The Priced-Out Middle Class
Brad Penley
Investment Principal | Private Equity Funding for Small Business and Commercial Real Estate | Giving to Missionaries through Business | US Navy EOD Officer
This was a tough week for my outstanding and wonderful middle-class parents (not them in the picture). They are the epitome of the hard-working, dedicated, American nuclear family, and this past week they put an offer on their retirement home. It was a beautiful 2,752 square foot home with 4 beds, and 4 baths, with a basement they were planning on making into an Airbnb to help them supplement the mortgage on a price-tag of $525,000. They were moving to be closer to my brothers as they start having kids, so my parents can be there to help with grandchildren, and more so my parents can BE involved with their grandchildren. They have great credit, they are debt-free, they were going to put down the standard 20% down-payment, and have a quick close at 21 days. They even had an escalation clause that they would go up to $560,000 in increments of $5,000 to beat out any competitors. Their agent was proven and great. They didn't get the house.
The current economy is getting propped up by the housing industry right now, with federal interest rates at 0%, making home loans the cheapest in HISTORY. This sounds great for the middle class . . . except the superwealthy are gobbling up second and third homes like candy. There is an ALL-TIME low inventory in the market with Realtor.com stating:
- The number of homes for sale declined by 39.6% compared to last year
- The median listing price increased 13.4% over last year
- The typical home sold two weeks faster than last year - 66-day average, 13 days faster than last year
- Due to the high number of home refinances, 449,000 fewer homes were for sale last year
This is causing a huge strain on the already debt-laden millennials, who have the record for the most education debt in the history of mankind, and making a scenario where they can't afford to move out of an apartment and into a new home. This is also the trend for Gen-X/Y/Z who will also have to stay at home longer with mom and dad before being able to afford to buy a home on their own. Retirees like my parents also are finding it hard to find homes. This is all leading to more people staying in apartment-style living.
While this sucks for my parents, and those families trying to buy their first starter home, there is an opportunity for investors in this market. Renewed apartment leases are at an all-time high, as well as new leases. Occupancy rates are above 93% by all national indicators, and building new units can't happen fast enough to keep up with the staggering demand. These trends are also demographically based and not economically based - - there are just too many people needing a place to live and not enough single-family home availability.
So while my parents lick their wounds and are back out on the search for their perfect retirement home in the perfect location, investors need to be on the search for investment opportunities in apartments.
If you are an accredited investor and you want to passively invest to make large gains in your portfolio in 2021, then contact me at [email protected] or private message me on Linkedin to find out how you can invest with Growth VUE Properties to make your money work so you don't have to.
Brad Penley, Growth VUE Properties, Principal
Lt Commander Penley is an active duty Explosive Ordnance Disposal Officer with five successful counter-terrorism deployments, the comments made in this article are his own and do not reflect the United States Department of Defense. He has advanced degrees in Special Operations Low-Intensity Conflict, Strategy & War, and Financial Analysis. He currently has a multimillion-dollar personal investment portfolio, and also is a Principal at Growth VUE Properties which provides large commercial multifamily assets to passive investors.