A $2T Stimulus Package or Legislative Hail Mary?
The world has completely stopped. This is an unprecedented time, where the nation has experienced a shell shock to the supply chain and consumer demand. The cure to this self-inflicted shock is passed legislation known as the “CARES” Act. This legislative Hail Mary is a $2 trillion economic stimulus package - the largest in U.S. history.
This cocktail of ingredients provides support for essentially all Americans. Yet, what the $2T stimulus does for the real estate universe is arguably ineffective. This is rather concerning as a potential apocalypse could come, if COVID-19 is not suppressed. To further illustrate,
- The stimulus package offers no direct relief for landlords. They might find respite indirectly, however, through the one-time $1,200 check to most individuals making up to $75,000.
- What happens to mortgage servicers remains unclear. Last week, the Mortgage Bankers Association estimated that lenders could be on the hook for at least $75 billion on short notice, and possibly more than $100 billion if homeowners and landlords sought forbearance en masse
- Real estate investment trusts are mentioned briefly in the bill — but only to exclude them from part of a temporary change to rules around net operating losses, loans, leases and other contracts likely will need to be restructured and renegotiated. This need collaboration will need to be facilitated by the government.
Fortunately, in Colorado Springs, there is hope for the real estate industry. Pre-COVID-19, the city was experiencing an economic renaissance with over a $1B in real estate developments. These developments will continue as Hardhats can expect significant support. Infrastructure and construction could be eligible for $43 billion of the $340 billion outlined in the appropriations section of the package. Retail and small businesses are eligible for the Paycheck Protection Program that is designed to preserve jobs. The U.S. Small Business Administration said it will forgive loans “if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.”
Fortunately, you have the Top 5 Real Estate Team, The Lana Rodriguez Group (LRG) at your side to combat this challenging environment. This organization is energized with Real Estate Professionals and Veteran Business Owners, specializing in the home buying, selling, investing or leasing process for the entire Pikes Peak Region. We not only know how to find ideal homes, but most importantly create effective strategies for all types of opportunities and developments, especially during a recession. Contact Bryan Rodriguez now to discuss your Real Estate Strategy!