The affordability crisis that is breaking America
While the stock market may be hitting new highs. It doesn't have a direct correlation to the bigger issue we still face in America. The cost of living is actually becoming a bigger issue with the markets rise creating a bigger spread between those who can, and cannot, afford to keep up with the rising cost of living. The Affordability crisis is here. The cost of living, and access to affordable housing are still a significant and growing vs shrinking issue for most Americans. We have decided to take a new TruVest approach in moving beyond affordable housing to a "sustainable housing" approach. Which takes a contemporary holistic vs black and white approach to address the housing crisis in relation to the growing affordability crisis we are "all facing.
The following article is an in-depth look at a critically important socio-economic issue that's not getting enough light in relationship to the things that truly matter. We look forward to your thoughts in the comments. We want to hear about your relationship with the affordability crisis.
In one of the best decades the American economy has ever recorded, families were bled dry.
By ANNIE LOWREY?For The Atlantic
In the 2010s, the national unemployment rate dropped from a high of 9.9 percent to its current rate of just 3.5%. The economy expanded each and every year. Wages picked up for high-income workers as soon as the Great Recession ended, and picked up for lower-income workers in the?second half?of the decade. Americans? confidence in?the economy?hit its highest point since 2000, right before the dot-com bubble burst. The headline economic numbers looked good, if not great.
But beyond the headline economic numbers, a multifarious and strangely invisible economic crisis metastasized: Let?s call it the Great Affordability Crisis. This crisis involved not just what families earned but the other half of the ledger, too?how they spent their earnings. In one of the best decades the American economy has ever recorded, families were bled dry by landlords, hospital administrators, university bursars, and child-care centers. For millions, a roaring economy felt precarious or downright terrible.
Annie Lowrey: Cancel billionaires
Viewing the economy through a cost-of-living paradigm helps explain?why roughly?two in five American adults would struggle to come up with $400 in an emergency so many years after the Great Recession ended. It helps?explain why?one in five adults is unable to pay the current month?s bills in full. It demonstrates why a surprise furnace-repair bill, parking ticket, court fee, or medical expense remains ruinous for so many American families, despite all the wealth this country has generated. Fully one in three households is classified as ?financially fragile.?
Along with the rise of inequality, the slowdown in productivity growth, and the shrinking of the middle class, the spiralling cost of living has become a central facet of American economic life. It is a crisis amenable to policy solutions at the state, local, and federal levels?with all of the 2020 candidates, President Donald Trump included, teasing or pushing sweeping solutions for the problem. But absent those solutions, it looks certain to get worse for the foreseeable future?leaving households fragile, exacerbating the country?s inequality, slowing down growth, smothering productivity, and putting families? dreams of security out of reach.
The price of housing represents the most acute part of this crisis.
In metro areas such as the Bay Area, Seattle, and Boston, severe supply shortages have led to soaring prices?millions of low- and middle-income families are no longer able to purchase centrally located homes. The median asking price for a single-family home in San Francisco?has reached $1.6 million; even with today?s low-interest rates, that would require a monthly mortgage payment of roughly $6,000, assuming that a family puts down the standard 20%. In Manhattan, listings for sale?now ask an average of nearly $1,800 per square foot.
The housing cost crises in the Bay Area and New York might be the country?s most obscene. But the problem is national, driven by a combination of stagnant wages, restrictive building codes, and underinvestment in construction, among other trends. Home prices are rising?faster than wages in roughly 80% of American metro regions. In 2018, housing affordability declined in every one of the 160-some urban areas analyzed by?the National Association of Realtors, save for Decatur, Illinois. Rising prices and housing shortages are squeezing families in?Reno,?Minneapolis, and?Phoenix.
The problem now even extends to?rural?areas, where income growth?has lagged?in the post-recession period. A recent report by the Pew Charitable Trusts?found??sizable? increases in the number of households spending half or more of their income on housing in rural counties across the country. The housing crisis is hitting Bertie County, North Carolina, and Irion County, Texas, too.*
One central effect of the housing-cost crisis has been to turn the United States into a country of renters. The homeownership rate has fallen from a peak of nearly 70% in the mid-aughts to under 65 percent today; the numbers are more acute for Millennials, whose homeownership rate is 8 percentage points lower than that of their parents at?the same age. Unable to buy, roughly 3.5 million younger families have?kept renting?delaying the Millennial and Gen X cohorts? wealth accumulation, thus consigning them to worse net-worth trajectories for the rest of their lives. And renting, for many families, is not affordable, either: Nearly half of renters are facing uncomfortable?monthly bills, and the cost of renting has risen faster than renters? incomes for a full 20?years now. >>> READ MORE HERE
Evansville Promise Zone Partnership Announcement
If you are available please join us on Monday, February 11th at 1:30 pm CST to announce our new affordable housing partnership. The Promise Zone has formed a partnership with TruVest to rehab 25 homes in the Promise Zone in 2019. They are working with local realtors, the Evansville Land Bank and the Promise Zone to locate houses suitable for rehab. People with credit scores of 600 or more will be eligible for mortgages through Old National Bank (other qualifications may apply). If a person does not qualify for a conventional mortgage, TruVest will provide financing based on each individual situation. The press announcement will be at 723 East Oregon Street. Hope to see you there?
