Warning: The COVID-19 Housing Crisis Has Not Yet Begun 

According to some analysts, the current housing crunch that has burgeoned into an outright crisis by some measures is just the beginning of a post-pandemic housing meltdown.

That outlook is shared by Millionacres contributer Liz Brumer, who warned in mid-May 2021 that a combination of record demand, incredibly short supply, and “an estimated $8.4 billion to $52.6 billion in back rent owed” while one in 20 home loans are delinquent could result in a housing crisis that would ultimately manifest in “new and unexpected ways.” She warned that increasing unaffordability of housing in general could likely exacerbate the problem, particularly since so many analysts, investors, and homebuyers are certain that the housing market is highly unlikely to enter crisis mode.

Brumer noted that a new Housing Supply and Affordability Act allocating $213 billion toward creating affordable housing units both for purchase and rent is expected to help ease inventory issues and housing accessibility concerns, but added that she believes “this won’t be enough to combat the crisis at hand.”

Citing a Freddie Mac analysis indicating the United States needs about 4 million new homes to meet demand, she concluded that a combination of COVID-related rent problems and the end of various forbearance policies would ultimately result in a “flood of homes” entering the market in the coming year, which “could put millions of Americans in a troublesome place” if they are unable to access other living options.

While Brumer is a real estate investor in addition to an online contributor, her view appears somewhat narrow and biased when it comes to the housing market. Her article concludes (after going on to predict a commercial real estate crisis as well), with two telling points:

  1. She notes that government intervention is stalling the “true financial crisis” that awaits the American housing market and suggests that the intervention must not stop or slow “before the free market has sufficiently intervened” and
  2. That real estate has become “a billionaire factory” limited to “the rich and well-connected … with a set of unfair advantages that are completely unheard of with other investments.”

Brumer fails to consider what real estate investors active in accessible, thriving housing markets around the country know as fact: The free market cannot “intervene” when it is supported by unfair public policy that places owners and investors in a position in which they cannot generate returns on their properties.

Fortunately, PIP Group has figured out how to work around many of these issues in multiple southeastern markets in the United States, where housing remains accessible and state policy is largely investor-friendly.

Savvy, experienced real estate investors know that the key to success in real estate is working within and with the market, not getting carried away dreading for a “bubble” that would, in all honestly, ultimately create more opportunity and accessibility for everyone involved. Be prepared, be strategic, and be patient. This housing market is unprecedented, but the opportunities it offers are as well.

Learn more about PIP Group’s pandemic and post-pandemic investment strategies at PIPGroup.com.

 

About the Author

Charles Sells is the founder and CEO of The PIP Group, a turnkey service provider that focuses on investments in distressed real estate assets including tax liens, tax deeds, traditional foreclosures, fix-and-flips and long-term cash flow acquisitions. He has been involved in tax lien investing for over 20 years, during which time The PIP Group has grown to become one of the largest agencies of its kind with nearly 1,000 individual and institutional investors worldwide.

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