• Jared Jones

2021 Winners and Losers in Economy and Housing Market | JARED JONES | JONES GROUP REAL ESTATE

Several market sectors and to start things off, let's talk about the fed. The central banks have been pouring cash into our economy through the 20, 20 COVID situation. You can see by this chart, the federal reserve puts out. This is an kind of a overview of their balance sheet. You can see at the bottom here, this was 2014. We were hovering into 2014 at around 4 trillion and we maintain four and a half trillion dollars in assets there all the way going into 2020, and then with COVID it's spiked. So we're over 7 trillion on this report right now. Economists are crying, foul. They're saying like all this money is pouring into to prop up the stock market. It's building up kind of a fake market. And the real concern obviously, for this is the fact that it just causes inflation. You can already see if you're going to the grocery store over the past five, six months.

Food prices have been climbing, different goods, are costing, more building materials are costing more. So inflation is an absolute killer. And so as we kind of look at the marketplace, you want to kind of get an idea of how things look so right here. Fortune magazine has a chart that has been running since early last year and the pandemic hit, and you can see that temporary closures are plummeting and then permanent closure is actually climbing. So the pain is still in the economy with that being said, it's, it's more than likely that, the federal reserve, the central banking system will continue asset purchasing. And so the real concern and the increasing concern is that folks are going to end up hurt as a result. So take a look at States, moving in and out. There's some interesting data here. The postal service is actually putting out data that tells us where people are moving to.

So that's really, really an interesting point. I think that points to, an a pencil supply, right? So if there's that few people moving, from County to County, there's probably going to be a bunch of people that really need to move. The interesting thing about watching the U S PS data is that you can actually see where people's, money's moving to. Okay. In Florida, orange County, particularly central Florida Orlando area, the Bronx, Queens, Brooklyn, and Chicago, also Miami is a big importer of, of new residents. And so, you know, when you're moving your money or you're trying to raise money to invest, it helps to know that you're going to places where there's money going in the U S has some great data on that pain. obviously Biden is coming in, he's installing, extensions to a lot of the measures to protect, people who live in different properties, from the aspect of moratoriums on evictions.

And one of the interesting things is, some data that came out in December is a Moody's analytics said that there's around 70 billion, an outstanding, debt, from tenants. So it kind of equated to like five or 6,000 per person by January 12 million renters would owe around $6,000 in back rent and utilities by January. That is crazy. It's just a crazy number. So obviously, you know, I'm not going to go into unemployment numbers and new, uh, new unemployment benefit requests, but those are still very big numbers and, and you have real people that are behind and, you know, so, so kind of summarizing, it seems like a lot of folks that have moved in 2020 didn't go far, right? You also have the vaccine rolling out. And I think the vaccine rolling up out the vaccine rolling out rather has, uh, the ability to create a lot more movement in the market.

There's just a lot of stagnancy from the aspect of there's no supply because sellers aren't coming to the market. And so with that being said, you would expect that there would be a supply bump at some point in 2021. And with the vaccine, with the sense of containment, you would expect some of the safeguards that exist in the mortgage industry, to kind of come away and same thing with, with evictions. So, while there's evictions, uh, safeguards on the mounting debt is, is being staved off. You know, people are growing how much they owe their landlords. In the mortgage side, you have people that are on six month forbearance programs or more. And that number is, is up there. You have a five to 6% forbearance rate, but check this out, black Knight and, and S and you might have, I have noticed from last year, we actually, you hit a 21 year, uh, mortgage delinquency record.

So, it was actually a 21 year high for mortgage delinquency, Yahoo finance. In fact, in fact, you can probably find this covered by many other publications, Yahoo finance came out and documented last year, how there was a 21 year high for mortgage delinquency. I mean, you're talking about a big number considering the past, of people that just didn't pay their mortgage. We've had some Rocky years in residential, but the other thing, too, black Knight, which is used to be like a fidelity company, uh, who does data, talks about the fact that mortgage delinquencies towards the end of the year, they put out a report in December 21 that says despite seasonal headwinds, mortgage delinquencies improve for the six consecutive month in November, 2020 falling to 6.3, 3%. So coming down from 6.44 from the month prior, the national delinquency rate is now down 1.5% above its peak, which was almost 8% in may.

