In a recent NBC News interview Diane Swonk, chief economist at KPMG, claimed that the housing market is “crashing” due to the Federal Reserve’s rapid rate hikes and the cooling of the housing market due to unaffordability despite inventory constraints. However, other experts disagree and don’t believe that these factors alone will lead to a housing market crash.

Daryl Fairweather, chief economist at Redfin, suggests that the prices of homes are still above what they were last year so it doesn’t qualify as a crash. If you’ve bought a property in 2020 or 2021 you don’t need to worry about the value of your home. It’s still higher than it was before, even if it has seen some decline in value.

Moreover, buyers have put more money down on their homes in the past decade which serves as a financial cushion in case of a recession or job loss. So if you’re a homeowner you’re in a much better position than you were before the 2008 housing crash. But where does this leave the families without a credit score that doesn’t qualify them for a good house?

Remember that there is a very important FICO statistical data and that is that 50% of Americans do not own a home since they do not qualify for a conventional mortgage loan and this significantly opens up the offer alternatives for those with less qualifications. This is a new niche not recognized by most.

So again, what does this mean for families and their dream home?

“With mortgage rates at the highest level since the early 2000s and affordability at a record low, many potential buyers are priced out of the market or unwilling to buy a home in fears of home-price declines,” says Selma Hepp, deputy chief economist at CoreLogic.

Well according to Bankrate [2], home prices are expected to hold up in most areas due to rebounding demand and a continued low inventory of homes on the market. Additionally, the National Association of Realtors [3] predicts a 1.2% increase in home prices this year. Which still means an affordability problem for those families that make under $50K a year and have credit scores that disqualify them for a traditional mortgage or bank loan.

But what about supply and demand? The country is facing an acute housing supply problem due to a combination of factors. However, home builders are cautiously optimistic according to the National Association of Home Builders [2]. They’re using sales incentives to support new home sales and help ease the supply issue.

What most don’t see is that there is a more remunerative and safer possibility, which is to create equity instead of waiting to lose it. With the PhilanthroInvesting system, families and investors can create equity and not fear devaluation. It is a smarter and safer approach.

They buy houses at low prices and sell them financed on a 20 year loan with a 12% interest rate, which provides them with a net yearly return between 8 to 12% to face the recession without complications!

By having our PIs covered since the conception of our operation, this forecast is a good one for them only meaning better opportunities for our PIs to grow their capital since they are betting on constantly creating equity. So the pending issue would be affordability for low-income families looking for a home.

The bottom line is, according to the experts: “don’t let the fear of a potential recession stop you from buying your dream home. Just make sure to consider your budget, income stability and emergency funds before making a decision [1]. And remember, even if the market does take a dip it’s likely to reset rather than crash.”

Another tip the experts give [4] is that one thing someone can do is look for more affordable metros outside of big cities or consider compromising on the size/amenities of their dream home.

“If you’re not ready to buy a home just yet then take this time to bulk up your savings, build your credit strength and research towns/neighborhoods that might suit your needs. Don’t try to time the market and guess when mortgage rates will hit their lows because that’s a difficult game to play. Instead, think long-term and consider what your housing needs look like today and might look like in the future.”

Or simply: “Remember to keep an eye on your credit score and look for ways to improve it while making sure you have enough savings for a down payment.”

Our answer to this is that we carefully select these areas for this purpose, saving them the time and effort of building a credit score, or the necessity of bulking up their savings since both the downpayment is at least $1000 to $2000 and the monthly payment is two thirds of the average rent price, just leaving them to “worry” about coming up with a plan on improving their homes in a 20 years timespan.

Their credit scores will go up in time since that’s another thing we do to help them, achieved by reporting each payment they make to the credit bureaus so their situation improves in the future. Who knows? They might be able to refinance with a bank and pay off the loan to the PI in 8 years instead of 20, for example. Anything’s possible!

In conclusion, we are offering you the alternative hinted at in many forecasts, one that we’ve been perfecting for years. A concept that last year we named Traditional Vs Unique.

See you next week!

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References:

[1] The Housing Market Amid Recession Fears: Should You …

[2] 2023 Q3 Housing Market Trends: What To Expect

[3] Real Estate Housing Market Predictions & Forecast 2023

[4] Will The Housing Market Crash in 2023? Experts Give 5-Year Predictions