Magilla founder and CEO Chris Meyer is at the epicenter of loan closings in America.
As America’s search engine for loans, we are seeing the activity of offerings every day. “We deal with actual bankers responding to borrowers in the throes of a real estate transaction; the front lines of what is happening, at this very moment, in real estate, both commercially and residentially.”
We refuse to hedge or speak in the vague generalities of the other prognosticators simply because we don’t have to. Our data is in real time; this very minute.
Knowing this, here are our observations from the 3rdQ and looking ahead:
The natural disasters in Houston, Florida, and Puerto Rico were horrific. As a company, we feel for all those affected and want to help. There will be massive rebuilding efforts. No one has to be a soothsayer to know that these three regions of our country will continue to be a hotbed for real estate financing in the coming months. The problem will be the ability of the insurance companies to properly staff these large swaths of areas to “approve” the manifold insurance claims that will be inundating their offices. I would imagine there will be a massive shortage of labor and supplies to these areas, and this shortage will prolong these areas as hotbeds for the next eight months to a year… if not longer. Much more important than the data, we wish to help provide a way for these people to find the proper financing for their rebuild; an inherent benefit of the free platform we have already built.
In sectors closer to home, we see California staying typically hot in both residential and commercial real estate. “We feel the markets are white hot and prices bordering on ridiculous,” says Meyer. The natural inclination is for the prospective buyer to say, “Well, if I don’t get in now, when will I ever have the opportunity to own in this area?” We say, fight that urge. We have all seen this before, most recently in 2006 and 2007, and the results are not pretty. The saving grace this time around is twofold: the feelings are still fresh in the collective US housing market conscience and interest rates, while forecasted to keep ticking upward, are still historically low.
What does a prospective buyer do?
Hold, preserve cash, and grind at your homework. While not desirable, pretty, or what you want to hear, it is, nonetheless, the smart thing to do. This will send a collective message to the marketplace that the prices are too high and, perhaps, slowly they will stabilize. When we say grind at your homework, we mean work harder than the other people in the market looking for the same house you are. In these markets, relationships and extra work will get you in the home faster than anything else. There is no shame in renting or living with your folks longer. Fight the urge to “keep up with the Joneses” cause the Joneses don’t know anything about forecasting.
The commercial market is even more challenging for buyers. The reason is because there is so much money looking for a place to get better returns than the already over-inflated S&P. We work with the largest Commercial Real Estate brokers in the country. We hear it every day. They are crushing it. Things are closing and deals are flying. One insider friend of the company told us that the dentists and doctors are back, full bore, into real estate investing. We looked at one another and said, “This is the first sign of the apocalypse, start hoarding cash.”
Meyer just believes in telling it like he sees it. We don’t want anyone to get hurt. Our business is all about lending in America, and we have a vested interest in keeping lending in America thriving as the nation’s search engine for loans. But, we simply see things faster than others because our platform is ground zero for real estate in America. When we feel the market is overheated, we are going to tell everyone. It is simply what we see day in and day out.
Be smart, do your homework, and save for the right property or investment. This prudence will pay off.