So the interesting thing, as I was saying a second ago is when the vaccine rolls out, when will the protections end? Okay. So think about this. You've got 6% in forbearance. You've got six, 7% in delinquency right now. You've got 12 million non-paying tenants that are getting behind. You still have major issues. So if you are a non-essential person and you're in a business that closed, or you are in financial hurt, a lot of the market right now has underpinning hurt in it. That's just stagnant because of, of cooked in protections from one direction or another. In when the vaccine is rolled out, there's going to be a sense of, you know, now we can, we can back off things. Okay. And they're going to control how that, you know, revision happens. How do we take off, uh, you know, all these protections that exist.

So again, we're going to have to watch foreclosures in central Florida, all throughout the country. There's, you know, things are kind of okay for now. But you've got economic pain underneath. You've got the inflation of what we're buying. So, so essentially you have an income problem. You have an expense problem because everybody's cost of living is going to increase with inflation because the fed it's incredible property, not the stock market to keep things going. And the middle-class is going to get squeezed. And one, the safeguards come off, there will be inventory, hang the market because there will be this concept of musical chairs, right? Like, I can't really afford what I have. I had forbearance, but now I have to make my payment, or I'm going to be in trouble with foreclosure. Do I sell and get my equity back out? Okay. And then move into a multifamily situation or another home that I'm going to rent in central Florida multifamily is going to be in huge demand.

Okay. So, you know, kind of getting back to this concept of talking about all the winners and all the losers, you, you want to break all this down saying all that, to say, this let's summarize winners and losers. Well, losers, uh, savers, savers are losers. And the great words of Robert Kiyosaki, the purchasing power of a dollar is going to absolutely hurt the poor middle class in America. There's no two ways about it. As I showed you earlier on the Fed's going to continue buying and buying and buying. We are creating a fake market, just like CNBC. I showed you a headline earlier. And, and with that is going to erode the buying power. So you're going to see, I have a dollar in the bank today, 15 years from now, it's going to be worth 20 cents in terms of how much you can purchase.

So savers people that are sitting on their money, or they have cash are going to be in trouble. They're just not going to have enough value because it's absolutely being eroded. As we build the economy and mass retirees living on fixed incomes, super sad, but fixed incomes. Aren't going to go near as far workers on fixed incomes, borrowers on variable rates. That's going to be a little less of an impact, but if you do have a variable rate loan lookout, because the indexes will actually adjust those on you, whole economy from general economic uncertainty is going to be a loser and exporters that are less competitive are going to be in trouble. Winners. The winners are debtors on fixed payment plans, debtors on installment loans, car loans, house loans. If you're on a debt item, you are going to win huge because the other, factors that are inflated by, you know, inflationary pressures that cause rinse things to go up.

When you have a fixed item, you're going to be can shape governments with high public sector. Debt is going to be a problem. Owners of land and physical assets. I add assets that are physical, right? Like gold real estate, things that have a physical existence, them firms who can cut real wages firms who can cut real wages. So you're sitting with investments, what do you do? What do you do with your cash physical assets? If you're in a real situation and you can get out of it and you're doing okay financially, get out of the rental situation. Let's talk about real estate for a second. Real estate is going to absolutely skyrocket. I mean, there's going to be a time when things going up will have to come down, but real estate will skyrocket in the short term. The second thing multi-family is going to skyrocket.

There's going to be a huge multi-family delay demand even long after. I think the residential market starts to see a correction because there's going to need, there will be a high need for tenants. When they do corrective income structuring and corrective expense structure, they just got to lower their monthly household bills. So they're going to get out of a house payment or a high rent payment. They're going to get something a little bit less. So affordable. Multi-family is going to be a huge thing. Uh, data centers, industrial sites, things that are non street fronting, retail, operations, that fit with where the economy is going right now, are going to be great bets to invest in. So with all that being said, I hope this helps you with planning and understanding where the economy is heading in 2021. It's going to be an interesting ride. We'll see you soon.

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