The New Housing Bubble and Your Retirement Plan

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The New Housing Bubble and Your Retirement Plan
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Are we in a new real estate bubble? What are
billionaire moguls selling and holding now? How
will it impact your retirement plan?

• New questions and concerns are being raised about
  the US real estate market. Is another correction
  possibly on the horizon? How are leading
  investors reacting? What strain might this put on
  current retirement savings and expectations? What
  smart moves should individuals be making now in
  order to protect themselves?

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Whats in store for the Real Estate Market in
2016?

• The National Association of Realtors had forecast
  a year worth breaking out the glasses and bubbly
  for. An even better year than 2015, and a return
  to normal. New data suggests the hangover from
  that party may come sooner rather than later.
• Stock market declines and uncertainty in the
  economy is driving even more capital to real
  estate. So while some markets still appear to
  offer great value, analysts argue that some
  niches of the market have already peaked.

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What Sam Zell is Selling, and Holding?

• According to The Wall Street Journal billionaire
  real estate investor Sam Zell made a deal to sell
  off 23,000 apartments for 5.4B in the third
  quarter of 2015. The Denver Business
  Journal notes that Zell arrange to sell off 1.4B
  of metro Denver apartments in early 2016 more
  than 25 of the sales volume of the whole market
  in 2015.
• Note that Zell is also credited with one of the
  largest single sell off deals ever, right before
  the last bubble burst. He unloaded a 39B
  portfolio of office properties to Blackstone,
  just before most of them ended up tanking in
  value.
• Interestingly the one most consistent area of
  growth for Sam Zell, and one he has held onto for
  years, through multiple cycles is manufactured
  housing parks. He owns hundreds of them.

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What a New Housing Slowdown Would Mean for
Americans

• Firstly those approaching retirement should
  consider that a new decline or at least a stall
  in higher end housing prices and sales in top
  metros could negatively impact plans for
  retirement. During slower periods home equity
  lines of credit can be frozen and reeled in by
  lenders. It may be tougher to sell. Hopes for
  tapping equity with a reverse mortgage as a form
  of pension may be cramped.

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• Then there is the impact on REITs and real estate
  stocks. The Street recently reported that Real
  Estate would be given its own sector in the SP
  500 later in 2016. Some analysts speculate this
  was aimed at propping up the index during a
  forecast recessionary period. However, higher
  interest rates, and a slowdown in condos,
  apartment buildings, office, and single family
  rental homes could drag down the performance and
  trading prices of these publicly traded, and
  highly volatile investments.

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The Need for Affordable Housing

• The pressure from all the above is only going to
  increase the demand for affordable housing.
  Mortgage lending is still tight, and rents have
  been spiraling upwards to a point where Zillow
  reports the average income required to rent an
  apartment in many cities is several times minimum
  wage.
• In comparison to other housing types there are
  not many manufactured home parks. Yet, the need
  for affordable housing grows. Owning one of these
  properties could be key to empowering individuals
  to continue to generate income in lean times,
  preserve and grow their wealth, and possibly even
  secure affordable or essentially free housing for
  themselves, and their loved ones.

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To Sum It Up

• A new housing bubble and correction may happen
  this year, or the near future. When it happens it
  will hurt the retirement plans of millions of
  Americans. It will likely hurt their stock
  portfolios, and many of their real estate
  investments, while cramping the ability to
  leverage existing home equity. The opposite may
  be true for mobile home park owners. These
  investments tend to exhibit less volatility
  during downturns. Right now interest rates are
  low, seller financing may be available on these
  properties, and many are ripe for increasing
  rents and profitability. This could provide
  exactly what many need to maintain their
  lifestyles, and stay on track to a comfortable
  retirement.

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