China coughed and the world caught a cold. I got that term from a fellow financier and it is the perfect description of recent events with the Coronavirus.
China is the second-largest economy in the world, exporting about 540 products. So, when China couldn’t make and ship out their products, companies and governments suffered. Think about not being able to get your laptops, smartphones, furniture, clothing, plastics, and chicken.
America is the largest economy in the world. It is even more imperative that we are firing on all cylinders. Unlike China, almost 70% of our economy depends on personal consumption; that is, you and me spending money. That is what we do as Americans; we spend money and lots of it. In fact, 64% of Americans own homes yet 69% have less than $1,000 saved. As a finance person, this means opportunity so, let’s talk Real Estate.
Recent decisions to open states have posed the threat of not only an increase in health challenges but increased financial hardship. The real estate market lags behind the stock market. It makes sense, it takes time to view homes, apply for mortgages, get approved, etc.
If you want to invest in real estate, although it is still a sellers’ market, it’s a good time to get your ducks in a row. A recent forecast suggests a 50-60% decline in sales. That would make it a buyer’s market which will force lower home prices.
In April, 1 in 3 tenants did not pay their rent. This can lead to lots of evictions in 6-8 months. If that happens and the economy is still slow, it is going to be hard for landlords to find new tenants to replace the old ones. Landlords who are highly dependent on their investment income will take a hit and be motivated to cash out by selling their properties. Also, if the economy is slow to recover, there will be an increase in home foreclosures. This will lead to more conservative loan underwriting. Banks are already tightening up mortgage qualifications requiring higher credit scores and larger down payments. As a side note, interest rates are currently at a record low.
Of course, it is “wait and see” from here, but if you want to buy a home or investment property, the opportunity seems to be on the horizon.
Food for thought!
LanaWant some direction on how to move forward with your finances, schedule your free Q&A with me, and let’s see if working together is the right move for you. Go to calendly.com/lwilliamfinance
By now, I am certain you are taking the precautionary healthy steps to protect you and your family from the Coronavirus. It is my experience that panic can ensue regarding financial matters during times like this. Usually, it is AFTER an event such as a hurricane, tornado, or sudden death of a loved one. This puts you in a reactionary mode. We are at an advantage with this virus, in that, we can put together a plan in advance. To help with this, I’ve put together 8 key financial moves to make during this time of unrest. They are:1) Do things that help you relax. Emotions and finances are a bad mix. 2) Get some cash 3) Pull money from your savings account with the lowest interest rate 1st. 4) Use your credit card with the lowest interest rate 1st. 5) Leave your existing investments alone. 6) There’s a stock clearance sale right now. This is the time to buy. 7) Pay ahead or more on key bills and keep your receipts. Mortgage, rent, electric, gas, water, etc. 8) Don’t get down if your financial plan gets interrupted. This is why you have a plan. On another note, the FED decreased interest rates last week. This is usually done to stimulate the economy. How does it impact you? Low-interest rates mean it costs you less to borrow and invest. So, if you are thinking about: 1) Getting a loan – start paying attention to loan interest rates. They should drop soon. 2) Paying off your credit cards – if they have a variable rate, which they probably do, pay more. You can pay it off faster when the rate is lower. 3) Saving money – lock into a higher rate CD before rates drop. If you find these tips helpful, financial coaching is probably a good fit for you. Click here https://calendly.com/lwilliamfinance to schedule your complimentary 20-minute Q&A. Let’s talk about what’s going on with your money and how I may be able to help. Financially yours, Lana
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