What's Going on in Real Estate?

 

Overall, the U.S. residential real estate market has held up fairly well so far during the global pandemic. Industry experts say that the current economic decline is expected to affect retirement a bit differently than the Great Recession, largely due to housing prices remaining strong in many areas of the country.¹

 

One reason is because, early on, the CARES Act mandated forbearance relief for homeowners with federally backed mortgages (eg., FHA, VA, USDA, Fannie Mae and Freddie Mac).²

 

According to McKinsey & Company, the housing and construction industry has suffered from problems ranging from reduced demand to supply-chain issues. However, the firm believes that the real estate industry can emerge from the economic decline even stronger after the coronavirus crisis. The problem — as it is for most other industries — is how long will it take to contain the virus and re-energize the economy.

 

The McKinsey Global Institute estimates that in the current circumstances, the economy could be back on track by 2021. However, additional lockdowns and restrictions could mean that the economy may not return to 2019 levels until 2023 at the earliest.³

 

From a demographic point of view, pandemic or not, the housing cycle is on tap to experience new demand throughout the next 10 years. Many Millennials have finally hit their stride in the work world after holding off on buying a home until they were on stronger financial footing. In some cases, they are wanting to leave large metropolitan areas, looking instead at smaller, rural areas for affordability.⁴

 

Speaking of Millennials, they are now largely considered a driving force in the residential real estate market. In 2018, young adults represented the largest share of home buyers at 37%. High-earning Millennials are even dipping their toes into the luxury market. As part of this trend, they favor luxury condos, communities that promote healthy living and technology-enabled home offices.⁵

 

The home office is another influence of the pandemic that is impacting commercial real estate as well. Now that many companies recognize that their white-collar employees can simply work from home, this changes how they view the necessity of expensive office buildings and corporate headquarter campuses. In the future, we may see corporations cut their overhead dramatically in a move that could have long-term repercussions in commercial real estate.⁶

At Imber Wealth Advisors, we help individuals and families of Southeast Michigan plan for retirement. 

With a strong financial plan in place, we can help you prepare to leave the workforce and live comfortably. Take control of your financial future and give us a call at (734) 769-1719 today!

 

 

¹ Kim Blanton. Center for Retirement Research at Boston College. July 21, 2020. “Pandemic Puts More Retirements at Risk.” https://squaredawayblog.bc.edu/squared-away/pandemic-puts-more-retirements-at-risk/. Accessed Aug. 5, 2020.

² Consumer Financial Protection Bureau. July 1, 2020. “Learn about mortgage relief options and protections.” https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/mortgage-relief/. Accessed Aug. 5, 2020.

³ McKinsey & Company. May 8, 2020. “How construction can emerge stronger after coronavirus.” https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/how-construction-can-emerge-stronger-after-coronavirus. Accessed Aug. 5, 2020.

⁴ Merrill Lynch. May 2020. “Welcome To Phase II — The Bridge.” https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/Viewpoint_May20_Merrill.pdf. Accessed Aug. 5, 2020.

⁵ Diane Hartley. RISMedia. July 15, 2020. “Millennial Home-Buying Trends in the 2020 Luxury Real Estate Market.” https://rismedia.com/2020/07/15/millennial-home-buying-trends-2020-luxury-market/. Accessed Aug. 5, 2020.

⁶ Andrea Felsted. Advisor Perspectives. July 28, 2020. “Working From Home Is Terrible News for Landlords.” https://www.advisorperspectives.com/articles/2020/07/28/working-from-home-is-terrible-news-for-landlords. Accessed Aug. 5, 2020.

 

  

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

Is it Time to Go Global?

 

Competitive edge is a real factor. Here in the U.S., we boast that capitalism is the key to our success. Unfortunately, that key has gotten a little rusty lately thanks to the rampant spread of COVID-19 throughout the country. Some areas have locked down or experienced slowed economic growth because of safety protocols that prevented business as usual.

