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Levine Capital Newsletter May-2022

Real Estate Update April 2022

Find out what’s happening in the market now, what’s driving trends and investor choices, as well as the latest updates from Levine Capital…

The State Of The Markets

Key factors are at play right now…

Analysts Prepare For Stock Market Crash 

Bank of America has downgraded its outlook for the S&P 500. This follows the worst April performance on record since the 1970s. 

What is surprising is that many commenters online seem to be just throwing their hands up in despair that they are about to watch their lifetime of work and savings be vaporized as their 401ks tank. 

The solution is pretty simple. Instead of just watching your savings and investment portfolio get destroyed, roll it over to a self-directed retirement account, and invest smarter. Into recession-resistant assets. Or those that thrive during times like those we are expecting ahead.

Netflix Loses Investors $54B Overnight

Not only does the overall economic situation and risk of future panic selling seem to be a threat to the stock market and investors, but so is poor management. 

Netflix is just one of the latest examples of how much value can be lost by poor management, and how fast. 

Netflix just lost its stockholders around $54B virtually overnight. Instead of using a common-sense approach to returning to the activities and playbook which made it a success, they seem to be doubling down on creating more losses and tanking the company. Including penalizing and alienating their most loyal users, cutting back on content (reducing value), and firing people. 

It is an important reminder that the people managing your money and assets are far more important than the appearance of an opportunity. Focus on vetting them first, and the performance will come. 

Stagflation Favors Real Estate Investing

National GDP fell by 1.4% in the first three months of 2022. Signaling a falling economy, and hinting that we are already in a recession. With rampant inflation, we are facing not just a regular recession, but a more dreaded period of Stagflation. 

That means poor overall economic activity, and fast-rising prices.

One of the asset classes which benefits most from this is real estate.

Rising prices lift property values and rents. While an economic contraction creates distressed acquisition opportunities. People will have to move. Housing isn’t an option for most people. It is a must-have they will always need to find a way to pay for. 

The State Of The Real Estate Market

Deals and trading volumes in real estate continue to abound. 

Is A Resurgence Of ARM Loans Healthy? 

CoreLogic notes that interest rates on adjustable-rate mortgages have been growing at less than a third of the pace of fixed-rate mortgages. Suggesting we could be entering a new surge of interest and origination of ARM loans. 

Sophisticated borrowers and investors have always done well using more creative and alternative types of loan products. ARMs can be beneficial for fix and flip investors, or those looking for a short-term bridge, before locking in better rate long-term financing. 

However, ARMs have proven dangerous for less sophisticated retail home buyers. This is even truer given we are moving into a phase of rapid interest rate hikes. Few may be prepared for just how high those payments can go. Which could lead to many losing their homes in the next few years. 

House Price Growth Hits New High Highs 

House price growth has hit new record highs in both February and March 2022. 

The S&P Case Shiller Index shows a 19.8% rise in February. The strongest year-over-year increase in this month ever on record. 

That was trumped again in March at 20.9%, according to data from CoreLogic and coverage by HousingWire. That is even higher in states like Arizona and Florida which grew close to 10% faster. 

Madonna Flips Mansion For $26M

Celebrities continue to cash in on the house flipping game too. Most recently we saw Madonna resell a three-acre California property for $26M. 

She purchased it from artist The Weekend for just $19.3M a year ago. 

What’s Most Important In Investing Now

This moment is all about positioning. It is about positioning your portfolio to benefit the most from what’s next while minimizing your downside exposure to risk and taxes, and maximizing the upside. 

Talk to one of our experts to answer all the questions you still have about the market, what’s smart for your portfolio, and where the best opportunities are now. 

Levine Capital Updates

We are pleased to announce a new investment opportunity that can be characterized as a high risk-adjusted yield, safe, and liquid investment. The hallmark of the investment strategy is to provide capital to fund 1st lien position loans backed by real estate collaterals, sell the loans for a profit to institutional buyers in the secondary market, and, most importantly, recycle funds over and over. More details about our upcoming webinar will be coming soon! 

Be sure to check our site for the latest developments here and check out the latest news and insights on the market in our news section.


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