Stock Loans Combine Best of Both Markets
Secured stock loans allow buyers to snap up tempting real estate deals
These are tempting times for real estate bargain hunters. Unfortunately, many investors have money tied up in dwindling stock portfolios, and the best way to recover those losses may be to leave the money right where it is. On the other hand, whether it's the tony house down the street with a falling price, a rock-bottom rental, or office space listed at a deep discount, there are real estate deals to be had.
Investors with stock portfolios are getting the best of both markets. Instead of selling outright, they are retaining their stocks and getting secured stock loans to snap up irresistible real estate bargains.
No shortage of distressed and foreclosure properties
Investor purchases of foreclosed houses have helped boost home-sale figures sharply in recent months, although prices remain depressed. There seems to be no shortage of foreclosed and distressed properties. In May, Mortgage Bankers Association reported that 12 percent of home-loan borrowers are behind on their payments or in foreclosure, a record 36-basis-point increase in one year. New York-based real estate research firm Real Capital Analytics estimates that there is presently $90 billion in commercial distressed real estate in the United States.
Generational demographics drive market recovery
The State of the Nation's Housing 2009 report prepared by the Joint Center for Housing Studies of Harvard University, predicts that once the U.S. emerges from the current recession, strong demographic trends will restore health to the housing market. Echo boomers - the 75 million Americans born between 1979 and 1995 - are the key to recovery.
"There will be 5 million more echo boomers than there were boomers when they first started swelling housing markets," said Eric Belsky, executive director of the Joint Center. Household growth during the next 10 years should range between 12.5 million and 14.8 million. "This is a powerful, powerful underpinning of future demand," said Belsky.
According to the report:
The longer-term outlook is also promising. The record size of the echo-boom generation now reaching young adulthood should help keep household growth at least on par with 1995-2005 levels even if immigration slows dramatically from its peak pace in the first half of this decade. Over time, the combination of pent up [sic] demand from deferred household formation and low levels of home building will reduce the excess vacant inventory, bring markets back into balance, and send housing starts up sharply from early 2009 levels. If history is any guide, housing markets will rebound in advance of labor markets and help to spark the economic recovery.
Price corrections and production cuts point to eventual recovery stock-certificates
There are strong factors working against a quick recovery, however, and it's not clear whether recent increases in housing starts and existing home sales imply a rebound. "The best that can be said of the market is that house price corrections and steep cuts in housing production are creating the conditions that will lead to an eventual recovery," he said. "For now, markets remain under considerable stress."
That stress combined with confidence that the stock market will also rebound, are motivating investors to hang onto their portfolios and employ stock loans to take advantage of bargain-priced real estate investments.
These are tempting times for real estate bargain hunters. Unfortunately, many investors have money tied up in dwindling stock portfolios, and the best way to recover those losses may be to leave the money right where it is. On the other hand, whether it's the tony house down the street with a falling price, a rock-bottom rental, or office space listed at a deep discount, there are real estate deals to be had.
Investors with stock portfolios are getting the best of both markets. Instead of selling outright, they are retaining their stocks and getting secured stock loans to snap up irresistible real estate bargains.
No shortage of distressed and foreclosure properties
Investor purchases of foreclosed houses have helped boost home-sale figures sharply in recent months, although prices remain depressed. There seems to be no shortage of foreclosed and distressed properties. In May, Mortgage Bankers Association reported that 12 percent of home-loan borrowers are behind on their payments or in foreclosure, a record 36-basis-point increase in one year. New York-based real estate research firm Real Capital Analytics estimates that there is presently $90 billion in commercial distressed real estate in the United States.
Generational demographics drive market recovery
The State of the Nation's Housing 2009 report prepared by the Joint Center for Housing Studies of Harvard University, predicts that once the U.S. emerges from the current recession, strong demographic trends will restore health to the housing market. Echo boomers - the 75 million Americans born between 1979 and 1995 - are the key to recovery.
"There will be 5 million more echo boomers than there were boomers when they first started swelling housing markets," said Eric Belsky, executive director of the Joint Center. Household growth during the next 10 years should range between 12.5 million and 14.8 million. "This is a powerful, powerful underpinning of future demand," said Belsky.
According to the report:
The longer-term outlook is also promising. The record size of the echo-boom generation now reaching young adulthood should help keep household growth at least on par with 1995-2005 levels even if immigration slows dramatically from its peak pace in the first half of this decade. Over time, the combination of pent up [sic] demand from deferred household formation and low levels of home building will reduce the excess vacant inventory, bring markets back into balance, and send housing starts up sharply from early 2009 levels. If history is any guide, housing markets will rebound in advance of labor markets and help to spark the economic recovery.
Price corrections and production cuts point to eventual recovery stock-certificates
There are strong factors working against a quick recovery, however, and it's not clear whether recent increases in housing starts and existing home sales imply a rebound. "The best that can be said of the market is that house price corrections and steep cuts in housing production are creating the conditions that will lead to an eventual recovery," he said. "For now, markets remain under considerable stress."
That stress combined with confidence that the stock market will also rebound, are motivating investors to hang onto their portfolios and employ stock loans to take advantage of bargain-priced real estate investments.