Pacific Western Bank.
Prior to the deal, Civic’s assets were worth about 5%, says Tesar, but now that it is part of the bank, it can rely on low-cost deposits to finance new loans. The US Federal Reserve paid 0.24% interest rate on its assets last quarter, a record low, according to the Federal Deposit Insurance Corporation, which allows Civic to significantly increase its margin, Tessar said.
The city of Delaware, Wilmington, wanted to bring in builders and contractors who were renovating homes to help renovate the neighborhood, said Mayor von Rago, the city’s deputy chief of staff.
Rago says city officials have transferred ownership of the vacant property to a land bank that works with developers to repair and sell the homes. Over the past two years, the Land Bank has sold more than 100 properties.
Although not everyone is looking forward to the future. The inventory of apartments is so low և they do not necessarily have many opportunities to find insufficient houses to fix them. This was stated by Kurt Altig, CEO of Seattle-based lender Builders Capital. He said more T-shirts now make fewer deals.
Flippers often focus on the lower end of the housing market. Nearly 68 percent of all home turnover last year sold for $ 300,000 or less, according to Attom. The average home sale price at the end of December was $ 309,200.
These homes are also on the smaller side, averaging about 1,450 square feet over the past five years. The average size of a single family home in the United States is about 2,300 square feet.
According to Atom, almost 60% of home improvement companies finance themselves. Financing parties can usually only get loans that are equal to 60% to 75% of the estimated home value, leaving more room to protect the lender.
“The reality is that people want to move into a house that is ready from the inside,” said Toraki Bicham. “Most people are not comfortable fixing problems.”