Parasite Flight Millennials and the Opportunity in Real Estate

In the middle of a pandemic that experts say will tank the economy, the housing market just had its best June since 2005. New home sales spiked 55%, interest rates are at record lows and California was the only state that pulled back prices. This is more than a buyer’s market — it’s a buyer’s bonanza. If history is any indicator, opportunities like this will not last long.

Oh, are you just finding out? Well, then! Read on.

For you new folks, crises are when well prepared people get richer. Money is kind of like energy; it’s neither created nor destroyed. It just moves around. COVID, just like the housing/banking crisis of 2008, the dot-com bubble of 2000 and every crisis before it, just consolidates money into the hands of people who know how to attract it.

The way to attract money now is in real estate. You may have assets to leverage so you can buy, or this may be your first rodeo. Either way, here’s what you need to know.

Parasite Flight

New buyers are snatching up homes so quickly that unsold new inventory dropped 20% annually. There is only a 90 day supply of unsold homes on the market (average is around 6 months), but experts believe that will soon increase. As government unemployment stimulus and the 12 month CARES act mortgage forbearance dries up, renters will leave and landlords without renters will sell. They’ll be looking to get out of the market quickly, because the inventory that upwardly mobile buyers want isn’t in the cities. Millennials are the good folks driving this housing rally. They are looking for move-in ready, socially distant homes in the suburbs. Telecommuting is the new thing, so there’s no reason for this cohort to risk COVID in the city. But the working class who can’t uproot still need housing. Depending on your budget (and COVID risk tolerance), you can either find a downtown deal or a rising value in the parasite flight suburbs.

Timing Your Strike

Demand is pulling back from its highs already as we move into July. Buyers who can afford move-in properties are snatching them up, but this pace cannot last. Don’t tell this to developers. Many of them are already ramping up production based on the June numbers. If we don’t get a substantial stimulus to float the economy until the pandemic subsides, we’ll likely see overproduction in Q3 and Q4 2020. How much will the market overshoot its supply? No one knows, but we can be sure there will be an imbalance before the correction. Be on the lookout for wilder-than-usual price swings, weighted to the lower end of buying ranges as Gen Xers look to protect their retirement nest eggs from market volatility. If we get a double dip recession (which seems more and more likely as the corona Congress drags its feet), you can expect even better buying opportunities from fear-based selling. No, you don’t have to get your new home at the very bottom of the market to get a good deal. But when you find a deal you like, you do need to strike quickly.

There’s an App for That

Striking quickly in real estate may seem like an oxymoron. In the traditional home buying process, that’s probably true. But if you see this market for the once in a lifetime opportunity it is, you can use Figure to bring you up to speed with the market. Figure accelerates the home refi process to get you cash out for a new purchase in days rather than months. What’s more, you can apply from the comfort of home — away from germ-filled banks. Lock in today’s low rates and get as much as $500,000 to invest in new deals. Figure is also blockchain ready, with lenders buying and selling loans on the Provenance blockchain. Cut out the bureaucracy of the middleman and go straight to the source.

Your Next Move? Go Figure

As crazy as things seem now, real estate is still one of the best investments to consider if you’re looking for long term, low risk returns. Using Figure, you can move like a millionaire even if your bank tally would normally put you in the 3 month wait loan line. The traditional way of buying real estate is for traditional people. We’re not in traditional times — this is the parasite flight!