How to Build a Mountain of Wealth Outside of the Stock Market-Part 2
Another week has come and gone and the Markets finished on a downward slide. I am sure some of you are experiencing some heartburn with your investments. Are you being proactive with moving your investments in and out of the Market, or are they tied up in your 401(k)? The one thing that I wanted to make sure for myself that I had full control of my investments as they are my retirement nest egg. In my last post I provided an overview of real estate note investing niche and the two types of investments that are available to you and me. In this post I want to discuss the ins and outs of performing notes.
A performing note A.K.A. is a mortgage that you or I can get from our local bank. Once your mortgage is funded by your lender or broker it either is serviced by that entity or it could be sold to another financial institution. Mortgages are sold in what is called the primary market. The major players in this market are banks, credit unions, and mortgage brokers. Now you are asking yourself where to do I come into play? You come into play in the secondary market. Before, I go into too much depth on the secondary market I want to give you an overview of Mortgage Backed Securities(MBS). Mortgage Backed Securities were created by President Lyndon Johnson when the Charter Act was passed in 1968. The original concept of MBS was to allow banks to sell off mortgages that would in turn allow them to free up funds to lend to other homeowners. The simplest MBS is called the pass-through participation certificate. This MBS pays the holder principal and interest payments that have been collected on the mortgage. This MBS is the most common you and I will invest in the secondary market. The creation of MBS also allowed non-bank institutions to enter into the mortgage business, and lenders were able to get their cash back in the secondary market instead of waiting for 15 to 30 years for the mortgage to mature. This brings us to the 2000s when the industry decided to become creative in offering complex MBS to entice new homeowners. We all know how this finished! I am not willing to rehash history, but if you want to read more about MBS here is a great website.
With all that out of the way lets talk about how you and I can invest in the secondary market. There are numerous ways to invest in the secondary market, but I am going to cover the three options I have experience with. First, purchasing directly from banks, lenders, hedge funds, and mortgage brokers. This choice is for a person that is looking to be a full-time investor, and he/she will have to build relationships with these financial institutions. Specifically as I have done in my career many times one has to "Dial for Dollars" to Asset Managers. These individuals control multi million dollar portfolios for their respected banks, and their job is to make sure these loans are sold and off the books before the end of the banks' fiscal year. The 2nd option is to purchase directly from private sellers. This option too has some full-time aspects as in you have to market your business to potential sellers in the form of phone calls, website presence, email marketing, and direct mail campaigns. A private seller is typically an individual/couple that has sold their home to a buyer on Contract/Owner Financing, which is another form of a MBS. Another nuance of contracts/owner financing transactions is that you need to ensure the loan was originated per Federal and State Laws. The biggest challenge I have experienced with these MBS is the contract violates State usury laws. When that is discovered the contract has to be re-written like a new loan. All terms stay the same except the interest rate on the loan is lowered and the home buyer will sign the new loan documents. The 3rd option is to be a private lender. Simply put you are the bank and you are lending funds to investors with an ROI expectation. This option by far is the easiest way to start investing in MBS.
There are endless investment vehicles that one can choose from, but there are not many investments that have a greater impact on society as a whole like MBS. When you invest in a contract/owner financing transaction you are providing financing to home buyers that otherwise would not be able to obtain a mortgage due to some credit challenges. In turn, you earn a healthy ROI and your investment is backed by real estate. I will leave you here for this post, and in my next post I will talk about non-performing notes (MBS), and how they too can be a great investment vehicle for your portfolio.
About the Author:
Ryan is an Executive Level Manager with over 20 years of progressive management experience in all aspects of; finance, compliance, divisional & product management, operations, advanced technology development, and real estate related investment opportunities. TruVest, infuses cutting-edge technology to identify non-performing assets that will generate multiple streams of revenue. Utilizing proven models and processes, TruVest consistently turns non-performing assets into performing, resulting in consistent solid returns.
September carries greatest single-month-default surge in a ten-year period
Home loan defaults rose in September, producing the most extensive single-month-default increase in many years.