The principles of capitalism – such as competition and supply and demand – have been crippled.¹ On the other hand, countries that were hit early on with the pandemic have managed to control the contagion and reopen their economies.² Market analyst Carl Kawaja believes this comparative advantage gives way to more global opportunities than the U.S. can currently pursue. In his words: “I like to compare it to basketball – a sport where the U.S. historically has been fairly dominant. But then Argentina started getting better, and Greece started getting better, and Spain started getting better. And, the next thing you know, the U.S. lost the Olympics.”³

The good news is U.S. investors can take advantage if international companies pull ahead in the near-term while we struggle to flatten the curve of contagion. If you would like to consider ways to incorporate more global equity opportunity within your asset allocation, we’re happy to work with you. Don’t hesitate to reach out to schedule a consultation.

Regardless of the state of the pandemic, it’s important to recognize that not all the best investment opportunities are in the United States. According to the World Bank, in 2018 the nation represented only 44% of world stock market capitalization.⁴

Investing internationally does have its risks. But there are ways to do it strategically, such as investing in global mutual funds or ETFs, leaving the day-to-day stock picking to a professional money manager, whose job it is to weigh those risks, such as currency fluctuation, lack of government regulation, economic instability and the disruption of civil unrest. This means professional market analysts do the research and move assets in and out of geographic regions on your behalf.⁵

In recent weeks, Blackrock commented Europe has a “leg up” over the U.S. as well as other parts of the globe, citing the EU’s health care infrastructure and policy response to the pandemic. The money manager noted the region’s monetary and fiscal support provided a cushion during the pandemic that left many countries able to recover faster economically.⁶

Investors seeking income may consider global bonds, which have historically outperformed during short-term periods of market turmoil. They also offer the opportunity for long-term diversification benefits to U.S. investor portfolios.⁷

At Imber Wealth Advisors, we help people in the Ann Arbor area plan for retirement. With a strong financial plan in place, we can help you prepare to leave the workforce and live comfortably. Take control of your financial future and give us a call at (734) 769-1719 today!

 

¹ Jim Chappelow. Investopedia. April 6, 2020. “Capitalism.” https://www.investopedia.com/terms/c/capitalism.asp. Accessed July 20, 2020.

² Ferdinando Giugliano. Bloomberg. July 6, 2020. “Why Europe’s in Better Shape Than the U.S.” https://www.bloomberg.com/opinion/articles/2020-07-06/coronavirus-recovery-why-europe-s-in-better-shape-than-the-u-s. Accessed July 20, 2020.

³ Capital Group. June 24, 2020. “Midyear Outlook: International markets on the comeback trail.” https://www.capitalgroup.com/advisor/insights/articles/international-midyear-outlook-2020.html. Accessed July 20, 2020.

⁴ James D. Peterson. Charles Schwab. Nov. 13, 2019. “Why Global Diversification Matters.” https://www.schwab.com/resource-center/insights/content/why-global-diversification-matters. Accessed July 20, 2020.

⁵ Tinesh Bhasin. LiveMint. July 24, 2020. “What to keep in mind if you want to invest in global markets.” https://www.livemint.com/money/personal-finance/what-to-keep-in-mind-if-you-want-to-invest-in-global-markets-11593015469209.html. Accessed July 20, 2020.

⁶ Callum Keown. MarketWatch. July 20, 2020. “Risks are mounting for U.S. stocks. Here’s where BlackRock says investors should look instead.” https://www.marketwatch.com/story/risks-are-mounting-for-us-stocks-heres-where-investors-should-look-instead-says-blackrock-2020-07-20. Accessed July 20, 2020.

⁷ David Wakefield. Pensions & Investment. July 13, 2020. “Investing during a pandemic: Three results a global fixed income strategy can deliver.” https://www.pionline.com/Mondrian_globalfixedincome. Accessed July 20, 2020.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies