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Levine Capital Newsletter: September 2021

Real Estate Update September 2021

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…

The New Tax On Unrealized Gains

Tax Armageddon isn’t over. Not by a long way. If it feels like there is a new tax hike or new tax coming every day you might be right. 

One of the latest proposals to pay for the $3.5T infrastructure bill that “costs nothing,” is a new annual tax on unrealized gains. And there seems to be a lot of support for it, including from the white house. 

Normally, investors only pay taxes when they sell an asset and realize a positive gain. They can often use losses to offset gains. 

While the details are still very murky, this would require the IRS to estimate how much your assets went up in value by a certain day each year, and then bill you for that. It probably won’t matter if they crash by 50% the next day. Don’t expect a big refund the next year if you do have realized losses on the same investment. 

You can maybe imagine the impact if that gains tax was applied to people’s homes and cars. They may be taxed well over its value over the years and would have to find extra cash each year for this tax, despite not putting any extra in their pocket. 

It may be time to substantially restructure your finances, investments, and retirement savings. This probably includes finding more layers of tax breaks and protections. One strategy that may stand out is focusing on passive income-producing investments which can deliver the same or increasing cash flow yields, regardless of the paper value of the asset.

Gen X Wealth Up 50%

We’ve all heard how billionaires have added 30% or more to their wealth through COVID, but it’s not just the billionaires on Forbes lists that are winning. 

New data from Bloomberg shows that Generation X now surpasses boomers in wealth, and accounts for almost 30% of the nation’s wealth. 

They have certainly finally rebounded from 2008, and by far lead millennials who account for just 5% of the nation’s wealth. 

Much of this boost in net worth is certainly thanks to real estate and the dramatic rise in real estate values over the past two years. 

They also stand to be among the most influential investors over the next few years, and they aren’t picking your grandma’s old stock market investments either. 

Facebook Is Dead

Facebook is not having a great year. While the recent social media blackouts and accusations about its malpractices aren’t going to help either, the social giant has been using losers for years. 

Despite declaring that it was being buoyed by COVID and people having to stay home, or being restricted from travel, Facebook lost 2M daily users in Q3 2020. That trend has continued through 2021. That follows the loss of at least 15M between 2017 and 2019. That’s just in the USA and Canada.

Now politicians want it broken up, and are accusing it of funneling dark money as whistleblowers come out in the news.

The recent October blackout not only impacted Facebook itself, but its subsidiaries, Instagram and Whatsapp as well. Networks that have now become one and the same with Facebook and its privacy issues. 

For business owners and investors, this has become a big wake-up call and a reminder not to rely on third-party platforms for their business and incomes. It is much wiser to invest in your own proprietary assets. With so much having been online over the past couple of years, people are craving more in-person networking and personal relationships too. 

On the money side, don’t be surprised to see tech giants like this and their founders putting more of their funds into real estate based assets to protect themselves from crashing valuations and stock sell offs. 

Other investors are likely to follow suit, and seek more consistency and safety in their investments as well. 

The State Of The Real Estate Market

Everyone knows that the real estate market has been on fire over the past year. Here are some of the most influential trends impacting the space now, and the outlook ahead.

Wall Street Drops Hundreds Of Millions Into Real Estate Debt

Big institutions have continued to pile into the real estate debt market. Especially, into private investments. This action is providing a whole new level of liquidity for the secondary market and securitization opportunities we haven’t seen before. 

JP Morgan has said that when it comes to real estate debt, opportunities persist in private markets. They are especially interested in the high yields it offers. 

Goldman Sachs recently put $300M into a single similar investment and has made bets in this space close to $1B after raising billions for new funds.

Other institutional funds have shifted into this space from commercial real estate too. Including California’s Employee’s Retirement System (Calpers) which invested $1B in a single real estate debt investment earlier this year. 

Almost $4T In Mortgage Loans To Be Originated This Year

Freddie Mac is forecasting $3.9T in mortgage loan originations for this year. That’s almost tied with the record of $4T last year.

While some expect refinances to slow next year if mortgage rates go up, record house price increases could fuel more cash-out refinances, as owners move to tap, leverage, and protect their equity gains.

We’ve recently seen the fastest house price growth on record. At least back to when tracking started in 1975. Freddie Mac forecasts continued positive growth in 2022 as housing shortages continue.  

Just 1% Of GSE Mortgage Loans Now In Forbearance

The distress in the housing market from COVID seems all but gone now. The number of mortgage loans in forbearance have been declining at a faster pace as well. Just 1.38% of Fannie Mae and Freddie Mac-backed loans were in forbearance at the end of September 2021. 

The Mortgage Bankers Association estimates that there are still around 1.4M mortgages in forbearance nationwide. Only 12.4% of those are new forbearances. Over 20% have continued to make payments on their loans throughout the forbearance period. 

This suggests a strong market, with a few discount opportunities for investors with the right connections. With some of the best deals being in real estate debt versus REOs. 

What’s Most Important In Investing Now

A lot of things are changing. Old investments are coming under a lot of pressure and tax threats. Yet, new opportunities are opening up. 

One of the most important moves to make right now is probably to review your portfolio and restructure it to minimize new risks and maximize the upside potential available to you. 

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

As a company, Levine Capital continues to be extremely bullish on single-family homes and multifamily investments. 

Be sure to check our site for the latest developments here

Also, be sure to check out the latest news and insights on the market in our news section.


  1. How To Create A Balanced Investment Portfolio
  2. An Investor’s Guide For Retired Individuals
  3. 3 Investment Red Flags Every Investor Should Know

Upcoming Event

We are thrilled to host a new webinar in October: How Trusts Can Help Achieve Real Bullet-Proof Asset Protection (that LLCs Cannot Provide)

Wed, October 27, 7:00 PM EST

In our webinar, we are inviting Barry Bruce, preeminent tax strategist with 4 decades of consulting, to discuss why “asset protection” should be top of mind when it comes to tax planning. Also, you will learn how you can capitalize on various trust structures to safeguard your valuable assets and increase your control over their fate.

Please stay tuned and the invitation will go out soon.