MARKET & TRENDS
PREPARATION
The Sandwich Effect
MAJOR CHANGES ARE PREDICTED BEFORE 2021, REGARDLESS OF “SECOND WAVE”
by Tom Olson
lenders, many think the onslaught of single-family foreclo- sures that is likely to emerge at the end of the state-im- posed grace period will not hit until 2021. However, prices across the housing spectrum will spend fall and winter adjusting. This adjustment will include high-end price points softening as owners of top-tier properties find they cannot afford their monthly housing payments and begin to sell off those properties. On the other end of the spectrum, low- end properties will begin working their way through the forbearance process as homeowners realize they will prob- ably have to sell when the grace period ends. Landlords who have either opted not to evict nonpaying tenants or have been legally prevented from doing so will find they ei- ther must evict or must sell off their non-cash-flowing as- sets to minimize further damage to their portfolios. There
ederal and state governments are proving surpris- ingly effective at holding much of the economic
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fallout at bay, although there will come a point where the price for all of this quantitative easing policy must be paid. Real estate investors must be ready for the next eco- nomic swings and resulting market upheaval. Those who are prepared will be in a prime position to grow their wealth, build their legacy, and support their community. THE “SANDWICH EFFECT” ISALREADY TRENDING Many real estate investors expect much of fall and winter 2020 to essentially consist of markets and econo- mies “on hold.” Because of aggressive rent and mortgage forbearance policies in place for multifamily owners and
88 | think realty magazine :: august 2020
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