Defaults accelerated to 13.2% in September, the most substantial month-to-month increase since November 2008. This increased the nationwide default rate to 3.97%.
Generally, the month of September experiences an increase in defaults. Of the most recent 19 Septembers, 16 experienced increases, which brought the average default rate to 5.2%. This is the biggest jump in defaults for any single month.
UNCOVER MORE REAL ESTATE TRENDS
The 2nd variable that generated an increase in defaults was the fact that the calendar month finished on a Sunday, which generally causes a tremendous burden on defaults.
Moreover, Hurricane Florence, which swept the Eastern United States in September, impacted defaults to an increase of 38% month-over-month in the States it affected. Currently, more than 6,000 homeowners are delinquent as a result of being affected by the hurricane.
Foreclosures dropped 15.1% from August to virtually an 18-year low. This was actually down 11.5% from September 2017. The month's double-digit decrease brought foreclosed properties to 40,000 for the month.
Is There a Shortage?
I hope you had a productive week.
For some reason this week there was a ton of articles on the spring housing shortage. Is there truly a shortage? Or have our expectations gotten out of control? Can you spend a little more time finding a house that needs some "TLC" in a good neighborhood? On the other side of the equation, mortgage rates are going up, but rates are still respectable to where homeownership is not out of reach. I know from our perspective that some markets are tighter than others, but we are always able to find houses to purchase.
Is there a shift in mentality needed for homebuyers that are entering the market this year? I would like to hear your thoughts on the topic. Until next week, let's all be part of bringing Wall Street to?YOUR?Street! Have a great week and I look forward to speaking with you soon!
Transparency = Caring
I hope you had a great week!
For the past few weeks, we have been finishing up one of our properties in Indiana.
We have agreed to sell it with owner financing to a local family. This family has a special needs child. We were supposed to close the transaction this week, but there was an emergency with their child to where they had to take him to OH for surgery. We had the family scheduled with our Title Company to sign documents and close. With this emergency, they could not close and the Title Company charges a fee for "No-Shows". I was able to talk to our title representative and explain the situation. She was very thoughtful and wiped out the fee. She then told me that when the family comes in to close next week she had a few gifts she wanted to give them. It really touched me, and I thanked her many times. She said something that reminded me why I am in the business " Ryan, we all go through tough times in life, and if we cannot help one another why are we on this planet".
One of the core values we live by is "Doing The Right Thing". This situation definitely falls into that category! I am really excited to get this family?into?their home next week! I will share some pictures with you once we get them in.
What a Week!
This past week was full of so many emotions! We commenced beta testing for our due diligence platform, and also purchased 2 assets in Indiana. The launch of the platform by far has been the toughest challenge I have faced in my career. I am very thankful for my family, colleagues, and friends that have supported me on this journey. Now the next chapter of this journey starts this week with implementing feedback from the beta testers, creating the new website for TruExchange, and throughout the week I will be sharing our progress on our recent acquisitions.?Let's all be part of bringing Wall Street to?YOUR?Street! Have a great week and I look forward to speaking with you soon!
Have You Ever Felt Lost?
Have You Ever Felt Lost?
It seems like I misplaced my Crystal Ball
Has this ever happened to you?
That is how I felt this week, and all that I needed was just a little time to reflect
I started The Platform Journey several months ago, and I had no clue how it would turn out
This journey has taken me down several paths. Some have been good, and some have been not so good
However, this journey finishes I know two things: I have put everything that I have spiritually into this journey, and the Platform that is launched will provide great VALUE to you
Thank you for allowing me to share my personal journey with you
Have a great week, and I hope your own journey is going well!
This Week Has Been Challenging!
This week has been Challenging and Rewarding
The Platform is coming to LIFE!
Dashboard has gone from mock-up to development
Had a Discussion during the week with an individual that watched the dashboard video (https://lnkd.in/g_t6zaT ) from last week
The conversation went well, and he provided some great feedback and improvements. That all have been documented for future releases (I will share our conversation in an upcoming post)
Platform Lesson #1 from the week
Functionality is critical
And this is something I know, but this week the details got the best of me
I was too focused on getting three aspects of the platform completed and I lost sight of the end result
Providing automation and functionality for you.? I hate when I lose focus on the end result.? My passion and perfectionism got the best of me!
Which leads me down the road of tangents.? Can you say SQUIRREL!!!!
Platform Lesson #2 from the week
Never lose sight of your why
From the beginning of this journey, I have been focused on providing value
If myself and our team cannot provide this to you then we have failed
This is what drives me every single day.? I love the challenge!
What is driving you on your journey? Would love to hear from you!
I look forward to connecting with you next week!
Cheers!